Minimum wage being reviewed in Oman: Minister of Labour

Muscat: The Minister of Labour confirmed that a review is ongoing to raise the minimum wage in the Sultanate of Oman to more than OMR 360.

His Excellency Mahad Baawin, the Minister of Labour, confirmed that the factors in consideration for the review include the average monthly wages and the annual inflation rate, the results of which range between OMR 360-400.‏

The Ministry of Labour issued a decision in 2020 that caused widespread criticism and a real crisis for job seekers, especially those with university degrees.

Earlier, the decision of the Ministry of Labour in 2020 regarding the abolition of the minimum wage sparked wide discussions and reactions. The reactions varied between support and opposition, especially from young people, since the Ministry announced a circular stipulating that wages should not be linked to qualifications. The Ministry considered the decision in favor of raising Omanisation rates and providing more jobs for citizens.

Additionally, the Ministry indicated that it is currently working on changes in the legislative system, which contributes to regulating the labour market.

The decision of the abolition of the minimum wage associated with qualifications was welcomed and accepted by some. This was especially true for businessmen, who described it as “wise” as it will significantly contribute to raising the percentage of Omanisation in private sector companies and institutions.

Others, especially job seekers, considered that it was not beneficial for them, as it would not do justice to those with educational degrees, and might widen the gap between the benefits of working in the public and private sectors, at a time when the government is intensifying efforts to reduce the differences and standardise the benefits between the two sectors. They said that the decision to decrease the minimum wage to OMR 325 is not within the goals of Oman Vision 2040, which focuses on the knowledge economy.

Dr. Mohammad Al-Wardi, an academic and economist, said that the decision to reduce wages and not link them to qualifications will provide job seekers with opportunities in private sector establishments, regardless of their university qualifications.

He pointed out that it is a temporary solution, but it has negative effects in the long term, as company owners will be able to hire job seekers at the minimum wage of OMR 325, given the exceptional circumstances of the negative effects resulting from the spread of the Coronavirus, as well as the drop in oil prices. This in turn contributes to reducing operations costs of these companies.

Dr. Al-Wardi said: "The decision of decreasing minimum wages to OMR 325 may not be compatible with the aspirations of the job seekers, as after spending many years of studying diligently, they will receive a small salary while they are employed in a private sector facility, which is below the level of their experience and competencies."

He added that it will also reduce the enthusiasm and passion of students who are currently in school, especially university, to seek knowledge and acquire the necessary skills related to the labour market. It will also discourage them from continuing their higher studies, which contradicts the goals of Oman Vision 2040, which is based on making the Sultanate among the top 20 countries in innovation, creating a force of manpower armed with science and knowledge, and diversifying sources of knowledge-based income.

Dr. Al Wardi pointed out that employment based on supply and demand cannot be applied in rentier nations like the GCC countries in general, as one-third of the Sultanate's population consists of expatriate workers who compete with citizens for available job opportunities.

He said: ”The developed countries that are based on this principle, i.e. supply and demand, depend mainly in the private sector, while in the Sultanate workers depend on the public or government sector. The salaries of employees in the government sector are higher than those in the private sector, which in turn leads to the reluctance of young people to work in the private sector.”

Dr. Al Wardi stressed that the decision to reduce wages to OMR 325 will lead to widening the gap in benefits between the public and private sectors at a time when the Sultanate relies on the private sector for employment and advancing the national economy.