Muscat: His Excellency Dr. Mahad bin Saeed Baowin, Minister of Labour, has confirmed that the Sultanate is home to over 400,000 registered companies; however, only 265,000 of these are listed in the Ministry’s database as employers. Among these, roughly 245,000 are classified as micro establishments, each typically employing four to five expatriate workers without any Omani staff, primarily engaged in basic service activities. Of the 1,600,000 workers in the commercial sector, approximately 1,100,000 expatriates are found in these micro establishments, while the remaining 20,000 companies employ around 500,000 expatriates and 265,000 Omanis. Notably, about 185,000 Omanis are employed across roughly 700 companies, with the remainder distributed among firms that employ more than ten Omanis.
His Excellency highlighted that the Ministry is actively pursuing localization and training programs aimed at enhancing employment opportunities for Omanis within these companies, while also exploring alternatives in other sectors.
Preserving Omani Employment in the Private Sector
His Excellency underscored the Ministry’s commitment to tackling challenges within the private sector, particularly concerning labor welfare and negotiations related to service terminations or wage cuts. Through diligent negotiations, the Ministry has successfully retained over 60,000 Omani workers in their positions during the years 2021, 2022, and 2023.
Each company undergoes a thorough assessment to evaluate its financial health and determine its ability to remain operational or if it is at risk of liquidation or bankruptcy. In certain instances, the termination of both expatriate and Omani workers is sanctioned based on these evaluations, taking into account the challenges companies may encounter upon project completion, with affected workers being transitioned to the social protection system.
His Excellency elaborated that the private sector serves as a crucial foundation for employment; however, it encounters greater stability challenges than the public sector. The Ministry is diligently working to enhance these conditions by improving job security and generating new opportunities that allow employees to shift between projects and elevate their working environments.
Wage Protection System Implementation
His Excellency noted that the Wage Protection System (WPS) has been under development for several years and became mandatory following a decision made in mid-2023. This system mandates that all private sector salaries be processed through it, facilitating oversight and addressing disputes between employees and employers. Its main objective is to ensure that workers receive their payments in a structured and timely manner while also protecting the interests of business owners.
The system was officially launched in July 2023, providing large companies with a six-month grace period and small to medium-sized enterprises with eight months to achieve compliance. Full compliance was anticipated by February 2024, but additional awareness initiatives were initiated from April 2024 through the end of the year, disseminating over 3,700,000 awareness messages and issuing more than 200,000 warnings to non-compliant businesses. At the start of this year, mandatory enforcement measures were put into effect to ensure adherence.
His Excellency further remarked that the recent increase in account registrations and compliance is attributed to the swift actions taken by companies to evade penalties. This system represents not only a move towards greater transparency and order but also reinforces the Ministry’s dedication to safeguarding the rights of both workers and business owners.
Regulations and Compliance Monitoring
His Excellency emphasized that imposing fines is not the primary objective of the Ministry, and such actions are only taken when absolutely necessary. To foster compliance and create a stable and equitable work environment, the Ministry employs various supportive measures. It focuses on raising awareness, facilitating dialogue, and providing essential resources for business owners to understand and adhere to applicable laws and regulations.
To assist businesses in aligning with the Wage Protection System, the Ministry has extended the registration period for more than eighteen months, allowing ample time for compliance. In cases of technical errors or misunderstandings during the registration process, companies are permitted to rectify these issues without incurring fines, provided they submit the required documentation. These initiatives are intended to be supportive rather than punitive, encouraging businesses to integrate fully and accurately into the system.
His Excellency concluded by noting that sufficient time has been allocated for companies to complete their registration, and the Ministry is vigilant in assessing the need for any additional measures. The overarching aim is to enhance services and regulate the market, ultimately benefiting all stakeholders and contributing to improved international benchmarks as a natural result of these regulatory efforts.
The Wage Protection System, which has garnered international accolades, reflects the Ministry’s commitment to protecting workers’ rights while also ensuring the rights of business owners are upheld. The Ministry is actively working to position Oman as a leading example in enhancing work environments and safeguarding the rights of all participants in the labor market.
Labour Market Development and Future Strategies
His Excellency emphasized that Oman’s labour market, similar to those worldwide, encompasses a variety of sectors, some of which are well-established while others require further development. The oil and gas industry is particularly notable for its successful initiatives, alongside the banking and telecommunications sectors, which demonstrate high levels of efficiency and effectiveness. The Ministry is actively collaborating with partners in employment governance committees to improve regulations in essential sectors such as healthcare, education, and public services, as well as critical areas like tourism and food security.
A significant challenge lies in aligning educational outcomes with the needs of the market. The Ministry aims to address this issue through training programs linked to employment and localization efforts across different sectors. Furthermore, it is important to note that 80% of the expatriate workforce occupies low-skilled positions that are generally unattractive to Omani nationals. Nevertheless, the Ministry is dedicated to fostering positive change and motivating economic sectors to promote sustainable development within the Sultanate.
Private Sector Employment and Organisational Challenges
His Excellency pointed out that two fundamental areas require strengthening within the labour market. The first involves steering economic activities towards enhancing employment opportunities by establishing large enterprises that foster economic clusters in sectors capable of increasing recruitment. The second area highlights the pressing need to regulate these sectors to maintain order and ensure the availability of accurate and reliable data for future planning. The public sector is tasked with integrating between 12,000 to 16,000 new employees each year across civil, military, and security domains. Meanwhile, a majority of job seekers are drawn to the private sector, underscoring the need for substantial efforts to enhance its capacity for employee retention.
The Ministry is diligently developing accurate and organized databases that facilitate effective planning for development and the seamless integration of new graduates into the labor market, ensuring alignment with market demands.
Addressing Concerns About Fines and Business Compliance
In response to inquiries regarding the perception among some business owners that the Ministry of Labour focuses on imposing fines rather than providing meaningful solutions for enhancing the work environment, His Excellency clarified that these concerns arise from a shift towards a more regulated and structured market. Businesses that comply with regulations do not encounter these challenges, as they perceive regulatory measures as opportunities to safeguard their rights and improve service quality. Conversely, companies that have not yet achieved optimal organization may feel overwhelmed by these regulations.
Compliance with laws and regulations is not merely a legal obligation; it is also essential for preserving the integrity and stability of the market. The Ministry of Labour is committed to ensuring that the measures implemented aim to mitigate detrimental practices such as illicit trade, the sale of commercial records, and substandard service quality. Ultimately, these regulations are intended to elevate service standards, benefit consumers, and protect workers’ rights, fostering a healthier and more sustainable market for all parties involved.
