Question

What is meant by Omanization? Discuss the main reasons behind the Omanization Policy? Examine critically its impact, if any, on Private sector businesses

Answer 1

Omanization is a policy enacted by the government of Oman in 1988 aimed at replacing expatriate workers with trained Omani Personnel. The Sultanate of Oman sets quotas for various industries to reach in terms of the percentage of Omani to foreign workers. Companies which reach their government mandated goals are given a "green card", meaning they recieve press attention and preferential treatment in their dealings with the government

• Reasons behind the Omanization Policy

The Omanization plan, implemented in 1988, strives to reduce the country’s dependence on expatriate manpower by substituting Omani nationals for foreign labor.

Rationale

1) Positions currently held by expatriate workers could be easily occupied by Omani nationals.

2) Replacing expatriates with Omani workers also would help reduce public spending on subsidized services (electricity, water, health) consumed by expatriates.

3) The substitution of expatriate workers by Omanis also would help to reduce Oman’s balance of payments deficit because workers’ remittances, which amounted to $1.7 billion in 1996, would be lower.

4) The substitution of expatriates by Omanis could well lead to an increase in domestic spending through the multiplier effect, and thus contribute to faster GDP growth. With this rationale, concrete steps were planned and implemented during the fourth (1991-95), fifth (1996-2000), and sixth (2001-2006) Five-Year Plans.

• IMPACT OF OMANIZATION

Since 1995, the policy of Omanization has reduced the share of expatriate workers in both the public and private sector. Between 1995 and 1998, the share of expenditure in public sector employment decreased from 22.3% to 20.8% and in private sector employment declined from 85.2% to 81.6%.

During the fifth Five-Year Plan, the Omani labor force increased by about 5.1% compared to 2.3% for the expatriate labor force. The Omanization rate increased in the private sector from 14.7% in 1995 to 16.6% in 2000.The Omanization data in the private sector indicates that the sectors least affected by the plan are agriculture and fishing; wholesale and retail trade; restaurants and hotels; manufacturing; the construction of roads and buildings; and community and personal service. In these sectors, 88% of the total private sector employees are employed and 95% of total expatriate workers are engaged.