Muscat :The IMF’s latest ‘Selected Issues Report on Oman’ forecasts that around 550,000 Omanis will enter the workforce within the next eight years, creating a need for increased employment opportunities, particularly in the private sector.
“Taking into account the prevailing participation rate (67 percent) and the replacement of retirees (approximately 10 thousand annually), around 220 thousand new jobs will need to be created by 2032, against 103 thousand newly created jobs for Omanis during 2012-2019. While it continues to be a preferred destination for young Omanis, using the public sector as an employment vehicle is no longer a feasible option under current efforts to entrench medium-term fiscal sustainability while reducing reliance on hydrocarbon revenues,” states the IMF report under the section ‘Labor Market Dynamics in Oman’.
Oman’s reliance on the public sector as a primary employer is unsustainable, the report states, especially given fiscal constraints and efforts to reduce the country’s dependence on hydrocarbon revenues. While the private sector has expanded, it continues to rely heavily on low-cost expatriate labour, which accounts for 86 percent of private-sector jobs.
“While 56 percent of the Omani workforce finds employment within the private sector,2 public sector jobs remain a favorable destination for Omanis given the continued job security, higher remuneration, and more relaxed work arrangement. Using educational attainment as an indicator of skill level, expatriate workers predominantly occupy the lower-skilled job spectrum (IMF, 2021), making up 68 percent of Oman’s overall employed labor force, and 86 percent of private sector jobs. Moreover, employment among Omanis in the private sector is more diversified, with significant participation in construction, agriculture, and manufacturing sectors. In contrast, expatriate workers primarily find employment in construction, domestic labour, and trade. Regarding sectoral employment shares, the share of Omani workers is high (exceeded 70 percent of total workers) in sectors primarily dominated by state- owned enterprises (SOEs), including electricity and mining. Conversely, Omani workers constituted less than 15 percent of the workforce in sectors such as tourism, construction, and real estate,” the report explains.
Gender disparity also remains a significant issue, with female labour force participation at just 32 percent in 2023, despite Omani women excelling in educational attainment and test scores. The IMF recommends initiatives such as investing in early childhood education, expanding leadership programs for women, and improving access to financing for female entrepreneurs to boost female workforce participation.
The report also notes positive trends in employment post-COVID-19. Private sector employment for Omanis rose by 18 percent, more than double the 8 percent increase in the public sector. Employment for Omani women saw the most significant growth, surging 23 percent between 2020 and 2023, compared to a 10 percent increase for men. Expatriate employment, however, grew at more than twice the rate of national employment.
Looking ahead, the IMF emphasizes the importance of Oman’s economic diversification under Vision 2040, which aims to create high-skilled job opportunities for Omanis.
“The analysis reveals that comprehensive reforms are needed to narrow the public-private wage gap, boost private sector employment for nationals, and elevate overall productivity. These include aligning wages with productivity, improving vocational training, fostering female labor market participation, and enhancing labor market mobility for expatriate workers. Implementing these measures is pivotal for Oman to realize its Vision 2040 objectives, transitioning towards a knowledge-based economy, and achieving sustainable nonhydrocarbon growth,” states the IMF analysis.
