Generally, labour-related matters in Oman, including recruitment and regulation of the expat recruitment process, are governed by Sultani Decree No. 35/2003 on the Promulgation of the Labour Law (the "Labour Law"). More recently, following the issuance of the Ministerial Decision No. 38/2018 by the Minister of Manpower (the "Ministry of Manpower"), a six-month ban on hiring expat workers was imposed across 87 positions on 28 January 2018. This was done to regulate the Oman Labour market, create more job opportunities for the Omani citizens and integrate them within the workforce, and reinforce the "Omani First" agenda of the Government of Oman, which is already evident in the restrictive provisions provided in the Labour Law.
As it currently stands, expatriates account for 39% of the 3.3 million population in Oman and represent 90% of the private sector workforce. As such, there has been an extension of the regulation of expatriates with the issuance of three Decisions from the Minister of Manpower, namely Ministerial Decision No. 487/2018, Ministerial Decision No. 488/2018 and Ministerial Decision No. 489/2018. Since the six-month implementation of these Ministerial Decisions, 32 000 Omanis have been employed, in line with the Government's Omanisation policy.
Commencement of Controlling the Recruitment of Non-Omani’s
Article 18 of the Labour Law states that an employer is prohibited from hiring non-Omani workers unless the employee has obtained a permit from the Ministry of Manpower. Article 18 further provides that the employer must comply with the following requirements before the employer may obtain a permit from the Ministry of Manpower for a foreign employee:
i. evidence that no Omani is available for the position for
which the employer is seeking a work permit;
ii. the employer has complied with the Omanisation percentages prescribed by the Ministry of Manpower; and
iii. the prescribed fees have been paid.
In addition to the above conditions, a foreign employee may not work in Oman before obtaining a labour card, the Civil Status ID Card the issuance of which is based on the following conditions:
i. the expatriate has professional competence or a technical skill or qualiﬁcation that is required in the Oman Labour market;
ii. the expatriate has entered the country in a lawful manner and satisﬁes the conditions set out in the foreign residence law (such as valid passport, visa, and sponsorship);
iii. the expatriate is medically ﬁt and free from contagious or chronic diseases as outlined by the Ministry of Health;
iv. the expatriate has entered into a contract with an Omani or non-Omani employer who has obtained the necessary permit from the Ministry of Commerce and Industry, if the worker is requested to work in the establishment; and
v. the prescribed fee has been paid.
Importance of Omanisation Established in the Labour Law
Chapter 1 of Title 2 of the Labour Law (Employing Citizens) imposes an overarching obligation upon employers to assist relevant local employment departments to highlight job opportunities and attract Omani nationals into the workforce. The following articles are key in indicating the importance of executing such actions by employers:
- Article 11 establishes the obligation that employers must employ Omani workers to the utmost possible limit as required by the circumstances of each sector or activity and to the extent of availability of Omani manpower, which is to be determined by the Minister within the relevant economic sector.
- Article 13 requires employers to provide a list of vacant positions, occupations and job requirements within the workplace upon the request of the relevant department responsible for procuring Omani citizens.
- Article 16 stipulates that upon the hiring of an Omani citizen, the employer or its representative must record in a special register the names of all Omani workers that are employed with it.
Recent Expansion of Restrictions on Foreign Worker Recruitment
The Ministry of Manpower through its recent decisions has expanded the restrictions on the recruitment of the foreign workers in Oman through the following recent decisions:
I. Ministerial Decision No. 487/2018
The Ministry of Manpower through its Decision No. 487/2018 has extended the temporary suspension of recruiting foreign workers in certain professions. Under article 1, the suspension imposes a six-month ban of hiring professions within: – sales; – marketing; and – purchasing. The Decision applies to all private sector establishments (article 2). This suspension commenced on 1 December 2018 and will continue for a period of six months from that date. The Ministerial Decision means that companies will not be able to hire foreign workers in the three designations identiﬁed above and will not be able to receive new permits for employees in the aforementioned roles.
II. Ministerial Decision No. 488/2018
The Ministry of Manpower, through Ministerial Decision No. 488/2018, has extended a ban on the recruitment of foreign workers for an additional six months from 2 December 2018 mainly in the construction and cleaning domains. The Decision does not apply to establishments registered with the Public Authority for Small- and Medium-Sized Enterprise Development and insured with the Public Authority for Social Insurance (PASI).
III. Ministerial Decision No. 489/2018
This third decision of the Ministry of Manpower, Ministerial Decision No. 489/2018, temporarily bans the recruitment of foreign workers in carpentry, aluminium, blacksmith and brick kiln work from 2 January 2019. The period of suspension of the permit to bring non-Omani manpower in the private sector was put in place on 2 January of this year and will continue for a period of six months.
By virtue of article 113, employers who violate the provisions of articles 14 to 16 of the Labour Law on facilitating the employment of Omanis may be ﬁned not less than OMR 10 and not more than OMR 100 for each worker. In addition, the violation of article 17 may give rise to a ﬁne of not less than OMR 50 and not exceeding OMR 100 and double the amount if there is a repetition of the same violation.
Article 114(bis) was amended by the Sultani Decree No. 113/2011, effectively stipulating more stringent penalties upon the violation of the foregoing articles. Accordingly, an employer does not comply with the Omanisation percentages referred in article 11 may be subject to a ﬁne of not less than OMR 250 and not more than OMR 500 for each Omani employee that should have been employed.
Employers have a six-month period to rectify the situation and comply with the Omanisation percentage. If an employer does not do so and re-offends under the article, the penalty as stipulated above will be doubled.
Rationale of Foreign Hiring Restrictions and Omanisation Policy
The policy of Omanisation, which has been the underpinning of the Labour Law, was developed to address severe concerns of high national unemployment. As a result, there have been bans of private sector companies regarding wide-ranging sectors such as information systems, insurance, information, medical professions, airports, engineering and technical professions.
Extending the suspension on recruitment of foreign workers across various industry sectors signiﬁes that the Omani government remains keen on addressing the issue of a high unemployment rate among its citizens, particularly young people.
Unemployment among Omani youth aged between 15-24 reached 48.7% in 2017, which is a major concern. It was with the aim of regulating the labour market within the above-mentioned sectors in order to create job opportunities for Omani nationals that had qualiﬁcations from universities and colleges. Highlighting the Omanis' plight in searching for employment, the National Centre for Statistics and Information indicated 1.8 million foreign workers were employed compared to only 429 800 local nationals.
Effects of Foreign Hiring Restrictions
According to data from the National Centre for Statistics and Information, since the beginning of 2017, the unemployment rate for Omanis between the ages of 25 and 29 dropped by 13.6%, 11% for those between 30 and 34 years of age and by 7.1% for locals from 35 to 39 years of age, as companies have started replacing expatriates with people from the local workforce, and some 32 000 Omanis have been hired by the private sector in Oman.
Between October 2017 and 2018, the number of expats in the labour force decreased by 3.4% and currently stands at 1 739 473, down from 1 795 689 in December 2017. The biggest drop was in the construction sector, which decreased by 13.69% in October 2018. The manufacturing (5.2%), engineering (6.8%), industrial (5.9%), mining (6.47%), agriculture (1.4%), and ﬁnance (2.1%) sectors showed a rise in the number of Omanis replacing expatriate workers.
Effects of the Suspension of Foreign Recruitment
While the suspension has had a serious impact on foreign companies deploying foreign nationals on permanent contracts, the restrictions have proved to be beneﬁcial for the Omani workforce, as some 32 000 Omanis have been hired in the private sector in Oman due to the restrictions being imposed by the Ministry of Manpower; nevertheless, due to ongoing bans and restrictions, almost all companies have been affected by a shortage of workers, as they are unable to ﬁnd suitable Omanis for the positions.
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