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Omani Nationals See Hike in Minimum Wage

Oman : 17 February 2011

The government  has increased the minimum wage for nationals working in Oman within the private sector.

The intention is distribute the extra money in an effort to increase the standard of living across Oman, although economists are warning that this move could stifle the desire for locals to become involved in business.

The minimum monthly salary has risen 43 percent to hit 200 rials (or Dh 1,907), which will hopefully boost the standard of living according to the Oman News Agency. This wage move was announced after inflation rose and December’s consumer prices jumped at the quickest rate in the last four months.

After political upheavals rocked Tunisia and Egypt and protests have been rising elsewhere, governments around the region are rolling out plans of support for their populations.

Kuwait granted each citizen Dh 12,855 (or $3,500 US) this month and now King Hamad bin Isa Al Khalifa of Bahrain is promising 1,000 rials to every family of Bahrainis.

Economists state that further steps of financial improvement aimed at nationals may be seen across the Gulf.

Over half of the Gulf’s working population was not granted a pay raise in 2010, although wages in the UAE are forecasted to jump by 6.3 percent this year based on the findings of a recent survey.

Chief economist at the National Bank of Abu Dhabi, Giyas Gokkent, noted that local governments are aiming to improve the standard of living for nationals.

But the challenge is to do so without creating conditions that destroy the incentive to recruit more nationals into private industry.

Many of the Gulf area governments are working hard to get citizens employed in the private sector in efforts to decrease the population’s reliance on heavy public spending.

Among nationals the jobless rate is higher than 10 percent in many Gulf nations. Within the region’s youth the rates are even higher, with as much as 39 percent of 20 to 24-year-old Saudis currently unemployed.

There are not many nationals working within the private sector even though governments are working towards increasing that number.

It is estimated that 19 percent of Oman nationals are working in private industries, which is more than the rate in the UAE and most of the other Gulf nations.

Economists state that improving education should be more of a priority than increasing wages.

According to a recently published report by John Sfakianakis, there are concerns that the current education system may not be equipping students with the technical skills needed for working, which is a vital concern with Saudi citizens making up only one in ten of the private sector employees. Sfakianakis is the chief economist for Banque Saudi Fransi.

The tensions and protests in Tunisia and Egypt were ignited in part by unemployment. Last month in Saudi Arabia young grads held a demonstration to call attention to the lack of career opportunities.

Officials in Oman state that this decision to increase minimum wages for nationals is an effort to keep pace with increasing costs of living.

Food prices have been increasing steadily in the last few months as anything from rice to wheat has climbed in cost. Inflation sped up to hit 4.2 percent in December when compared to the same period one year before.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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