Thursday 18 / April / 2024
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MUSCAT: Companies have begun repatriating expatriates from highly-paid positions and tightening their spend on nationals as oil-driven austerity starts to dig into staff budgets.
“Many companies are centralising their offices to reduce the workforce, cutting down bonuses, adjusting annual leave plans and air ticket provisions and also dropping off training opportunities abroad,” Dr Anchan CK, an investment advisor and financial expert, said.
“While big companies are into austerity measures, small companies are looking for merger options to survive,” Anchan added.
Due to the global oil price crisis since the middle of 2015, Oman’s government announced an OMR3.3b budget deficit in 2016 with plans to dramatically lower spending and slash subsidies.
This has already seen petrol prices rise and visa fees increase with more measures expected, and so companies are planning to cut their costs to survive in 2016.
Talking to Times of Oman on the condition of anonymity, two senior expatriate managers said that they were told to leave due to cost cutting measures.
“I was told to quit as part of cost cutting measures. I have been a long time employee in the company. However, I don’t feel sad,” a general manager in one of the companies in Muscat who was forced to leave Oman a few days ago, said.
Another senior manager in engineering firm also said that he was forced to leave as part of the cost cutting exercise.
“The company was centralising the departments to save money. The company offered me a golden handshake and I agreed to it,” the senior manager said.
According to a finance advisor in a government driven initiative, cost cutting measures have already come into effect.
“This time, the plan is to cut bonus by 50 per cent for the employees. Tight control over air tickets, visa for maids and abroad training options are in place already,” the finance advisor said.
Tonia Gray, general manager at Competence HR, said, “Companies have cancelled the payment of bonuses and allowances (including field/special allowances) and in some cases employees have accepted reduced pay during this time to avoid the need for redundancies.
“Some have cancelled the medical insurance for nationals as they have access to government health services. These measures are an attempt to save the company and therefore the employees’ jobs in the longer term. While no-one likes to be on the receiving end of such cuts, the alternative of loss of jobs or company closure would be far worse.”
An official in one of the leading health insurance firms said that they are seeing reduced price requests from companies during the time of policy renewal.
“We may have to wait a little more to link it with bad economy. However, it’s happening. We are also seeing that some companies are willing to pull out from insurance coverage for their employees,” the insurance company official said.
Tonia also added that other than restructuring their organisations resulting in redundancy of employees and the remaining employees undertaking more work and responsibility, other companies are reducing benefits.
“Restructuring has to be done in such a way that key skills and experience are kept to ensure the company can deliver its services, whatever those services may be,” Tonia added.
A board member from general federation of Oman trade union said, “We are hearing about it. However, we are confident that companies won’t surpass the conditions set by the Labour Law. If somebody are being denied the facilities agreed in the job contract, they have to come forward. If they come forward with official complaints, then we will be able to take it up to government authorities,” Mohammed Khaldi, the trade union federation board member, said.
An economist and business consultant said that the tightening of the belt is necessary as the cash inflows have reduced and thereby the cash availability.
“Every responsible employee shall understand the situation and appreciate the need to cut down on all ‘extras’,” Krishnan MAK, the business consultant in Muscat, said.
