Low-paid workers are bearing the brunt of the current economical hardship, given the sharp increase in consumer prices, such as that of petrol, while the income gap between the poor and rich is widening out of proportion.
Official data shows that more than half of the Omani workers in the private sector earn a minimum wage of between OMR325 and OMR600. Just 13 per cent of Omanis working in the private sector earn more than OMR1,000.
Pay inequality is undoubtedly creating instability in the market as high petrol prices, domestic gas, education, food and rentals are either shooting up or on the verge of rising.
Meanwhile, salaries are not going up to compensate for the steady inflation. In a country where everything depends on the cash flow from the government, the private sector is caught in a whirlpool of capital shortage.
The effort at job creation in the private sector is only concentrated in the lower rungs of the employment ladder and that is the better part of the economy. But the bad news is that the pay new recruits get is just enough to get their noses above the water.
It is not about the poor losing ground for employment, but the upper class pulling away from what they take home at the end of the month. Most employers would not want to tweak the pay structure in favour of the low-income staff. Paying more simply means taking away a sizeable profit margin from their revenue.
The private sector’s directors also argue that they need to keep half of their recruitment at a monthly pay of OMR600 or below to afford to employ more people. However, whether the realise it or not, productivity at any company largely depends on how much you pay your staff. You pay less; you get much less from your workers. The hardship of low-earners is now compounded by the increasing prices.
Their pay packets have been degraded and their purchasing power is diminishing. The pay gap appears to reflect the graduates who are in the queue for the job market. Young people in their early twenties want to do the normal thing after landing their first job, such as getting married or owning a home. Like we all did during their age.
Unrelenting income difference is now very visible in the housing market. OMR600 cannot get them to an OMR100,000 mortgage, which is a minimum for buying a house these days. If they do, they would need to spend 80 of their income to make the repayments. Obviously owning a property is a distant accomplishment for them. A quick look at the rental market does not provide any comfort for a newly wedded graduate either. But how do you address the large income gap? Obviously employers would not revise their pay packages in the current austerity situation. The lower oil price is one excuse they would use to not make any improvements in salaries. The government is unlikely to offer any incentives, now that it has cut down on subsidies.
Economists would tell you that Oman is not the only country which has the problem of low earners who struggle to make ends meet. They would also tell you that the government should not interfere with the pay structure of the private sector by tampering with labour regulations.
The general message is that if you are young then you have a family that would back you up during hard times. It has been happening for years when a newly married couple move in with parents because they are not paid enough to afford the rent to live separately.
Income inequality certainly is not a conspiracy between the private sector and the government. The two sides work separately and independently. This is probably the reason why it has gone unnoticed that the pay gap has widened. Economically, we are stuck in an income bubble since we associate with individuals who are like us. In a way, it is a segregation of income groups that may have certain consequences in a long run between the have-little and have-a-lot.