Private sector fails to give Omani economy necessary boost

Opinion Saturday 22/October/2016 20:40 PM
By: Times News Service
Private sector fails to give Omani economy necessary boost

Oman has always been a booming economy, but the country is beginning to see a lull in job creation during the last three years, despite a series of the government incentives being awarded to the private sector.
Big projects, such as Oman Railway and the air transportation industry, are growing, but such industries are mainly benefiting from the initiatives adopted by the government, with the private sector doing very little to expand the economy.
Pursuing diversification is not the job of the government only. Private companies have not risen to the challenge to create labour intensive projects to reduce employment and create significant revenue.
The oil sector, though still profitable, is capital exhaustive and demand for employment is limited.
With oil prices still hovering at lower levels, this industry might see a rapid decline in the coming decade. The few initiatives that are labour intensive, such as tourism, have failed to produce enough revenue to justify mass employment.
The current commendable initiative from Petroleum Development Oman (PDO) to train 50,000 young people to be job ready has received wide acclamation. However, not all the trained candidates will find jobs. As a matter of fact, only a smaller percentage will be successful in a market that has less demand and a lot of supply.
But a company, such as PDO, 60 per cent of which is owned by the government, is at least trying to make up for its reduced power of employment by running a free training drive.
This is clear evidence, among others, that the State is already implementing a programme to sustain development in the face of reduced energy revenues. The private sector is still lagging behind in this initiative. Most Omani investors pump in funds during the construction of properties to earn quick rental revenues, but shy away from SME (small and medium enterprise) projects.
Local investors have also snubbed the government’s incentives in industrial areas in Sohar, Salalah and Duqm. Less than 40 per cent of the combined land reserved for investment in these cities has been taken up.
Most of it has been taken up by foreign investors. Some Omani entrepreneurs even prefer to invest in countries that have cheaper labour, but fail to transfer the proceeds to their own country.
Young educated people may be well advised to seek employment in the Gulf Cooperation Council (GCC) states, with the United Arab Emirates (UAE) being a favourite destination for them. However, these countries have their own employment problems.
With the abundance of local skills remaining unused, a growing number of school graduates find it pointless to enrol in universities, now that they know that the likelihood of finding a job is severely limited.
While the inability of the public sector to take up graduates is obvious, private companies have very small excuses. One of them is that new recruits lack the drive to take the challenge and cope with demanding work rates.
But if they don’t get the opportunity, how will they prove that misplaced belief wrong. The second one and most popular, is that the government hiked salaries up by 30 per cent in 2012 in the civil service, which the private companies find hard to match.
It was true two years ago, but the mentality of a majority of job seekers has changed. They understand the challenges they face now.
Even degree holders accept offers of pay that are lower than what their certificates should command. They only need job security. The current job seekers are not fussy about longer working hours or for lower benefits and compensation. Instead of blaming the current austerity, private companies must overcome some prejudices and dig deeper into their resources to create more jobs.