The poor getting poorer in Oman

The poor getting poorer in Oman
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Published September 15th, 2013 - 07:36 GMT via

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According to statistics, only 15 per cent of working Omanis are getting paid more than OMR5,000 a month.
According to statistics, only 15 per cent of working Omanis are getting paid more than OMR5,000 a month.
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Ministry of Finance

For the positive minded, the rich get richer as the wage gap widens but on the lower rung of the economy, it is the poor who see their monthly bills increase astronomically as inflation takes away a big chunk of their income.

According to statistics, only 15 per cent of working Omanis are getting paid more than OMR5,000 a month, 18 per cent between OMR3,000 to OMR5,000 and 30 per cent from OMR1,000 to OMR3,000 a month. That means more than a third get paid less than OMR1,000 a month.

The rate of pay hikes for those who are earning OMR3,000 and above is rising because employers see them as high flyers, leaving the rest of the nation struggling to make do with steep mortgages, increasing education fees for their children and rising food prices.

Roughly 30 per cent of the total workforce, both in the government and private sector, has to adjust the expenses every month with 37 per cent struggling by constantly cutting expenditure. The good news is that the rest, which is 33 per cent, are having it so good that they have ample income to invest in their future, like owning a second home. 

The high earners also receive fat bonuses as well as promotions every few years to further widen the gap between them and the low earners.

Welfare system

Pay inequality is not unique to Oman. Based on the experiences of many countries, no government in the world has any real control on the wage structure, especially in the private sector. 

This happens when average wages fail to keep pace with economic growth. In Oman, the economy has grown at a steady pace of 4 per cent annual average in the last five years, according to the figures available in the Ministry of Finance. This has been possible due to high international oil prices that encouraged the government to increase spending every year since 2008. 

A good number of low wage earners are working in the civil ministries. The civil service across the globe, and Oman is no exception, is considered as part of a welfare system where productivity is not a priority. Right here at home, the civil service personnel's jobs do not go hand in hand with the demand. In many cases, positions are only created for the sake of employing Omanis. Giving a decent livelihood to the nationals is part of the government's role but increasing their pay once they get the job is never a priority.    

New graduates
It is almost the same story in the private sector. Many feel that workers in the private companies are underpaid, with an exception in the financial and energy sectors. Graduates with Bachelor's degree should expect a salary of between OMR600 to OMR750 a month when they land a job in the private sector. That includes a basic salary of no more than OMR400 a month. With an annual increment fixed at five per cent based on the basic pay, a graduate would expect an increase of OMR20 a month after working for a full year. It is not exactly the kind of professional encouragement a youngster would look forward to every year.

Inflation rate

Yes, the increment keeps pace with the inflation rate but at this rate, a youngster would be able to move towards owning his own house and pay for the wedding costs at a snail's pace. Soon, the low wages will become a liability once the government's spending starts to subside, as is expected to happen by the year 2015.

The state's generous expenditure has been a lifeline of the private sector for many years and, without it, the economy will face a stern challenge to sustain itself. Low earners, who we know comprise a majority in this country, cannot keep the economy growing since their spending power is severely restricted. They can only spend what they receive.

The result is that the inequality of the wage structure across the labour market creates a small band of highly paid elite who know that the economy's sun will never set on them and the vast majority who can only see the crimson light far away on the horizon.


© Muscat Press and Publishing House SAOC 2013

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