Over the past 20 years, the influx of Asian workers to the Middle East has grown significantly. The rising number of non-nationals, commonly known as expatriates, has raised concerns in host countries about the potential drawbacks of relying heavily on foreign labor. In response, countries like Saudi Arabia, Oman, the UAE, and Qatar have implemented "localization" policies, reserving a substantial portion of jobs for their citizens.
What is Omanisation?
Omanisation is a nationalization program policy introduced by the Omani government in 1988 to replace foreign workers with trained Omani nationals. The government targets different industries to hire a certain percentage of Omani workers. This program aims to reduce reliance on foreign labor and create more jobs for locals. By focusing on hiring Omani nationals, Omanisation helps strengthen the local workforce and boosts economic independence.
Companies that achieve their government-mandated quotas are awarded a "green card," which grants them positive media coverage and favorable treatment in government interactions. The Sultanate has established several universities to train Omani workers to support this initiative.
Read more: Top ATS in Oman
[fs-toc-omit]Current Expat Population in Oman:
1.776 million (as of April 2023)
[fs-toc-omit]Top 3 Expat Nationalities Operating in Oman:
- Bangladeshi: 698,000
- Indian:403,000
- Pakistani: 307,000
[fs-toc-omit]Sector-Specific Targets for Omanisation in Private Sector
- Banking & Finance: 60% nationals
- Industrial Sector: 35%
- Hotels and Restaurants: 30%
- Wholesale and Retail Sector: 20%
- Contracting: 15%3
Read more: What is Emiratisation?
The History of Omanisation
After Sultan Qaboos came to power in 1970, Oman began a journey of economic liberalization and modernization. The discovery of oil created a surge in job opportunities, drawing thousands of migrants to the country. From 1970 to 2000, the foreign population in Oman consistently increased. Population data since 1980 shows a steady rise in the proportion of non-Omani residents. By the end of 2002, there were 668,000 expatriates out of a total population of 2.5 million. The presence of foreigners is even more significant in the workforce compared to the overall population.
1988: Omanisation programme launched to replace expatriates with trained Omani personnel.
Mid-1990s: Significant push in Omanisation as over half the national population is under 15.
October 1994: First Omanisation laws passed, setting quotas for private sector employment of Omani nationals as following:
60% in transport, storage, and communication
45% in finance, insurance, and real estate
35% in industry
30% in hotels and restaurants
20% in wholesale and retail
1995: "Oman 2020 - Vision for Oman’s Economy" conference highlights employment of new generations as a key national goal.
1997: The Omanisation Follow-up and Monitoring Committee was established to oversee plans, assess manpower needs, and prepare recruitment strategies for the public and private sectors.
End of 1999: Omani employees in government services exceed the 72% target, reaching 86% in many departments.
2000: Introduction of "green card" for companies meeting Omanisation targets, granting media recognition and preferential treatment by the Ministry.
December 2001: The Ministry of Social Affairs splits, forming the Ministry of Manpower to focus on Omanisation. Full Omanisation of unskilled or low-skilled jobs is regularly announced.
2005: Omanisation targets specific jobs such as heavy vehicle drivers, petrol pump attendants, and hairdressers—regulation of tourist guides to require licenses and promote Omani employment in the sector.
Read more: What is Saudization?
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Updates in the Omanisation Policy in 2024
Starting April 1, 2024, the Omani government mandates that all foreign-owned companies in Oman must hire at least one Omani national within a year of beginning their operations and register them with the Social Protection Fund. This is a crucial step in supporting the Omanisation program.
If companies fail to meet this requirement by the deadline, they will be given a 30-day grace period to comply, with the possibility of one extension. There needs to be more information on whether this grace period will apply to already established foreign-owned companies in Oman. The Ministry of Commerce, Industry, and Investment Promotion will monitor adherence to this rule during the renewal of commercial registrations and will electronically flag non-compliant companies.
What is the Penalty for Non-compliance to Omanisation?
Penalties for noncompliance include restrictions on certain transactions on the Oman Business Platform, specifically for foreign investors. Foreign-owned businesses should review their workforce by hiring at least one Omani national to meet this requirement. This new regulation may present challenges for employers in fulfilling their hiring needs. If companies fail to follow this rule, the relevant authorities will electronically flag them for monitoring and enforcement.
What is the Goal of Omanisation?
This new regulation continues the Omani government's efforts to attract foreign investment and simplify business processes. Foreign investors can now fully own businesses in many sectors and engage in over 1,700 commercial and industrial activities through the Oman Business Platform. Additionally, the government has streamlined operations by reducing, canceling, or merging 836 services to make investing easier and promote economic growth.
Requiring foreign-owned companies to hire at least one Omani citizen aims to create stable jobs, improve skill development, and boost the economy for investors and the local population.
Read more: How to Attract and Retain Emirati Talent?
How to Overcome the Challenges of Omanisation?
Omanisation, the policy aimed at increasing the employment of Omani nationals in the private sector, faces challenges, but there are strategies to improve its effectiveness:
[fs-toc-omit]Upskilling and Training
Private sector companies should invest in training programs to enhance the skills of Omani workers. Focusing on specialized training and instilling a work ethos suitable for private sector careers is crucial.
[fs-toc-omit]Future Vision and Planning
Develop plans that align with the needs of existing private sector institutions and future investments. Understanding these requirements will help qualify and train Omani talent in the necessary specializations.
Hire the Best Talent
in Oman
Meet Omanisation goals
Source Talent in less than 10 seconds
Reduce time-to-hire by 40%
[fs-toc-omit]Minimum Wage Considerations
While competition limits increasing minimum wages, companies should explore ways to improve compensation for Omani employees. Addressing wage disparities can contribute to successful Omanisation.
[fs-toc-omit]Collaboration with Government Entities
Rather than blaming government decisions, private sector entities should collaborate with relevant authorities to achieve national and patriotic goals. Balancing profit motives with social responsibility is essential.
Read more: Top Recruitment Platforms in Oman.
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