Choosy Omanis Add To Government’s Unemployment Headache

Rushing out of a bank door, Harith Mohsin smiled as he clutched a paper approving a $50,000 state loan to start his own business, happy that he would no longer have to depend on unemployment benefits.

Mohsin, 23, is one of 1,500 young Omanis whose low-interest loans have been cleared since January under the government’s self-employment financing scheme, which aims to reduce an unemployment problem that has triggered political unrest.

“I was looking for a job for a year until the Ministry of Manpower asked me if I would like to operate a business in my hometown,” said Mohsin, who wants to start a tour company in the northeastern city of Ibri, which is near old forts and tombs.

“This is an opportunity for me to be my own boss.”

Late last year Sultan Qaboos bin Said, who has ruled for 42 years, ordered a fourfold boost in funds available for the programme to OMR60 million ($156 million) annually as one measure to slash the jobless rate.

The scheme offers loans with an annual rate of two per cent and a one-year grace period for repaying credit above OMR5,000. No interest is charged at or below this amount.

Unemployment among Omani citizens exceeded 24 per cent in 2010, according to an International Monetary Fund estimate based on the latest population census, though the IMF conceded that the number might include many people who were not truly looking for work. The government does not release jobless data.

Political stability in Oman, which has seen sporadic street protests demanding jobs and a crackdown on corruption since February 2011, is important for the region because the small oil producer sits on the Strait of Hormuz, through which almost a fifth of oil traded worldwide passes.

To appease protesters, the government created some 44,000 new public sector jobs in 2011, raised the minimum wage for Omanis in the private sector, launched a new unemployment benefit, and almost doubled the intake for higher education.

But annual growth of roughly three per cent in Oman’s native population of about two million is aggravating the unemployment problem. Moreover, despite strong growth in the total number of jobs available, most new private sector positions have gone to some of the over one million foreigners working in the sultanate.

Last month, a finance ministry official told Reuters that Oman, flush with a budget surplus from high oil prices, had allocated an additional $1 billion to create new jobs over the next 12 months.

However, a strategy relying on public sector jobs may not be sustainable in the long term. Oman’s modest proven oil reserves, which provide nearly 70 per cent of budget income, are expected to last just 17 years at the 2011 rate of production, according to the BP statistical world energy review from June.

Around 45,000 new positions for Omanis are needed each year, twice the number achieved in the five years to 2010, if the government wants to slash unemployment, the IMF estimated in a report last December. “To be sustainable, these new jobs will have to be in the private sector,” it said.

Hence the government’s emphasis on fostering new private sector entrepreneurs such as Mohsin.

CUTTING OIL RELIANCE

Only a fraction of Omanis will ever start their own firms, though; most of those in the private sector will have to work as salaried employees. And here the government’s plans are running up against harsh reality, as they are in other Gulf states.

Despite Oman’s healthy 2011 economic growth of 5.5 per cent, many firms are reluctant to hire locals, blaming insufficient training and education and high salary expectations.

“Only 20 per cent of 50,000 jobs were created by the private sector, and only because the government forced them to,” said Ahmed Saleem, a consultant at job recruiter Capital Manpower Co.

Khalid al-Khammasi, 21, who has been looking for work since finishing secondary school in June, said: “I want a job but all three places I have been to insisted on a degree, which I don’t have.

“We can’t all be business people. It is not for some, and I know I would lose money if I ventured in it.”