Slowdown to leave thousands out of job in 2017

By Saleh al Shaibany — The government will struggle to create jobs for thousands of Omani graduates this year with the growing perception that it may not be equal to the task. About 24,000 students are expected to graduate and look for jobs this year, joining around 20,000 more who have been in the unemployment queue in 2016 and a year before. The private sector will be worst hit as major companies will continue to struggle to balance their books in 2017. With cost-cutting in government’s subsidies and fiscal spending, the private sector’s expansion will see another year of austerity as low oil prices will put further pressure the economy.
With oil estimated at an average price of $55 per barrel this year, the government is putting further curbs on projects whose contracts in the past provided thriving business to the private sector. The civil service has reached its capacity in terms of absorbing Omani staff and the state’s subsidiaries are bursting at the seams with over-employment. With another crippling deficit estimated in 2017, the financial planners have no ace up their sleeves to generate enough jobs.
With a budget deficit of RO 5.3 billion in 2016, Oman would need to dig deeper into its reserves. Borrowings of RO 2.5 billion planned in 2017 would need to focus on generating jobs without compromising on the quality of existing manpower requirement.
The choices are limited though. Either the government would choose the easier route of restricting the recruitment of foreign workers to create positions for nationals or borrow more money to revive the stalled projects.
Forcing the private sector to lay off workers would have severe repercussions on the long-term revival of their businesses. That would remove skills from their core operations and severely hamper their competitiveness in the open market. Borrowing excessively would increase the predicted deficit of RO 3 billion forecast this year. Oman, like its neighbours, enjoyed a windfall of revenues until June 2014 when oil prices tumbled from $115 per barrel to just $48 per barrel now. There would be no relief this year too with international oil traders predicting an average price of $50 per barrel in 2017. On top of the doom’s list, young job- seekers would have to bear the brunt of the economic hardship.
The trade-off on the removal of expatriates for the job entry of Omanis work well in theory as much as borrowing to pump cash into projects. But with nearly 50,000 estimated job-seekers on the loose by the second half of this year, the bubbles of the boiling point may not vapourise easily in the air of discontent. On closer scrutiny, the country has created a decent number of jobs in the last five years, at an average of 22,000 a year for Omani graduates.
However, the number of graduates has been outstripping the job demand by more than half. In other words, the Sultanate is creating more graduates than it can generate jobs.
But this statistics is not surprising. The government’s population figures show Oman is a nation that has been enjoying a baby boom since the early 1980s. With the rate of birth outpacing job creation, Oman would need to look deep elsewhere. Sending home expatriates by a large number is never an answer nor keep pumping funds into the private sector and risk bankruptcy.
The answer is not less obvious as it might seem. Diversification, though the drive started 25 years ago, has never worked simply because of lack of real commitment. For example, natural resources such as rich minerals are still buried deep under the rocky terrain of the country. Tourism is still talked about but not implemented in a larger scale. Self-employment has been largely overlooked as the most effective route of cutting down the job queue. As we embark on 2017, the year may well hold a few surprises on the economics of scale.