Oman defends graduate pay cut as means to spur employment

The ruling has sparked anger among degree holders looking for jobs but might spur entrepreneurship says one academic

A vendor wearing a face mask against the coronavirus uses a wheelbarrow to carry fresh fish to be sold at the Mutrah Souq in the Omani capital Muscat on September 18, 2020. AFP

A decision by the Omani Labour Ministry to extend private sector minimum wage rules to graduates has sparked anger among holders of bachelors and master’s degrees but may spark entrepreneurship, says one academic.

Seven years ago, the government brought in a minimum wage of 325 rials (Dh3,010) for Omanis who didn’t have a degree. Now the Labour Ministry has issued a decree to give employers the flexibility to offer all new recruits – even holders of degrees – the same minimum wages.

“Providing more job opportunities to Omanis currently looking for work in the country was one of the main reasons behind the decision to no longer equate an employee’s salary to his qualifications,” the ruling by the Labour Ministry said in Thursday.

Prior to the ruling, the basic salary for Omani undergraduates in the private sector was at least 600 rials a month – nearly twice the amount of their non-degree holding counterparts – and for post-graduates it was 750 rials a month. University fees are set by the government and differ depending on the course but cost around 1,800 rials a year for undergraduate studies.

But Omani graduates looking for jobs took to social media to brand the new rule “unfair” saying it would encourage employers to offer less to new starters.

"This new ruling is not based on fairness. A graduate will now be treated the same way as a school dropout in terms of wages. Many of us are not happy and would rather stay at home instead of accepting this indignity," Anwaar Al Ruqaishi, 23, a job seeker with a bachelor's in business management, told The National.

Other graduates said the new minimum wage rules would reduce competency in the private sector if all new recruits are treated the same.

“If there is no distinction of wages according to qualifications, university graduates would not contribute as effectively as they should. It will demoralise them in their workplaces just because they don’t get paid what they deserve,” Mohammed Al Suleimani, 24, an information technology graduate, said.

The ministry defended the ruling by saying it aims to encourage employers to hire more Omanis into the workforce that currently employs 1.8 million expatriates. There are about 60,000 Omani graduates currently seeking work.

“We aim to provide immediate job opportunities to a large number of Omani jobseekers. Among the objectives of the ministry is regulating the labour market, which drove us to the decision of replacing expatriate manpower with the national workforce,” the ministry said.

But one academic said the new decision rewards merit rather than academic skill alone and may also encourage young graduates to start their own businesses if they were unhappy with the wages being offered.

“Obviously companies now tend to reward employees not just because of their education, but on the basis of their performance and skills. But this must encourage graduates to start their own businesses where the financial rewards are much higher,” said Dr Venkat Ram Raj, a lecturer at Modern College of Business and Science in Muscat.