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Labor Market Regulation in the Construction and Contracting Sector

This case study discusses the labor market regulation challenges in Oman's construction sector, proposing solutions to improve Omanization percentages and regulate companies for better workforce management.

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Labor Market Regulation in the Construction and Contracting Sector

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  1. Labor Market Regulation in the Construction and Contracting Sector Oman Society for Contractors Shahswar Gamdust Al Balushi 20 September 2016

  2. Case for change

  3. No. of active companies No. of registered companies • 12,000Grade 1 and above • 38,000 Grade 2 and below • Total 50,000 • 110,000 companies Numbers from Chamber of Commerce and Industry in September 2015 Numbers from Ministry of Commerce and Industry in September 2015

  4. Number of labor workforce • Number of expats: 683,840 . It represents 43% of the expatriate workers • Number of nationals: 54,753. It represents 27% of the Omani workers • Total : 738,593 Omanization target set by MOMP is 30% sector cannot achieve it. The labor market in the sector is distorted. Uneven implementation of the Omanization targets. Ministry of Manpower, September 2015

  5. Number of labor workforce according to Company Classification world class excellent first second third fourth total Ministry of Manpower, September 2015

  6. The workforce percentages according to level of skill Others 75% of workforce are blue collar. Other workers 25.14% Skilled & semi skilled 74.86%

  7. Proposed solutions

  8. Omanization in Big Companies • According to the Ministerial Resolution No. 321/2009, the targeted percentage remains 30% • A percentage of no less than 15% is to be achieved during the 9th 5 YDP (2016-2020) • 2017: minimum 10%,targeted 12% • 2018 : minimum 12% targeted 13% • 2019 : minimum 13% targeted 14% • 2020 : minimum 14% targeted 15% • The percentage is reviewed every year based on the job seekers rates and the higher education outputs. • The percentage is applied to all companies without exception.

  9. Options to achieve Omanization percentages • Direct recruitment or; • one or a combination of the below options: • Training for employment under the supervision of Ministry of Manpower and Oman Society of Contractors. (Trainee should be registered in the Public Authority for Social Insurance). • Commitment to recruit last-year students of higher education institutions. (Trainee should be registered in the Public Authority for Social Insurance). • Employing more white color staff at better salaries: • RO 700 – RO 1,200 counts for 2 Omanis. • RO 1,201 – RO 2,000 counts for 3 Omanis. • RO 2,001 – RO 2,500 counts for 4 Omanis. • RO 2,501 and above counts for 5 Omanis. • Employ female Omanis above an agreed percentage you may count the extra above the agreed percentage double Omanization. • Buy Omanization short fall at a rate of minimum salary of an Omani employee monthly per person.

  10. Facilitation for Big Companies • Establishing a company to provide heavy and light driving services, as well as other equipment for private institutions. • The company will accommodate a huge number of job seekers in an annual basis, mainly graduates of Diploma (High School) and below, drop out of schools, educationally, technically or professionally unqualified individuals to enable them join the labor market as they represent a burden on supply of national labor. • The company is in charge of regulating the drivers pays as per the type of the vehicle (light/heavy/equipment) • Private companies shall contract with this company to provide driving services. • Expatriate employees may obtain permits to work in the company, however; Omanis will be given priority.

  11. Ring fencing and regulating the sector • The classification of the efficiency, quality and performance of the companies working in the construction and contracting sector by Oman Society Contractors: • Submission of the Classification Certificate each time the company submits documents for government tenders to consolidate company classification system. • Submission of Classification Certificate upon submitting any labor clearances with Ministry of Manpower and construction permits with the Municipalities to tackle the phenomenal hidden trade in the sector. • Listing and consolidating some occupations under specific job titles mainly; construction worker, workshops worker, heavy duty equipment operator, and plant operator. • A one-year grace period to rectify the companies’ situation with regard to banned jobs. • Legislating companies ban.

  12. Omanization in Small and Medium Enterprises • Regulatory controls have been established to ration the business of such enterprises and best reserve the right of the Omani citizen working in those enterprises by means of offering multiple options as follows: • First option – the owner of the enterprise shall wok as a full timer, dedicated to run and supervise his/her business directly. • Second option - in case of inability to work full time, the owner shall appoint a full time Omani to run the business on his/her behalf. • Third option – in case the above said options happen to be inconvenient, the enterprise owner shall pay a monthly fee, i.e. the minimal wage rate of an Omani worker, to the State treasury for every expatriate worker in the enterprise.

  13. Solutions for the phenomenon of freelance labor • Allow grade one and above enterprises to get the number they need of expatriate workers easily in accordance with the facilitations mentioned above. • Allow subcontractors of government projects get the number they need of expatriate workers easily in accordance with the facilitations mentioned above. • A resolution from the Ministry of Manpower to allow labor force optimization between an enterprise and another with a countersigned contract from the Ministry for the enterprises classified by the association. • Establishing a company in charge of providing technical services (electricity, plumbing, carpentry, maintenance … etc.) for the houses.

  14. Implementation flow

  15. Implementation in Big Companies Omanization percentage less then 10% - The e-system will not allow the companies to obtain or renew any work permits or cards , and companies will be banned so that they cannot enjoy any government services and no tenders will be awarded to them by any government body. Omanization percentage = Minimal percentage in a year - The system will allow them to renew work cards only. - To recruit other expatriate workers, the company has to increase the percentage to the approved level according to the options of achieving Omanization. Omanization percentage = the approved percentage in a year - The system will allow them to renew work cards and recruit expatriate workers only if the company maintains the approved percentage through applying the options of achieving Omanization. Omanization percentage higher than the approved in a year - The system will allow them to renew work cards and recruit expatriate workers. - If the company maintains the high percentage, it will be favored over other companies in the tendering process by 10% over the highest bidder.

  16. Company is restricted from government services and tenders Below minimum Company cannot access any service Company registers in Manpower e-system To obtain labor clearances must attain Omanization target At minimum Company can only renew labor cards Company logs in the e-system Company must maintain the Omanization target. To obtain the labor clearances. System gives present Omanization status of company At target Company can renew labor cards and obtain labor clearances Company must maintain the above target Omanization . To get tender favoring. Above target Company can renew labor cards and obtain labor clearances Company can attain the Omanization target by choosing one or a combination of the options provided

  17. Implementation in Small and Medium Enterprises Omanization percentage = 0%. The e-system will not allow obtaining or renewing work cards and permits. In case one of the enterprise’s owners works full time and registers him\her self in the Public Authority for Social Insurance or; in case the owner recruits an Omani who can work full time to work on his/her behalf and has registered the Omani in the Public Authority for Social Insurance or; in case of paying a monthly fee for the State treasury for every expatriate worker working in the enterprise: The enterprise has the right to obtain or renew work cards and permits within the restrictions of the enterprise classification. In both cases (full-time owner or an Omani on behalf), the case should be continuous. If the case discontinues, the system will automatically and by default choose the case of paying the monthly fee until the case changes. If the number of workers in the enterprise exceeds 99, the enterprise is to be treated as a big enterprise.

  18. 0% Company cannot access any service Company registers in Manpower e-system Owner works fulltime Company can renew labor cards and obtain labor clearances Company logs in the e-system System gives present Omanization status of company Owner appoints an Omani to work fulltime Company can renew labor cards and obtain labor clearances Pays the monthly Omanization fees per every expat Company can renew labor cards and obtain labor clearances

  19. KPI

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