Monday, February 22, 2016

The Oil Crisis: Impact on Daily Life

Good afternoon my few loyal readers who still check in on me from time to time although I have yet to pull myself back into regular writing. Looking back at my posts from 2009, etc, I find that my angry posts were always the popular ones. My feminist outbursts and descriptions of women and life in Salalah. I find that I am not so angry anymore, and I'm not a very effective 'happy blogger' if you know what I mean.

Nevertheless, I'm pleased to inform you that I am a bit angry today, hence the post. 

I do not need to elaborate on the existing oil crisis in Oman and why it happened, etc. My post today is about the direct impact on the lives of Omani citizens from the perspective of someone who directly works on budgeting and employee benefits. 

As many of you know, in early January, the Minister of Finance announced that the price of fuel would go up. Muscat Mutterings wrote about that here.  That was the first step. Most people thought "Oh well, it's a small price to pay. I don't mind paying extra for fuel". Some of us knew this was just the beginning, We assumed electricity and water would be next.

In mid-December, it was announced (again through Ministry of Finance) that all government entities as well as government-companies, and any companies owned 40% or more by the government would not be allowed to issue any bonus/rewards to employees until further notice. Employees gritted their teeth and said "Ok, we can handle a hike in fuel costs and no bonus... we'll be alright". Some grumbled, but most were ready to sacrifice this to help Oman get back on its feet again.

December 31st, another Ministry of Finance circular, this one with more serious requests... They requested the following from government entities and companies again (40% or more government owned):

1) Reduction of operation costs by 10% at least
2) Stopping all promotions
3) Cutting over-time
4) Minimum salary spending (in other words, please don't hire anyone)
5) Monitoring vehicle usage (don't use your car after office hours, please)
6) Reduce spending on electricity, water, internet, and rent.
7) Cutting down on business travel whether inside or outside Oman, using Oman Air only, cutting business class, 
8) Not sending anyone to conferences abroad, and also not arranging conferences in Oman. 

A lot of people were royally pissed off, particularly about the promotions and over-time. Some of us were royally impressed. It made sense after all. Promotions aren't necessarily a given right. 

Silence for a little bit. Things calmed down. Then another F-Bomb dropped (F referring to Finance ministry, not what you think...). Yesterday another major announcement from the Ministry of Finance to all government organizations and companies 50% or more government (basically most of Oman, right?). The announcement was a polite order to murder all employee benefits. A neat table listing everything that should be cut... where do I start? Here are some samples:

1) Employee medical insurance (families included)
2) Life insurance 
3) Vehicle insurance
4) All internal loans (whether company sponsored housing loans or salary advances, etc)
5) No more 13-salaries or Eid money, or Ramadan bonus, etc. 
6) Basically no rewards. 
7) No schooling fees to be paid for employees' children
8) No scholarships or sponsoring employees' higher education
9) No gifts to employees 
10) No marriage support funds
11) No funeral support funds
12) No birth support funds
13) No phones and paid phone bills
14) No annual medical checkups
15) No company vehicles for top managements
16) No annual airfare tickets for expats (I presume) 
17) No payment towards house-maids (didn't know that was a benefit!)
18) No gym memberships
19) No home internet or phone benefits
20) No covering employees' rent
21) No share of profits for employees
22)  No relocation allowance or settling-in allowance or furniture allowance
23) No credit cards for CEOs
24) No monetary reimbursement in the event of a disability (say what?!)
25) No reimbursement in the event of death (even worse)
26) No benefits for retirees.

Etc, etc. The list is long. Basically what they're saying is "Your salary and nothing more".

Now, don't bite my head off, but I think a good chunk of the list is perfectly sensible. In fact, I respect the Minister's decision on those items. 

However, I can't help but wonder if this was thought-through. Did they really think carefully before cutting all medical insurance? For real? Do they realize that Salalah basically has one government hospital for a quarter of a million people? What about life insurance? 

What about internal study-assistance support for employees completing their university degrees. What do you tell them? Sorry, no more support halfway through your degree?

And disabilities and death support? Really?

Some of these benefits were clearly stipulated in employees' contracts. What does that say for Oman's legal system? What's the point of a contract? In fact, what's the point of a Board of Directors for many of these organizations if the Ministry of Finance can dismiss them and make these decisions on their behalf. Did the Ministry actually consult any of the sectors before dropping the bomb? Unlikely.

If companies aren't able to offer any benefits (whether private or public sector), what's the point of a job market? How do you retain your employees? 

I understand and respect his decision to cut down on some managerial benefits. In fact, I tip my hat to him. However, why not introduce other measures as well instead of cutting medical benefits from people and their families without any notice? 

Why not impose income tax on extremely wealthy people? What about land-tax for people hogging way too much land? Why not stop projects? Cut down on Diwan costs? Entertainment? 

The one thing the minister hasn't said outright is "Stop recruitment". But anyone working in the government and semi-government sector knows that's what's between the lines. They can't say it outright because it may lead to another mini Arab-spring. 

There are a lot of pissed off people in Oman today. These difficult times require leadership. I think Omanis would feel so much better if His Majesty gave us a speech along the lines of "We're going through a tough period, we need your support, we can get through this if we all work together and make small sacrifices,... what doesn't kill us will make us stronger".  

Is it so hard? In times of difficulty, clear communication is key. It's the only way to convince people. Change Management, my friends. Change management. 

Over and out for now.



  1. Some things on the list are okay to cut... but not death benefits or retirement... seriously.

    Excellent suggestions for other options however...Land tax for people who own a lot of land (without employing a certain number of Omanis on it for some reason) or super wealthy.... Even me... I could pay taxes. Not much, but a percentage. People under a certain cap (or with a certain number of dependents under their care) shouldn't have to of course.

    And Arab spring? lol. Like ANY of the GULF STATES ACTUALLY SUFFERED FROM THEIR Arab Spring. People may have suffered, but the governments are largely unchanged.

    What needs to be done actually is firing of some people. We are over employed in a lot of areas (army in Muscat is one, Ministries are another...the most major). People should actually fired because their jobs are fake. How many copying dudes do you need? Like, hiring an Omani English teacher to run a consultancy project (and she's good mind you) for the Ministry of Education, but then CHANGING HER REPORT and not listening to it... Why have a job for her there anyways when she is needed as a teacher? So some people can fake looking good?

    That bothers me.

    And a hiring freeze (for areas that don't expansion) is an excellent idea. I wouldn't support an Arab Spring set of protestors over that... and I am sure neither would the rest of the country if the actions were required ANY LOGICAL AND FAIR>

    Key words of course are "logic" and "fair"

  2. Wait a sec, I work for the Government, should I have been getting all those things? D'oh!

  3. I live in the States but I am so glad to be able to visit blogs like yours and hear about the going-ons in Oman. As a person who one day wishes to live and work in Oman, I feel it's important to stay informed and you help me do just that. I had no idea about the oil crisis in Oman, their is no mention of that in the U.S. media. So I Thank you for your blog, and I'd like to say that I enjoy both the angry and non-angry posts alike!

  4. I live in the States, but I am so glad that I'm able to read blogs like yours and stay informed on the going-ons in Oman. As a person who one day wishes to work and live in Oman, I feel it's important to stay aware of Omani politics and life. I had no idea, for example, that Oman is going through and oil crisis right now because there is no mention of it in the U.S media. So, I thank you for your posts, I enjoy the angry and non-angry ones alike!

  5. Scary! I hope this is just a 'recommendation' by the Ministry of Finance and most government entities do not go ahead with the implementation. I never thought in my wildest imagination that the situation would get so bad.

  6. ANother excellent post Nadia. Sorry to read that you have fewer readers these days. I always used to visit your blog when I worked in oman. Its been a while, 5 years, since I left. But Oman left such I mark (in a positive sense, we loved Oman) that I can never let go and love to read about my adopted country.

    If its any consolation the oil crisis has hit hard all over. I was out of work at home in UK for almost a year as a consequence, so many projects folded.

    You are quite right of course with your observations. The answer is of course a blended approach, with guidelines from the government applied by management with judgement.

    There is a belief in Oman that people have a right to more money/work/benefits/promotion for nothing which is of course fantasy.

    Your point about medical facilities is very astute. Again, judgement is required.

    Do keep up your blog if only occasionally. You always deliver a good read!