Sunday, May 27, 2007

THE MINIMUM WAGE

Update! Courtesy of Muscati- Apparently Expatriates are allowed to change jobs. I am feeling suitably retarted now. / update...

*Disclaimer 1*** This is Just my opinion, and I'm not like a PHD in economics or labor law, so If I've got it all wrong, just be really glad that I don't work for the Ministry of Manpower.***End Disclaimer*

*Disclaimer 2*** I alos realise I got somewhat off topic somewhere***End Disclaimer*


I’ve been thinking about writing this post for a more than a month now, ever since I read in the paper that the Authorities (Min of Man I assume) are planning on instituting a minimum wage of RO 140 a month,for all omanis.

Measly as a hundred forty rats a month is, it’s one more incentive for employers to avoid hiring an Omani to do the same job.

For those of you who don’t want to read the whole article, I’ll sum it up in the following three bullet points, and then you can surf onward and away.

1) A minimum Wage that applies only to Omanis provides a negative financial incentive for further Omanisation.
2) Excessive reliance on expatriate labor is bad for the economics of the country and for the character of the society.
3) Current quotas for omanisation make it difficult for companies to terminate an under performing Omani, while re-enforcing the attitude that keeping your job is a right, and not a privilege that is earned.

I’ll outlay a number of reasons why a minimum wage should be applicable across all sectors and nationalities in a minute, but first I want to ask you which of the two prospective employees you would hire, assuming they are equal in work experience, education and work ethic.

Candidate A:

  • Is here alone, without immediate or extended family

  • Once hired by you, cannot quit to take a position with another company

  • Does not expect annual leave, every two years is OK

  • Is easy to fire should their performance not meet your expectations

  • Costs 40% less because the minimum wage does not apply to the candidate.


Candidate B:




  • Has a large family both in Muscat, and in the home village

  • Can quit anytime to work for the competition

  • Expects annual holiday leave, as well as leave for family deaths, Eid, weddings, and personal issues

  • Is practically impossible to fire or terminate, particularly if your company is subject to omanisation quotas.

  • Costs 40% more due to the mandatory minimum wage


I’m going to hire candidate A…. Duh...

But here’s the thing, it’s not good for the economics or the work ethic of the country to be so dependent on cheap foreign labour. It’s holding us back, and the current laws are rewarding companies for hiring foreign staff, skilled and unskilled alike.

Take for example our nanny. Our lovel and hardworking Nanny is from Sri Lanka. She’s not here for the weather or the fantastic egalitarian treatment offered to our guests from the subcontinent… she’s here for the money, of which she sends 80% home to her family in Sri Lanka. It’s safe to assume that most foreign workers here are sending at least half of their salary overseas, and every baiza of that is money we’re just pissing away, never to be reinvested here. If we had been able to hire an Omani woman to care for the princess, it’s likely that 90% of her salary would be re-invested locally. She could pay for her kiddies to attend a good school here, she could purchase a car from one of the car selling monopolies, and her daughters would wear clothes purchased here. If, god forbid, we were to mistreat her she could quit and find a job with a better, kinder family.

Another example is the guys constructing the addition to the house next door. Last week they needed to put a new line into the power transformer across the street. To do so they had to dig up the road and the parking area adjacent to the house. It took six imported Pakistani workmen three days to dig a trench, and another day to fill it in (using hand tools). That’s six guys, sending six salaries home each month, needing six return air tickets every other year. With one backhoe and one trained Omani it would have taken three hours, and cost less, even if the Omani were pulling a huge salary.

Forced Omanisation via the use of quotas isn’t a good idea either, in the long term. Once Hired, It’s difficult to fire an Omani who isn’t a good fit for the job, so many of these companies are just paying a bunch of Omanis to stay home or while away thier hours in a "Job Center" (ask PDO about that) One small company I worked for had a PRO who was completely useless. But they had to keep him on because of the omanisation quota, and the difficulty of firing him without possible recourse in court. This hammers home the concept that it's our right to be paid for doing nothing, and our right at birth to be treated differently. It also reinforces the negative stereotype of the "lazy Omani". not good.

So, Ministry of Manpower, if you are listening here's a few things I think we should do, gradually, in order to allow business to adjust.

1) Secure the borders. We don’t need a flood if illegal immigrants.
2) Create some financial incentives to hire Omanis, and some financial consequences for hiring expatriates. It should be a lot more expensive to hire an expatriate.
3) With immediate effect, anybody can quit his or her job to work for another company at any time. This will incentivise employers to keep their employees happy, or risk loosing them, and the investment required to recruit and train them.
4) Start teaching the kids in the schools that should work, and that there is no job so menial that you should consider yourself above doing it. Sweeping streets, construction, hospitality, or child care, no one is above earning a living.
5) Do away with Omanisation Quotas. A stiff corporate tax incentive could encourage higher levels of Omanisation instead.
6) Make it easy to fire anyone, local or expatriate alike, with little or no financial penalties. Allowing an employer to fire a useless or lazy worker and replace them with a more deserving candidate is fundamental.
7) Establish a Minimum wage that is applicable to everyone, or don’t establish one at all.

Later tin the week, Suburban Muscat will enlighten everyone on her opinions regarding closing the highways every time someone important comes to town. I'm planning a real dummy spit, so don't change that channel!

3 comments:

muscati said...

Expatriates don't clearance from their current sponsor to change jobs anymore. They are not bound to stay with their employer if they find a better job with a competitor.

Omanis aren't always cheaper for companies to hire than expats except in the most menial jobs. The expat that has the lowest salary still has to be given accomodation, a ticket home every two years, his health expenses have to be covered, a labor permit has to be obtained and paid for, etc.

Suburban said...

Muscati,

THank you for the clarification. I had no idea they had changed the law to allow job / sponsorship switches. Shows how much I know.

And I agree that it's often more expensive to hire an expatriate for menial and advanced jobs alike. But maybe not expensive enough.

I can't get my head around why we have so many workers from outside doing jobs that an Omani could do. Maybe I'm seeing things the wrong way round or looking at the problem from the wrong angle...

I assume everybody wants to work? hmmmm.

Undercover Dragon said...

Since this post, things have come full circle. Muscati is now incorrect, as expats cannot quit again, passports are still confiscated, and omanisation continues to fall as expats still do all the work. It is still very very hard to fire an omani, and we still have omani paid to stay away from the office just to meet the numbers. You would still not get a hard working Omani housemaid.