MINISTER OF MANPOWER RESPONDS TO ANXIETY ABOUT

C O N F I D E N T I A L SECTION 01 OF 02 MUSCAT 000357

SIPDIS

DEPARTMENT FOR NEA/ARP, NEA/PI, DRL FOR AANZALDUA
USTR FOR JBUNTIN AND AROSENBERG
DOL FOR CPONTICELLI, JSHEA, BSHEPARD AND JRUDE

E.O. 12958: DECL: 05/13/2018
TAGS: PGOV PHUM ELAB ETRD KMPI MU
SUBJECT: MINISTER OF MANPOWER RESPONDS TO ANXIETY ABOUT
LABOR MARKET

REF: MUSCAT 348

Classified By: Ambassador Gary A. Grappo for Reasons 1.4 b/d.


1. (SBU) Summary: Through often direct exchanges with
Minister of Manpower Juma bin Ali al-Juma at a recent
conference, oil and gas company executives expressed sharp
concerns about a shortage of skilled labor in Oman's labor
market. Juma, while acknowledging immediate problems of
labor supply and demand, encouraged companies to work with
the Ministry on long-term solutions that develop Oman's
workforce to meet their skill requirements. Juma placed
particular emphasis on public-private partnerships to improve
vocational training and develop effective mechanisms to match
job seekers with available positions. Post continues to
strongly recommend that the Department support a visit by
Juma to Washington to meet with U.S. Secretary of Labor Chou
to discuss ways to address these and other issues. End
Summary.

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Survey Reveals High Anxiety
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2. (SBU) During a recent conference for oil and gas company
executives organized by the Oman Society of Petroleum
Services (OPAL),the employers' association for Oman's oil
and gas sector, Minister of Manpower Juma was asked to
respond to a recent OPAL survey that revealed a high level of
anxiety about trends in Oman's labor market. According to
the survey results, 90% of participating companies in the oil
and gas sector currently are facing a shortage of skilled
labor. Almost 80% anticipate that the shortage in supply
will worsen over the next three to five years as growth in
Oman's economy, as well as in the economies of labor-source
markets like India, increases demand for skilled workers.
The gap between supply and demand has resulted in lost
efficiency and increased costs, the survey respondents said.
Two-thirds of respondents said that they regularly lose
talented members of their workforce to competitors in what
they described as "poaching," and 80% said that the tight
labor market is resulting in upward pressure on wages and a
"significant increase" in the costs of acquiring and
retaining employees.


3. (SBU) In his formal address to the conference, Juma
acknowledged that Oman is facing a talent crisis,
particularly among companies in the oil and gas sector, where
high world market prices are helping to spur expansion and
growth. He argued, however, that the crisis presents both a
challenge and an opportunity to the government and companies
operating in Oman because while firms report that they do not
have enough skilled labor to meet demand, there are many
Omanis looking for work who can be trained. There is a
"break down" in mechanisms to match the skills of Omani job
seekers with available positions, Juma stated, and in
public-private partnerships to prepare Omanis to compete and
succeed in employment.

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An Emphasis on Training and Development
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4. (SBU) Juma laid out a six-point plan to help guide his
Ministry's (MOM) efforts to address what he described as a
"skills gap" in Oman's labor market. He called on companies
to work with the MOM to define long-term industry skill needs
so that universities and the Ministry's vocational schools
can develop graduates with the right skill sets. To help
facilitate job matching, the MOM plans to develop a skill
assessment center in Muscat, he said, to help companies
select and hire the right people for their needs. Juma
challenged companies to stop competing with each other for
talent and place a greater emphasis on talent management and
development. He further exhorted the private sector to
commit to matching young Omanis with suitable positions, and
to equipping Omanis with the resources necessary for them to
develop into globally competitive workers.


5. (SBU) Following his speech, Juma stayed at the conference
as a member of a panel with CEOs of locally-based companies,
during which he fielded a number of direct questions that
reinforced private sector anxiety about the labor market.
One company executive asked Juma if the government would
shoulder the cost of worker training because the "poaching"
of trained employees provides a disincentive for companies to
fund workforce development. Juma acknowledged this problem,

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but stated that it was not the government's role to train the
private sector workforce. Companies must be the pioneers in
finding new ways to address the talent shortage, he argued,
further commenting that if all companies invested in their
workforce in equal amounts then there would be no reason for
firms to rememdy their labor shortage at the expense of their
competitors. In the short term, companies should conclude a
"gentleman's agreement" not to poach, Juma suggested.


6. (SBU) Another executive pushed Juma further on this point.
He said that his company had shown its commitment to Omani
labor and workforce development by regularly maintaining a
higher than required Omanization rate. He recently lost 35%
of his Omani workforce to poaching by competitors, however,
after his company made a significant investment in time and
resources to train them. His business now is finding it
difficult to replace them from the local labor market because
there simply are not enough Omanis "fit for service" and
ready to assume skilled positions. He further complained
that MOM regulations impose an unrealistic burden on his
company in filling skilled position vacancies with expatriate
workers. For instance, he claimed, the MOM requires an
expatriate candidate for a skilled job to have a higher
university degree in order to receive clearance to work in
Oman. In the drilling industry, the executive complained,
most employees need years of on-the-job experience rather
than a degree, but the MOM will not recognize this as a
substitute. He bluntly stated that his company does not know
how it will meet its growth demands.


7. (SBU) Juma defended MOM policies governing labor
clearances, arguing that the government has an interest in
confirming an expatriate worker's skills in order to protect
and develop the quality of the nation's workforce. He did
admit, however, that the MOM needs to update its worker
database, particularly for Omani workers, because it has
found that some job seekers listed as "accountants" have
proven to be illiterate once they start work. In addressing
the executive's first point, Juma returned to his argument
that companies need to place greater attention and resources
on workforce development. "You need to improve your work
environment," he responded tersely, "so that you don't lose
more workers."

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Comment
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8. (C) The conference highlighted the pressure that Juma and
his Ministry are under to design labor policies that promote
the long-term goal of developing Oman's workforce while not
retarding investment and economic growth now. Juma appears
committed to Omanization, yet readily acknowledges that
government policies to promote it have contributed to a
"skills gap" and talent shortage by restricting expatriate
labor flows. While Juma emphasizes the need to develop
educational institutions to prepare the Omani workforce of
tomorrow, companies are clamoring for a greater supply of
skilled labor today. During several meetings with the
Ambassador, Juma has reached out for USG assistance and
welcomes a visit to the U.S. to learn from our experiences in
managing these issues. As previously reported (reftel),Post
strongly recommends that the Department of Labor issue an
official invitation for Juma to meet with U.S. Secretary of
Labor Chou in Washington as part of a larger educational and
resource-exchange program. End comment.
GRAPPO