Muscat: Bosses in the private sector cannot axe worker benefits for their expat and Omani employees in the same way those at government-funded companies, an official at the Ministry of Manpower told Times of Oman.
On Sunday, the Ministry of Finance put into play a decision to halt a raft of benefits, such as health insurance, school fees and housing allowances, for thousands of workers in semi-government institutions which receive 50 per cent or more state funding.
The decision has heightened concerns that the private sector will follow suit, amid reports some bosses have already begun cutting benefits, however, a Ministry of Manpower official said that employers have to respect the existing contracts.
“Benefits and rights mentioned in the job contract cannot be halted or cut. If done, then the worker can challenge it in the court,” Talib Al Dhabbari, head of the media department at Ministry of Manpower, said.
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Nabhan Al Battashi, chairman of General Federation of Oman Trade Union (GFOTU), said that nobody can break the work contract signed between the company and its employees.
“Even for the privileges, the Labour Law states clearly that any privilege granted to the employee by his companies for two continuous months becomes one of his rights and the company can’t stop under any case,” said Al Battashi.
Mohammed Al Farji, board member of General Federation of Oman Trade Union (GFOTU), said that the Labour Law clearly mentions workers’ rights which should not be violated by the companies under any circumstances.
Mohammed Hassan Al Ansi, senior official at the Oman Chamber of Commerce and Industry (OCCI), told Times of Oman that such decision should not be implemented by all the companies.
“Companies making good business and having several projects for the current year and in the future can’t just stop benefits granted to their employees,” said Al Ansi.
He added that such companies have no excuses but to follow the contract between them and their employees. “On the other hand, some of the oil sector companies who have failed to get projects for this year and the coming one, might be excused to restudy their expenses and maybe stop some of the unnecessary privileges given to their employees,” said Al Ansi.
Many private sector company workers are worried about whether the government decision will be replicated in their companies too.
“We don’t know whether our company will replicate what government is planning to implement in semi-government institutions. Already company is cutting many benefits citing financial crisis. If they replicate the government move, then it would be a disaster,” Fawaz Al Farsi, an engineer in a Muscat-based construction company, said.
Meanwhile, economists and businessmen said that the number of private sector companies adopting austerity measures is going up.”
“The private sector has already implemented the changes in their companies. They have send a lot of their back-office employees to their home country. They are asking them to work from offsite so that they can reduce the housing and service cost,” Jeevan Toprani, director of an audit firm, said.
Mubeen Khan, vice chairman of Indian Chattered Association Muscat Chapter, said that austerity measures has already started in private sector.
“Many companies have sent back their employees and trying to avoid the avoidable cost,” Mubeen said.
Prasanth Nair, organisational excellence advisor at Sital Administrative Consultancy, said that there are obvious signs of private sector austerity measures.
“Many organisations have already taken drastic as well as sporadic steps relating to existing market scenario. Expatriates who were enjoying such benefits from organisations may feel the heat and many of them may take desperate measures, including change of location and sending families back to home country,” Prasanth added.
Krishnan MAK, an economist in Muscat, said that it is a ‘no brainer’ that private sector shall replicate it.
“For obvious reasons it shall hit more hard on the expats for he/she has no other additional options to cover up the deficit / loss,” Krishnan said.
Economies of scale
Manjot Singh Chug, a business tax advisor at Ernst and Young, said that economies of scale must be achieved in all aspects of business.
“Reduced market demand will force private sector to achieve economies of scale for competitive pricing. Companies will have to critically evaluate and challenge aspects of business which are inefficient. Human Resource is only one aspect of it,” Manjot added.
Official statistics show that Oman has lost $14 billion worth of revenues in 2015 compared to a year earlier due to low oil prices.
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Oman had a fiscal deficit of 15 per cent last year and in 2016 the deficit is expected to be 17 per cent as the low oil price eats into export earnings and blows a hole in the country’s budget.
With breaking-even crude oil prices of $75 per barrel for the 2016 budget, Oman will need to dig deep into the reserves to come up with financial discrepancy to wipe out the OMR 3.5b deficit.