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Labor and Employment

Economic development has resulted in social transformation, not only in terms of diminishing the importance of the tribal element in Oman and stratifying Omani society but also in terms of inadvertently engendering a sense of entitlement among the public, common to social welfare states. In doing so, the government has been under increasing pressure to provide suitable employment for new migrants to the cities from village communities and to new graduates from colleges, to expand its social services, and to maintain the security of the country.

To fulfill these expectations, the government must ensure sustainable economic growth. Therefore, the policies of diversification and incligenization have taken on greater importance. Diversification is needed to ensure growth in the post-oil era; indigenization potentially eliminates the demand for foreign labor and increases opportunities for Omani nationals. The problems of the 1990s are resistant to change, however. The prospect for the depletion of the country's proven oil reserves (at the production rate of 1992, reserves would have been depleted within seventeen years) heightened the need for economic diversification, but so far, non-oil sectors have shown limited potential.

The net effect of the government's policies has been to link economic conditions with political stability. The suppression of the Dhofar rebellion in the first half of the 1970s provided a lesson for Sultan Qabus ibn Said. By addressing the gross economic neglect of the south, the government was able to ensure some political quiescence. In providing the majority of Omanis with adequate income through employment in the public sector, health and medical services, education, and other social services, the government has similarly ensured a modicum of public political support.

Because of the small indigenous population, the government has been obliged to use foreign labor. In 1992 about 60 percent of the labor force was foreign. Some 350,000 foreign workers and their families (primarily Indians, Pakistanis, Bangladeshis, Filipinos, and Sri Lankans) live in Oman. The high percentage of foreigners in the work force, combined with improvements in the country's education system, has prompted the government to institute a program of indigenization whereby Omani nationals gradually replace foreigners.

Education accounted for a modest 11.2 percent of the government's current expenditures in 1990, up from only 2.4 percent in 1975 but still considerably less than the 28 percent planned and less than the proportion recorded by other countries in the process of expanding their school systems. Lower secondary education remains underdeveloped, contributing to the low enrollment rates in upper secondary school, particularly for females.