Ministry of Finance cuts


So by now you must have heard the news, I mean, even the usually silent Dhofari Gucci woke up to blog about this. A quick recap, the day before yesterday the news was reported in the Times of Oman under the headline: Thousands in Oman to get their work benefits cut.

The article went on to detail the specifics of the Ministry of Finance's circular 5/2016 (of which I can't get a copy of as it seems the MOF website isn't working). But I've got a few questions that have me a little bit confused.

Let's start with the obvious ones first: Define state-owned institution? The phrase used in the news article said, "Thousands of expat and Omani employees working at state-owned institutions, run with 50 per cent government funding or more, are to have a number of benefits slashed, according to a decision from the Ministry of Finance".

Is a Ministry considered a state-owned institution, run with 50 per cent government funding (or more). Does this ruling affect those that work in the ministries? Dictionary.com's definition of the word institution says that it is an organization, establishment, foundation, society, or the like, devoted to the promotion of a particular cause or program, especially one of a public, educations, or charitable character.

I'd say that technically this would then apply to the Ministries, I don't actually know - do you?

Right so moving past the bit where we don't actually know exactly who this applies to, just acknowledging it applies to an awful lot of people, there's the question about is this even legal?

The announcement noted that a large number of privileges were to be stopped, unfortunately a full translation wasn't given but it was noted that health insurance for employees and family, life insurance, car insurance for staff and family members, loans, bonuses and incentives during Ramadan and Eid would be stopped.

It went further and then said, school fees, mobile phones and bills, annual medical checkups for employees and families, provision of a private car for senior managers, annual leave tickets, housemaid allowances, house rents, furniture allowances, credit cards for CEO's, hospitalisation fee's and other allowances would be stopped temporarily. How temporarily was not defined.

So there are basically two camps now. Pissed off Omani's and pissed off Expats. I don't really think taking private health insurance away from the Omani's is that big a deal - there is Government run healthcare, and Omani's get that for free. Private healthcare is a perk that is nice to have but not what I'd call essential when you have an alternative. The problem comes when the public healthcare service is not capable of serving the Omani population. Dhofar Gucci commented that there is only 1 government hospital in Salalah to cater to approximately 250,000 people. I've no idea how big the hospital is down there or if it's capable of handling that many people - but it's worth mentioning anyway. Taking life insurance away is incredible - what if you died on the job?!

Take the phone bills away and you'll effect business, but I'm sure there are lots of people who abuse their phones too and use them for personal calls too. Anyway, I don't really want to get into these individual benefits.

My main point here is for the expats. Expats don't get to use the Government healthcare - right? IF its an emergency, they'll take you in, but you'll get a bill too. We need private healthcare so we can go to a private clinic, and if we are here on family status, our families need that cover too. Personally, in my Contract with my employer (who is private sector and as far as I know isn't funded by the MoF at all) I have family status, and it's written and agreed about things like healthcare, accommodation, annual flights and so on.

Taking an expat employee's allowances away for healthcare, accommodation and flights is, I think, actually illegal under the Labour law? Admittedly the Oman Labour Law doesn't actually apply to Government and Municipality employees, and if those employees of companies which the Government has a share of (be it 50% or more), it's still technically a private business of which the Government is a stakeholder? Or are we literally just talking about state-owned institutions which receive 50% or more of it's funding. Is the definition of state-owned institutions something like the National Ferries Company, or Oman Air, or are we really just talking about the Ministries, ROP, Armed forces, Municipalities?

Article 28 of the Labour law stipulates that the Contract of Work between an employer and employee should, among other things set out the basic salary, any allowances or remuneration to which the employee is entitled to and any special conditions. So presumably, people who are employed at "institutions" funded by the Ministry of Finance by 50% or more (but not actual Government establishments eg a Ministry or Muscat Municipality for example) should be able to point to their contracts and demand payment in line with their contracts. Which would suggest that the other half of the company ownership/funding, eg the owner of the other 50% would have to pay these allowances to their staff. I'd imagine that the Government and the private owners of these companies must have some sort of agreement in place where the Government has to meet the cash-calls from the company so that it may pay it's dues, so that's a bag of legal worms that I'm not even going to think about any more!

Now, I wonder if this is actually the case, and then people start to not get their full packages, I wonder if these cases will make it to the labour courts, and how that will go?

I had hoped that the nations English language press would have asked some of these questions, and perhaps even gotten some answers from those in power - but so far I've not seen anything that considers this, it's just been a somewhat tabloid-ish pot stirring run of articles (yes I'm looking at you ToO, but not just you) with little actual clarity. Instead there's articles running about how expats are going to leave if they don't get their accommodation etc. This is just inflammatory and it beggars belief that no one has questioned exactly who this applies to. I wish I could read Arabic so I could check out what the Arabic press are saying about this.

Final thoughts on this are that if the Ministry of Finance are making this decision, then things must really be quite dire. If you've got rials here... I'd send em home tout suite, A re-peg might be coming... probably right before a large US$ loan is received. But I'm a pessimist glass is half empty kind of person when it comes to this sort of thing.

le fin.
Ministry of Finance cuts Ministry of Finance cuts Reviewed by Sythe on Thursday, February 25, 2016 Rating: 5

45 comments:

  1. Don't forget PDO is more than 50% state owned

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  2. Well I have read it and it is completely ambiguous - I didn't see the story in the TOO but the circular came out about 3 weeks ago so they are about as on the ball as usual. I think what it means is a suggestion as to how people are going to be dealt with; at the moment my state owned employer is honouring my contract which has all the benefits written on the face of the contract - I suspect if you are relying on internal procedures or the staff handbook for your leave flights etc. you may be in trouble but having been shafted before by this particular bunch changing the staff handbook I insisted on getting everything on the contract itself. The only thing that isn't guaranteed is the amount of the bonus so I am fairly resigned to not getting that. I do have about 15% of my take home pay as "allowances" and if they try and cut that then I am off - simple as that. I may even try and sue them for breach of contract but I don't think they are sufficiently stupid to try.

    As for abandoning the peg - it isn't impossible (so you are mad to keep any significant investments here - like a house at the Wave) but even for Oman where not thinking things through is the national sport there are so many bad consequences from this that this has to be the last of last resorts.

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  3. I'm surprised more people aren't commenting on this story. Housing allowance is a significant part of peoples salary. I don't think people realize how many companies are government owned or at least 50% owned by the government.

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  4. Actually i was appalled to learn about the vast difference in salaries between different individuals...an Omani with a Ph. D earns in the majority of cases a salary of 3700 riyals.. with no bonuses..benefits ..etc..this is it all ....and here seeing that article...everything is being paid including clothes...furniture....basically everything...medical ..bla bla bla...phone bills ..electricity...nothing missed out while..the average omani earns a maximum of 800-1200 riyals..with nothing else included..this is sheer discrimination and absurd. And yet the people who fall into this category of earning sooo much complain when some aspect of their benefits is deducted...no wonder oman has gone into a big deficit...how long can oman go on paying these type of salaries to outsiders and pay so little to its citizens...Oman is filled with educated omanis and they deserve better.

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