Demographic Profile
Oman has one of the youngest populations in the Gulf, with approximately 40 percent under the age of 25. This youth bulge is the result of high fertility rates that prevailed until recently and rapidly declining mortality. While the total fertility rate has dropped significantly (from over 7 children per woman in the 1980s to approximately 2.8 today), the momentum of the previous high-fertility period means large cohorts are entering the labour market annually. Simultaneously, improvements in healthcare mean the elderly population will grow, eventually creating pension and healthcare cost pressures.
Employment Challenge
The demographic structure creates an urgent employment challenge: Oman needs to create approximately 30,000-40,000 new jobs annually for its nationals. The public sector, traditionally the employer of choice, is near capacity – government employment already absorbs a disproportionate share of the national workforce and budget. The private sector, dominated by lower-cost expatriate labour, has been reluctant to hire Omanis at wage levels that match public sector expectations. This structural mismatch between labour supply growth and quality job creation is Oman’s most pressing socioeconomic challenge.
Fiscal Implications
The demographic profile creates fiscal pressures from multiple directions: education spending for large youth cohorts; job creation programmes and wage subsidies to address unemployment; housing demand from new household formation; and eventually, pension and healthcare costs as the population ages. Oman’s relatively generous public sector pension system faces long-term sustainability questions as the ratio of contributors to beneficiaries changes. The social protection system, designed during a period of smaller populations and higher oil revenues, requires restructuring.
Strategic Response
Oman’s response must address both supply and demand sides: on supply, improving education quality to produce graduates with employable skills, expanding technical and vocational training, and building entrepreneurship culture; on demand, creating conditions for private sector job growth through regulatory reform, investment attraction, and sector development in labour-intensive industries (tourism, manufacturing, logistics). The demographic challenge is also an opportunity – a young, increasingly educated population is an asset if the economy can absorb and productively employ them.