Three Decades of Underperformance
Omanisation — the policy of increasing Omani nationals’ share of private sector employment — has been an explicit Omani government policy since the National Labour Force Programme of the 1990s. Every major development plan since Vision 2020 has set ambitious Omanisation targets. Every major development plan’s mid-point review has found those targets underperformed.
Vision 2040 sets the most ambitious Omanisation target yet (40% by 2040, from 11.6% baseline) while the underlying structural drivers of underperformance remain largely unchanged. This warrants analytical honesty about why Omanisation persistently fails and what — if anything — would change under Vision 2040.
Structural Driver 1: The Cost Differential
Expatriate workers from South Asia (India, Pakistan, Bangladesh, the Philippines) accept wages that are 30-60% below what Omani nationals require for equivalent roles. For a private sector employer maximising profit, the economic decision is straightforward: expatriate workers generate higher returns per dirham of labour cost.
No amount of quota enforcement permanently overcomes a structural economic incentive of this magnitude. Employers find ways to achieve nominal compliance (employing Omanis in lower-productivity roles) while maintaining expatriate-dominated operations. The quota system creates compliance costs without changing the fundamental economic calculation.
What would change this? Either (a) Omani wage expectations decrease toward expatriate levels — politically and socially unacceptable, (b) Expatriate worker costs increase substantially through visa fee increases, minimum wage requirements, or tax — a policy option Oman has used cautiously, or (c) Omanis develop skills and productivity that genuinely justify their wage premium, eliminating the cost differential — the Vision 2040 education and training strategy’s long-term aspiration.
Structural Driver 2: The Skills Mismatch
Private sector employers consistently report that Omani graduates lack the practical skills, work readiness, and flexibility required for competitive private sector employment. This is not cultural bias — it is a genuine supply-side problem.
The skills gap has structural causes: an education system optimised for government employment (emphasising credentials over practical capability), insufficient exposure to private sector work environments during study, and limited technical and vocational training pathways.
What would change this? The vocational education reform (grades 11-12) and the dual education system pilots are the right interventions — but their impact is a 10-15 year story, not a 2-3 year fix.
Structural Driver 3: Cultural Preference for Government Employment
Government employment in Oman offers: job security (near-impossible to be made redundant), fixed hours, social status (government employee identity), and community connection. Private sector employment offers none of these with certainty, and historically has offered lower social status.
This preference is real and deeply embedded. Changing it requires either: (a) government employment becoming less available (fiscal constraints — Oman has taken steps here), or (b) private sector employment becoming more attractive (higher wages, better conditions, career prestige) — which requires private sector economic development.
What would change this? Vision 2040’s diversification agenda — if successful in creating high-value private sector jobs in green hydrogen, digital economy, and advanced manufacturing — would create visible, prestigious private sector career pathways. Senior Omani nationals in successful technology or energy companies are the cultural role models that shift preference over time.
The Realistic Trajectory
Given these structural drivers, what is a realistic Omanisation trajectory under Vision 2040?
Pessimistic scenario (current pace maintained): 22-24% by 2040 — well short of 40% target.
Base case (incremental improvements): 27-32% by 2040 — partial achievement.
Optimistic scenario (structural changes in education, economic diversification, and cost dynamics): 35-38% by 2040 — near-target achievement.
The optimistic scenario requires Vision 2040’s diversification to succeed in creating the high-value private sector roles that change the economic calculation. It also requires the education reform to produce a genuinely more competitive Omani graduate within the next 10 years.
Conclusion
Omanisation’s persistent shortfall is a structural policy challenge, not a failure of will. Achieving the Vision 2040 target requires structural changes in: (1) the economic attractiveness of private sector employment, (2) the skills quality of Omani graduates, and (3) the cultural perception of private sector careers. All three are being addressed — but slowly, from low bases, against significant resistance.
Investors and analysts should model Omanisation progress as a lagged response to Vision 2040’s broader economic transformation — not a leading indicator that will accelerate independently of the diversification agenda.