Omanis are suffering from a rise in the unemployment rate, which has become a prominent feature of the Omani economy. Although the government has taken measures to address this problem, these measures remain insufficient. The labor force in the Sultanate of Oman numbers about 2.5 million people, distributed as follows: 0.8 million Omanis and 1.7 million expatriates. Thus, Omanis account for 32% of the total.
Of the Omani labor force, 43.6% work in the government sector and 56.4% in the private sector. This means that the proportion of those employed in government is high compared with Saudi Arabia (33.3%) but low relative to Kuwait (83.6%). Yet this large variation does not obscure the prevailing preference of citizens across Gulf countries for employment in government institutions.
The number of unemployed Omanis is 85,300: 33,900 males and 51,400 females. Female unemployment in the Sultanate stands at about 60.2%, while in Saudi Arabia it reaches 72.4% after Riyadh’s recent efforts to employ women.
This article will be limited to the unemployment of Omanis. As for expatriates, unemployment is virtually non-existent, not only in Oman but in all Gulf countries, since employment is the sole justification for their residence.
Labor Market Indicators
Muscat does not publish sufficient or precise statistical information on the labor market, nor are there continuous updates, especially concerning unemployment. It is therefore necessary to use equations to extract market rates. In this way, the true extent of the problem facing citizens can be discerned.
According to the 2022 census of housing, dwellings, and households, the total population of Oman was about 4.93 million, of which 2.86 million were Omani.
The working-age population consists of individuals aged 15 to 64 years. By this internationally agreed definition, the number of Omanis eligible to work is about 1.65 million.
The population is divided into two categories: active and inactive. The active group comprises the employed and the unemployed. In Oman, the employed numbered 801,000 and the unemployed 85,300. Thus, the active population totaled 886,300.
On the basis of these data, the following three main labor market indicators can be derived:
First indicator: the participation rate, also known as the economic activity rate. This is the ratio of the active population to the working-age population. That is, (886,300 ÷ 1.65 million) × 100 = 53.7%.
Here lies the market’s fundamental problem, as this percentage is low. In advanced countries, the participation rate ranges between 70% and 90%. This means that a large number of Omanis of working age are outside the market: one in two Omanis is neither employed nor unemployed.
Second indicator: the employment rate. This is the ratio of the employed to the working-age population, i.e. (801,000 ÷ 1.65 million) × 100 = 48.5%.
This too is weak. In the European Union, the average employment rate is 69.9%. This indicates that the Omani economy has limited capacity to attract and utilize human resources in the production of goods and services.
It should be noted that Omani policies, embodied in Oman Vision 2040 and the Tenth Five-Year Plan (2021–2025), do not rely on this important indicator, despite its greater credibility than the unemployment rate. The unemployment rate is based on the number of unemployed, which can be statistically manipulated, while the number of employed is precisely defined.
Third indicator: the unemployment rate, which is the most commonly used because it directly reflects the unemployed. Despite its shortcomings, it is frequently employed in economic and social planning.
The unemployment rate is the ratio of the unemployed to the active population: (85,300 ÷ 886,300) × 100 = 9.6%. The officially published rate (3.5%), however, refers to overall unemployment, which includes Omanis and expatriates. As already noted, unemployment among expatriates is almost nonexistent, and their number is double that of Omanis. It is therefore self-evident that the overall unemployment rate will be lower than that of citizens. For credibility, a clear distinction must be made between overall unemployment and citizen unemployment.
On the basis of these data and calculations, it appears that unemployment among Omanis is high by all standards, with serious economic and social repercussions. The danger increases when considering that more than half of the unemployed are young university graduates. This situation reflects above all the failure of the education sector to align with labor market needs. The Ministry of Labor has stated that the government aims to create 10,000 government-sector jobs this year. Yet the number of university graduates exceeds twice that figure. Addressing unemployment in the Sultanate requires structural adjustments to education programs.
But what is the government’s role in confronting the unemployment crisis?
Government Measures
The government’s diminished capacity to create new jobs is due to many reasons, primarily financial. The Sultanate’s 2025 budget was organized with a deficit of 620 million rials, stemming from lower oil and gas revenues on the one hand, and rising current expenditures on the other. Defense and security spending amounted to 3.07 billion rials, or 26% of state expenditures, while investment spending was no more than 900 million rials, or 7%.
In practice, government measures to address unemployment focus on encouraging work in the private sector.
Omanization: Introduced in 1988 with the aim of replacing foreign workers with Omanis, this policy was based on laws designed to increase the share of Omanis employed across private-sector activities. Since last year, foreign companies operating in Oman have been required to employ at least one Omani.
However, a report issued by the International Monetary Fund (Article IV Consultations) confirmed that while the state made progress in employing expatriates, Omani employment declined in the first half of 2023.
The National Employment Program: One of the key programs of the Tenth Five-Year Plan, this program seeks to encourage self-employment and entrepreneurship. It offers several benefits: inclusion in the social insurance system, wage support, and tax exemptions.
One of its most important incentives is the provision of loans to young people to establish their projects, at an interest rate of 2% for loans exceeding 5,000 rials and 0% for smaller loans.
Nevertheless, the program has not always produced positive results, as loans were granted to young people lacking sufficient experience in entrepreneurship and business management.
Tawteen Platform: The Ministry of Labor created this digital platform to inform job seekers about vacancies across institutions. It aims to make the job search easier, covering not only government but also private-sector companies. The platform thereby assists job seekers and provides an important service to employers by identifying skilled candidates.
By mid-2025, 1,396 private-sector companies had registered on Tawteen, advertising 2,376 vacancies.
Employment Governance Committees: There are 17 such committees in various fields including tourism, health, manufacturing, and transport. Their task, according to their specializations, is to collect and analyze information from Tawteen in order to identify the skills demanded by the market. They then direct vocational training and education programs accordingly.
Job Security: A government allowance paid to unemployed Omanis under Royal Decree No. 82/2020 establishing the Job Security System. The Social Protection Fund disburses this allowance, financed from several sources including contributions from employees and employers, transfers from the state treasury, as well as grants and loans.
This system helps cover living costs, but the allowance is limited in amount, duration, and scope. It represents 60% of the wage, with a maximum duration of six months. Moreover, it does not cover the self-employed or those who voluntarily left their jobs.
The number of beneficiaries has been increasing annually, rising from 13,000 in mid-2022 to 16,000 in mid-2025. This growth underscores the fund’s importance in mitigating the effects of unemployment, but also signals that the unemployment crisis is worsening over time. This calls for measures linked to structural reforms of the economy.
Insufficient Measures
There is no doubt that the above government measures are important and necessary to expand job opportunities. Without them, unemployment would have worsened significantly. Yet they remain insufficient, as evidenced by the fact that the number of unemployed in the Sultanate has not declined but, on the contrary, has risen. In 2020, the unemployed numbered 65,400, rising to 85,300 in 2022. This situation is due to the government’s declining ability to hire, for reasons including state finances, as noted earlier.
Given this decline, it is only natural for government measures to shift toward the private sector. But Omanis, like other Gulf citizens, prefer public-sector employment for several reasons.
Government employees earn higher wages than their counterparts in the private sector. Government jobs are also considered more secure in several respects and come with social insurance benefits. Moreover, government pensions are higher than those in the private sector. It should be noted that Royal Decree No. 52/2023 (the Social Protection Law) aims to equalize pensions for employees in both the public and private sectors.
Another major obstacle to replacing expatriates with Omanis is the wage level and working hours. Employers prefer to hire expatriate labor, which is relatively cheaper. Thus, many private-sector companies employ only expatriates. In this regard, a report issued by the Ministry of Labor indicated that 245,000 establishments employ not a single Omani, while employing more than one million expatriates.
The limited effectiveness of government measures has led to public discontent, reflected in the protests of 2011, 2018, 2019, and 2021—all triggered by unemployment.
This weakness has fueled Omani frustration with the economic policies governing employment. According to an official document issued by the National Centre for Statistics and Information, containing public opinion surveys for 2025, only 36% of Omanis expressed satisfaction with job opportunities for youth. This low percentage has not changed in recent years, and it applies to both males and females across the governorates.
The rise in unemployment, the decline in employment, and the drop in economic participation clearly demonstrate the limited effectiveness of government measures concerning the labor market. Unemployment cannot be effectively addressed without improving growth rates, allocating more resources to government investment, and diversifying the economy. Such structural action alone can alter the equations, address the crisis at its roots, and provide appropriate solutions.
