Viewing cable 05MUSCAT669
Title: LABOR CONCERNS LOOM LARGE FOR PRIVATE SECTOR

IdentifierCreatedReleasedClassificationOrigin
05MUSCAT6692005-04-24 12:29:00 2011-08-30 01:44:00 CONFIDENTIAL Embassy Muscat
This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 03 MUSCAT 000669 
 
SIPDIS 
 
STATE FOR NEA/ARPI, DRL (JDEMARIA), NEA/PI (SFRANCESKI) 
STATE PASS USTR FOR B. CLATANOFF 
USDOL FOR JIM SHEA 
ABU DHABI FOR MEPI 
 
E.O. 12958: DECL: 04/19/2015 
TAGS: ETRD ELAB EWWT KMPI EINV PREL ECON MU
SUBJECT: LABOR CONCERNS LOOM LARGE FOR PRIVATE SECTOR 
 
REF: A. MUSCAT 132 
 
     ¶B. MUSCAT 534 
     ¶C. 04 MUSCAT 550 
 
Classified By: Ambassador Richard L. Baltimore III. 
Reason: 1.4 (d) 
 
------- 
SUMMARY 
------- 
 
¶1. (SBU) In a regional visit to Salalah April 15-17, PolOff 
met with officials at Salalah Port Services (SPS) and Dhofar 
Power Company (DPC) to discuss issues related to the labor 
chapter of the expected U.S.-Oman Free Trade Agreement, as 
well as customs, training, and recruitment and retention 
challenges specific to private-sector employment in the 
region.  Human resource managers at both SPS and DPC lamented 
that poor English language skills, sub-par education, and 
cultural differences remain significant challenges in 
recruiting qualified employees from the local labor pool. 
Moreover, both private-sector companies said that 
establishing worker representation committees, particularly 
without some explicit guidance from the Ministry of Manpower 
and substantial technical assistance, will be a monumental 
task.  End summary. 
 
------------------------------ 
PORT SALALAH RECRUITMENT BLUES 
------------------------------ 
 
¶2. (SBU) In a three-day regional visit to Salalah beginning 
on April 15, PolOff met with officials at Salalah Port 
Services (SPS) to discuss labor, customs, training, and 
recruitment and retention challenges specific to 
private-sector companies in the region. As one of the largest 
companies in Salalah, SPS employs over 1400 people.  The 
company currently exceeds a 65 percent Omanization target 
with over 900 Omani employees, and plans to achieve 78 
percent Omanization by the end of 2007.  However, many of the 
lowest paid positions at the port are still filled by 
expatriate labor with monthly salaries of about USD 260 plus 
housing, food, homeward passage and medical care.  In 
contrast, the lowest paid Omani at SPS receives a monthly 
salary of approximately USD 655 plus a housing and 
transportation allowance. 
 
¶3. (SBU) The successful Omanization program at SPS is part of 
the company's overall strategy to increase training and 
recruitment in the region.  Inadequate English language 
skills and poorly designed curriculum continue to hamper the 
company's ability to recruit from the local labor pool and 
fully meet its target Omanization rate without significant 
training and expense on its part.  In an effort to ease its 
recruitment challenges, SPS invested heavily in the newly 
opened Dhofar University (DU) but has been subsequently 
disappointed in the school's curriculum development and 
sub-par English program. 
 
¶4. (SBU) The International Maritime College Oman (IMCO) may 
help bridge the education gap with its much anticipated 
opening in Sohar this September.  IMCO is a joint venture 
between the Omani government (70 percent) and the STC Group 
of the Netherlands (30 percent).  The college will offer the 
first training of its kind in Oman in navigation, maritime 
engineering, port services, shipping and transport 
management, and operational technology.  Because Sohar will 
operate as an industrial port and currently lacks the 
equipment and technical infrastructure for training, a 
satellite campus will be opened in Salalah.  SPS, with its 
new training facility set to be complete in August, will host 
IMCO courses on-site.  (Note: The training facility is being 
paid for by the Omani government as part of the 
infrastructure for the expansion of berths five and six.  End 
note.) 
 
------------------------------ 
PORT SALALAH WORKER COMMITTEES 
------------------------------ 
 
¶5. (SBU) In addition to training and recruitment, management 
at SPS also highlighted its concerns about the recent 
ministerial decrees outlining the establishment of worker 
representation committees (refs A and B).  Ali Tabouk of SPS 
human resources is currently heading the steering committee 
that has been assigned the task of organizing committee 
elections.  Tabouk said that considering the collapse of two 
previous employee relations committees, establishing a new 
committee, even with the support of the Ministry of Manpower 
(MOM), will be a significant challenge.  Tabouk also said 
that of SPS's almost 1400 employees, not more than four are 
even interested in running for committee leadership.  Though 
he doesn't believe the signs are encouraging, SPS held 
elections on April 20. 
 
¶6. (SBU) Senior representatives of SPS groused that although 
the company has distributed copies of the ministerial decrees 
promoting the committees, as well as solicited involvement 
through its company newsletter, any representative committee 
established needs explicit guidance and support from the MOM. 
 Employees, and employers, are unlikely to see any benefit of 
the committees until both parties have a clear understanding 
of the implications and benefits of the new law.  Moreover, 
from the perspective of SPS, and most private-sector 
employers in Oman, laborers already have an abundance of 
protection under the current labor law.  Demonstrating his 
point, one senior SPS manager argued that although the 
grievance procedure at SPS is quite comprehensive, the 
company has had to heavily compensate eight employees in the 
last six years in order to dismiss them.  Management argues 
that both the MOM and the courts are heavily biased toward 
the employees and that companies are asked to take on an 
unfair burden in absorbing the cost of cultural no-no's in 
dismissing unproductive employees. 
 
--------------------------------------------- ----- 
DHOFAR POWER COMPANY SEEKS ENGLISH LANGUAGE SKILLS 
--------------------------------------------- ----- 
 
¶7. (C) In highlighting the importance of labor rights in the 
expected U.S.- Oman Free Trade Agreement, PolOff met with 
another of Salalah's most prestigious employers, Dhofar Power 
Company (DPC), a subsidiary of U.S.-based PSE&G Global. 
General Manager Yaser Tobeh (protect throughout) said that 
with 93 employees, including 52 expatriates, DPC has achieved 
42.3 percent Omanization.  The lowest paid expatriate 
receives about USD 850 per month plus a housing and 
transportation allowance.  In contrast to the unskilled Omani 
wages for SPS, the lowest-ranking Omani at DPC, an Omanized 
position of driver, receives about USD 310 per month plus 
housing and transportation.  According to one businessman, 
before policies of Omanization, no Omani would have 
considered this sort of unskilled position. 
 
¶8. (SBU) DPC representatives, echoing the comments of SPS 
officials, also said that one of their most significant 
recruitment challenges is finding qualified applicants with 
competent English language skills.  Moreover, senior 
recruitment officers bemoaned that the curriculum at DU is 
inconsistent with the needs of the business community and is 
mediocre at best.  Hoping to engage DU and influence future 
curriculum development, DPC currently offers DU engineering 
students training opportunities in exchange for employee 
English classes at DU. (Note: Employees at DPC who have taken 
English classes at DU have complained that the classes, with 
an Egyptian teacher, are inadequate. End note.) 
 
--------------------------------------------- ------ 
LABORERS PERCEIVED TO HAVE UPPER HAND IN THE COURTS 
--------------------------------------------- ------ 
 
¶9. (SBU) Although DPC has not yet established a worker 
representation committee, the company has started laying the 
framework for employee involvement.  Unfortunately, as with 
SPS and other private-sector companies, there is a 
fundamental lack of understanding of the role of the 
committees and the potential impact on businesses.  DPC 
managers said that officials with the MOM, unfamiliar with 
the concept themselves, are unable to provide any guidance or 
concrete assistance with the new committees.  Managers also 
complained that laborers in Oman already have the upper hand, 
suggesting that there is an overlap in authority between the 
MOM and the courts (who rely on consensus rather than law). 
Private-sector management argues that employees, knowing the 
labor court will more than likely compensate them with 
something, have an enormous incentive to take companies to 
court. 
 
¶10. (C) Tobeh, relatively frustrated with doing business in 
Oman, said that he was particularly disappointed over DPC's 
lengthy struggle to settle a dispute regarding unrefurbished 
turbine generators that DPC was required to purchase from the 
Omani government as part of its original concession (ref C). 
Although it appeared the case was nearing an amicable 
settlement in 2004, it has now been moved into arbitration 
with the International Court of Arbitration. 
 
¶11. (SBU) Despite DPC's legal challenges, in Tobeh's short 
time at the helm, he has led DPC through a successful 
restructuring and, more importantly, the company's first 
profitable quarter in March.  Moreover, DPC raised almost USD 
225 million in its initial public offering (IPO) in April, 
signaling a strong investor interest in independent water and 
power projects in Oman. 
COMMENT 
¶12. (SBU) Oman's private sector continues to struggle with 
understanding and implementing the recent ministerial decrees 
establishing worker representation committees.  While many 
members of the business community have demonstrated their 
progressive policies in establishing committees, the majority 
of companies feel that until the MOM provides more specific 
guidance, preferably through detailed decrees, established 
committees may come to a standstill over uncertainties about 
their scope and operations.  Nevertheless, the number of new 
workers committees continues to rise.  Eventually, they may 
just shape for themselves the roles they will play in Oman's 
evolving civil society. 
BALTIMORE