Social Security in Oman

Oman’s new unemployment insurance scheme will reduce COVID-19 labour market shocks – PASI General Manager

Public Authority for Social Insurance (PASI) General Manager Dr. Faisal Abdullah Al Farsi speaks to the ILO on Oman’s long-awaited unemployment insurance scheme.

Comment | 16 October 2020
Public Authority for Social Insurance (PASI) General Manager Dr. Faisal Abdullah Al Farsi
MUSCAT, Oman (ILO News) - As Oman prepares to implement its first unemployment insurance scheme, developed by the Public Authority for Social Insurance (PASI) with support from the ILO, we spoke to PASI General Manager Dr. Faisal Abdullah Al Farsi on the benefits the new scheme will bring to the Omani labour market.

ILO: Why has Oman introduced this new scheme?

Al Farsi: All countries of the world seek to provide social protection to individuals to ensure a sustainable, decent life for them and their families. It is well known that an unemployment insurance scheme is a social security system that helps protect individuals against the risk of involuntary unemployment and provide social stability. The Sultanate has continued to strengthen its social security system, introducing insurance schemes to meet the requirements of each stage, based on several pillars, mainly His Majesty Sultan Haitham bin Tarik’s speech on February 23, 2020, which highlighted the future orientations of the Sultanate, including the development of a comprehensive national framework for employment and continued improvement of its environment in the public and private sectors, in addition to adopting new employment policies to leverage national expertise and competencies and enable them to enter the labor market.

The national ‘Oman Vision 2040’ has played a key role in pushing towards the implementation of such schemes, as it has reflected the aspirations of social groups through their participation in drafting it and agreeing on its objectives. The Vision understands the economic and social realities and it is forward-looking through a number of priorities and initiatives, including those related to the priority of well-being and social protection emanating from the pillar of people and society, which promotes social solidarity and provides a decent standard of living for people.

It is worth mentioning that all issues relating to instituting the scheme are in line with the social principles provided for in the Statute of the State, which govern individuals’ relationship to society to build a future that meets the requirements of the times and preserves the achievements of the nation, to achieve economic and social development; improve the standard of living of individuals; emphasize the human values of justice, equality and equal opportunities among Omanis; promote solidarity and compassion for national unity; and enact laws and legislation to protect individuals, families, society, workers and employers and build social resilience against various adversities through social security schemes during emergencies, old age, disability, death and disease.

Inspired by this information and to establish social solidarity, His Majesty the Sultan, in March 2020, provided his noble guidance to institute an unemployment insurance scheme.

ILO: Why has the Sultanate introduced this new scheme at this particular time?

Al Farsi: It is important to note that it is the various circumstances and challenges that usually necessitate that states develop and enact the necessary regulations and legislation to cope with the consequences of such circumstances. The economic and health crisis experienced around the world over the past period has served as a springboard for some states to enact new legislation aimed at protecting societies from the effects of the crisis. The Sultanate, as one of these countries, has taken a set of measures that seek to mitigate the impact of the crisis on community members in general, and the workforce in particular. These measures include the introduction of an unemployment insurance scheme, whereby the Sultanate’s finalization of the necessary studies and identification of the necessary financing and implementation mechanisms – in cooperation with the ILO – coincided with the emergence of COVID-19 and with low oil prices.

ILO: What is the projected increase in total contributors to the social security system once the new unemployment insurance scheme comes into force?

Al Farsi: The total contributions to the social security system will be 26 per cent, distributed as follows:
  • 23 per cent for old age, disability and death insurance;
  • 1 per cent for insurance against work-related injuries and occupational diseases; and
  • 2 per cent for the unemployment insurance scheme.
ILO: How do you expect the newly introduced unemployment insurance scheme to impact on the Labour market?

Al Farsi: The implementation of the scheme on November 1 of this year under the current circumstances will have a significant positive impact, lead to job stability for workers in all sectors, help activate employment policies, and stimulate the Omani workforce to enter the labor market and work in jobs with potentially high unemployment risks. 

ILO: Will the new scheme encourage more Omanis to join the private sector and reduce dependence on the public sector?

Al Farsi: We believe that the answer is yes. The scheme will provide social protection for the Omani workforce against a major risk they face in the private sector; namely, involuntary unemployment. Since the scheme will provide insurance coverage in this aspect and give priority to those who have lost employment – in addition to the benefits they will receive – to have access to decent jobs, it will be one of the most important incentives for the Omani workforce to work in the private sector.