Oman institutes its first unemployment insurance scheme

Through a royal decree, Oman institutes a long-awaited unemployment insurance scheme, developed by the Public Authority for Social Insurance with support from the ILO.

News | 16 October 2020
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MUSCAT, Oman (ILO News) – The Sultanate of Oman has instituted its first unemployment insurance scheme, through a royal decree. Decree No.82/2020, signed by His Majesty Sultan Haitham bin Tarik Al Said on 17 August, legally institutes the Public Authority for Social Insurance (PASI)’s Employment Security Scheme for all Omani workers in the public, private, military and security sectors. The scheme will come into force on 1 November.

The move places Oman alongside a number of other countries in the Arab States region with similar unemployment insurance schemes, such as Bahrain, Jordan and Saudi Arabia.

PASI, Oman’s social insurance fund that covers all Omanis working both at home, within the Gulf Cooperation Council (GCC) countries and abroad (optional), as well as the self-employed, already provides long-term social insurance benefits during old age, death and disability, as well as coverage for employment-related injuries and occupational diseases.

Since 2015, the ILO has worked closely with PASI, the Ministry of Labour and with social partners represented in PASI’s Board of Directors in designing and establishing the new unemployment insurance scheme.

“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,” explained PASI General Manager Dr. Faisal Abdullah Al Farsi in an interview with the ILO.

“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,” Al Farsi continued.

The ILO’s technical support included conducting a financing mechanism feasibility study and an actuarial valuation to ensure the sustainability of the fund. It also included policy design support with a focus on the main parameters of the scheme, support in drafting of legislation, and conducting an implementation administration study.

“Oman’s adoption of such a scheme is a timely move, as the country’s labour market continues to reel from the COVID-19 pandemic and associated lockdown measures that have destroyed many jobs and caused a significant decrease in working hours,” said Luca Pellerano, the ILO’s Senior Social Security Specialist for Arab States.

“It has been demonstrated by countries in the region that unemployment and wage protection benefits are essential in responding to the economic shocks caused by COVID-19. The new scheme will provide much needed support to workers whose income earnings are at risk with the current pandemic and related economic crisis,” Pellerano continued.

PASI will manage the unemployment insurance scheme and administer the separate fund, which will receive contributions from Omani employees and workers and from employers at a rate of 1 per cent each.

The new scheme will provide temporary income support to insured Omanis who lost their employment involuntarily and who seek to become reemployed. It will be the first ever scheme in Oman to cover all Omani workers, be they in the private, public, military or security sectors, under one fund, and the benefit will be linked with active labour market policies. Unemployed insured Omanis will be entitled to receive benefits upon the first claim, provided that they have been affiliated with the scheme for 12 consecutive months - or for 12 non- consecutive months over a period of 36 months - prior to unemployment. However, this entitlement condition will be waived for the first year of the scheme.

Benefits will be paid monthly for six consecutive or non-consecutive months and amount to 60 per cent of the average salary paid during the 24 months prior to unemployment, provided that the value of the benefit shall not be less than the minimum pension provided in the social security law.