Oman labor laws are in the news again. Last year I wrote about Understanding the Omani Labor Market. Scroll down and read the comments, you will see that not everyone agrees with my article. What they do not agree with is that my description of the outcome is not what the law states. My analysis is focused on the economics of the outcome and not on the intent of the law. Economists are trained to analyze the intention of the law and compare it to the actual behavior response to the policies. This comes as surprise to many, people do not behave as you intend them to. The law of unintended consequences is always present.
The recent policy receiving attention in Oman is the No Objection Certificate (NOC). Here is a break down of the policy, the intention, benefits, cots, and my policy recommendation.
The intent of the law
The law is established to protect employers and their investment in the expatriate employee. The law requires that an expatriate employee must complete their contract AND receive a NOC from their employer to obtain a new job in Oman. The premise is the employer has invested in the employee and the NOC will insure that the employer recoups their investment and that the employee is leaving on good terms. Employees transferring jobs before the completion of their contract could hurt the employer.
Benefits of the NOC
The NOC transfers power to the employer. All benefits of the NOC are geared toward the employer. The employer does not have to invest in the expatriate employee since the employee does not have the freedom to leave. Leaving the employer means that the expatriate must leave the country and find a job in another country. That’s a high cost to pay for the expatriate.
Costs to the NOC
An Omani in direct competition for the employment/job with expatriate employees will be hurt by the NOC. The NOC makes expatriate workers more desirable, holding all other variables of employment constant. This topic is especially important because it goes against the goal of Omanisation.
Freedom of choice is important here. Allowing expatriates to move as they wish, will allow employers to choose their employees based on an even playing field. If an expatriate is doing well and is being solicited to work for another company, we should allow them to have the choice to leave. Allow labor to flow where labor is most wanted/needed. We should have employers fight over employees. Also by eliminating the NOC we will allow Omani’s to compete with expatriate workers on a more equal footing.
My quality of life would be lower if I had faced the NOC requirement here in the USA. I worked at a university for 3 years. When my market value increased, due to my productivity, other universities started to notice my work. I was able to move to a place that was a better fit for my work, life, and happiness. I knew I could reach my professional goals. Had my new university been required to obtain a NOC, I would not have had the chance to leave. My only choice would have been to continue working at an institution that I did not value. Take a moment to think about the impact that has to the quality of the work environment.
Employers, if you want someone to work for you, make your place of work valuable to them. Employee treatment research shows that if the employee feels valued, they are more productive. The NOC will make the whole country worse off.