Forecasts of Future Labour Market Requirements for Oman: An Application of the OMAGE model

This paper describes the theory of OMAGE, a dynamic computable general equilibrium model of the Oman economy, and its application to forecast labour-market requirements to the year 2030. A distinctive feature of the model is the detailed modelling of labour demand and labour supply, by industry, occupation, qualification and nationality, and the possibility of running the model in two modes: integrated or independent determination of the two sides of the labour market. As Oman uses a large expatriate workforce, in this paper we adopt an intermediate position, with growth in employment demand for Omanis tied to growth in labour supply of Omanis, but the supply of Non-Omanis is generally determined by employment demand. Key inputs to this forecast include information from external forecasting agencies on population and labour-force participation, commodity-using technological and household-taste changes, multi-factor productivity, and current consensus view for the world price of crude oil and for Oman’s production and reserves of oil. The results indicate that, despite the fall in oil production and price, the Omani economy is forecast to grow at an average annual rate of 3.3 per cent. Export-oriented and importcompeting industries outside of the oil sector are expected to expand, assisted by real depreciation and growth in world demand. Service and manufacturing sectors that sell primarily to households and government are also expected to have relatively good growth prospects due to higher-than-real-GDP growth in private and public consumption. Consequently, demand for occupations and qualifications used intensively in those sectors will have better growth prospects that those used intensively in the oil sectors. Fastest growing occupations include sales, services and managers and investor occupations. Fastest growing study fields include personal services, management and commerce, and create arts.