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Ground-Breaking Reform
Bahrain’s endeavors to reform the labor market
Ausamah A. Al Absi
Director of Employment
Ministry of Labor & Social Affairs
The Gulf… A Story
The Gulf Economies…
Oil… The economy grew in unparalleled speed
Infrastructure development… Need for labor
Population not ready…
Borders opened…
The rest is history….
Bahrain today….
…But 50 years on, the story is different 65% of the population is under 25 years old
Current unemployment at 20%
95% increase in Bahraini labor force in 2013
16% reduction in wages levels over 20 years
and… 60% of total labor force are expatriates
Bahrain today….
Borders open to the outside
Highly regulated markets on the inside
Limited expatriate movement within the market
Strict ‘Bahranization’ policies
Strong government grip on the market
Bahrain today….
There are two labor markets
There are two working environments
Public sector is the employer of choice
Economy dependent on labor intensive industries
Population growing faster than the rate of ‘desirable’ jobs created
Reform is over due…
The reform…
Aims to: Deregulate the market
Equalize the cost differential
Give equal rights and choices
Upgrade the working environment standards
Destination vision
Aspirations
Economic reform
Education
and training reform
Labour market reform
Improve Bahraini skills through education and training to better meet job market demand
Stimulate private sector job creation, especially in the medium and high wage job segments
Eliminate labour market distortions first to make education and economic reforms effective
Reform Process
2004 2005Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2006
Vision and policies Process redesign
Vision and
policiesImplementation
Launch
Launch
Launch
Labour market reform
Implement(cont.)
Economic reform
Education reform
Vision and
policiesImplement(cont.)
The Plan
Reform Process
Initiative by H.H. The Crown Prince of the Kingdom of Bahrain
1st Step: Diagnostic 2nd Step: Consultation with social partners 3rd Step: Announce Proposal
begin social dialogue 4th Step: Prepare for implementation 5th Step: begin a 3 year gradual engagement
The Reform
Allow expatriates to switch employers at will Unify social benefits
EFFECT
Abolish employer control over expatriate employee, thus: Increase expatriate wages Allow competition, create secondary market Allow freedom of choice for employer &
employee
The Reform
Equalize cost via increased fees on expatriate work permits payable by employer
EFFECT
Eliminate unfair competition, thus: Promote technology penetration Steer jobs created towards value added Make employment choice based on
productivity not cost
The Reform
Eliminate Bahranization policy Deregulate ‘hire-fire’ procedures
EFFECT
Make employment of Bahrainis a business decision, not by law, thus: Promote open market policies Induce a new work culture Make employment choice based on
productivity
The Reform
Dramatically reduce government's role Invest in economy upgrade
EFFECT
Allow for open market practices to control the labor market mechanism: Government a regulator not a market force Money generated to go to human
development Increase private sector’s role in the economy
The reform
Too elaborate and detailed to discuss within the time allocated, but:
Allows for continuous adjustments Aims to be fare to all parties Full Economic Impact Assessment Builds on other countries experiences Fully compatible with ILO & WTO Has been checked by….
16
Peter CapelliProfessor of Management; also Senior Advisor, Kingdom of Bahrain
Jere BehrmanDirector of Economics
Mustafa NabliRegional Chief Economist for Middle East/North Africa
Vincent Palmade Lead Economist of Private Sector Development
Manollo AbellaChief International Migration Branch
Augusto Lopez-Claros Chief Economist and Director, Global Competi-tiveness Programme
Pang Eng FongPractice Professor of Management, School of Business
Hui Weng TatDepartment of Economics
Tarek YousefProfessor of Economics
International experts
Thank you