Ground-Breaking Reform

1
Ground-Breaking Reform

• Bahrains endeavors to reform the labor market
• Ausamah A. Al Absi
• Director of Employment
• Ministry of Labor Social Affairs

2
The Gulf A Story
3
The Gulf Economies

• Oil The economy grew in unparalleled speed
• Infrastructure development Need for labor
• Population not ready
• Borders opened
• The rest is history.

4
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

5
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

6
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

7
The reform

• Aims to
• Deregulate the market
• Equalize the cost differential
• Give equal rights and choices
• Upgrade the working environment standards

8
Reform Process
Destination vision
Aspirations
Education and training reform
Labour market reform
Economic 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
9
The Plan
2004
2005
2006
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Labour market reform
Vision and policies
Process redesign
Implement(cont.)
Launch
Economic reform
Vision and policies
Implementation
Launch
Education reform
Vision and policies
Implement(cont.)
Launch
10
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

11
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

12
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

13
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

14
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 sectors role in the economy

15
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
International experts
Peter CapelliProfessor of Management also
Senior Advisor, Kingdom of Bahrain Jere
BehrmanDirector of Economics
Augusto Lopez-Claros Chief Economist and
Director, Global Competi-tiveness Programme
Mustafa NabliRegional Chief Economist for Middle
East/North Africa
Vincent Palmade Lead Economist of Private
Sector Development
Hui Weng TatDepartment of Economics
Manollo AbellaChief International Migration
Branch
17

• Thank you