Wednesday, April 21, 2010

Labor Reforms in Bahrain Tackle Local Unemployment Crisis

According to the Arabian Business News Source, recent reforms to Bahrain's labor market have begun to drive up the cost of employing cheap and unskilled laborers, increasing competitiveness of Bahraini citizens in the job market. This topic has been a pressing issue for the Bahraini Government in its efforts to expand job opportunities for Bahrainis and drive down its foreign population.

In a recent interview with Reuters News Agency, the Chief Executive of Bahrain's Labor Market Regulatory Authority (LMRA) Ali Radhi revealed the cost of employing expatriate workers is rising, and although the cost increase is not significant, it presents an upward moving trend. Recent reforms have imposed monthly 26.5 USD training fees paid by the employer for each expatriate worker brought to the island Kingdom.

Another significant reform occurred last year when Bahrain became the first Arab Gulf state to eliminate the employment sponsorship system, which LMRA officials hoped would allow workers to change sponsors without consent and encourage them to freely negotiate higher salaries with employers, making them less attractive for hire in comparison to their Bahraini counter-parts.

LMRA data shows that there has been an increasing trend in workers who have decided to change their sponsors under this new system, and that the gap in wages between locals and foreigners has decreased by 15 percent in some sectors, like construction. Radh noted that the effects of these reforms will be more significant once the current contracts of outsourced laborers expire and employers can choose between hiring locals instead of foreigners for the first time.

The next phase of labor reforms will be the implementation of an adaptable cap on foreign employment in certain sectors that will be determined by economic growth and industrial output. The employment ceilings have not been released to the public yet, but are awaiting approval by the board of the LMRA and reflect recent data collected from various industrial sectors.

Many Arab Gulf states are looking to Bahrain's economic transformation policies with envy, as they also attempt to address similar struggles of incorporating young people into the job market. Countries like Saudi Arabia and the United Arab Emirates have embraced bottom-down reforms that have forced companies to hire locals (and sack foreigners) in the recent economic downturn.

Bahrain is also working to tackle illegal employment of foreign workers, often perpetuated by local employers who recruit them to Bahrain but allow them to pursue other employment opportunities in exchange for a portion of their salaries, which throws them into financial and legal uncertainty, as well as, a higher likelihood of trafficking.

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