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Bahrain today.... Borders open to the outside. Highly regulated markets on the inside ... Initiative by H.H. The Crown Prince of the Kingdom of Bahrain ...
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1. Ground-Breaking Reform
Bahrain’s 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
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 effective8. Reform Process
2004 2005 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2006 Vision and policies Process redesign Vision and policies Implementation Launch Launch Launch Labour market reform Implement(cont.) Economic reform Education reform Vision and policies Implement(cont.)9. The Plan
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 sector’s 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….
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 Hui Weng TatDepartment of Economics International experts17. Thank you