Bahrain's Reliance on Cheap Labor Justifies Inaction on Minimum Wage Implementation

In a rather unsurprising development that touched the English-speaking media of Bahrain, a senior representative of the Bahraini Government stated publicly that the implementation of a minimum wage for expatriate workers would directly harm the island Kingdom's economy and limit regional competitiveness. In his remarks to a human rights commission, the legal advisor for Bahrain's Ministry of Labor further commented that the implementation of a minimum wage will make businessmen reluctant to invest in Bahrain if it lacks the advantage of cheap labor.

Thankfully, a human rights activist responded by slamming the government's decision, rejecting government claims that a minimum wage would hurt the national economy, or that it was ample grounds to revoke the rights of laborers or infringe upon their human rights.

This is one, of several examples that trace back to a source of inaction by the Bahraini government to acknowledge the abuses of its migrant workers, who currently amount to over 50% of the country's overall population. A disconnect continues to prevail, wherein the Bahraini government fails to grant or even recognize fundamental rights that should be awarded to expatriate workers regardless of their nationality. It is unjust, and inhumane to recruit workers from abroad, to promise them wages, and then to either withhold or garnish those wages without any legal protections under a competent and capable government.

The average migrant worker makes under 80 Bahraini Dinars a month, a pitiful and nearly unlivable salary that forces many into dilapidated housing and enhanced exposure to disease and long-term health risks, due to limited caloric intake. Champions for this minimum wage are not even asking for more than this amount, they are just pushing for a system that will force companies to pay workers what they deserve in their contracts

This perpetual inaction certainly does not stop with the expatriate community living in Bahrain, national citizens themselves continue to fight for a legal minimum wage as well. Only recently did the government approve a minimum wage for government employees-how convenient. Cheap labor competition is the endemic response to local cries for employment for young Bahrainis seeking jobs but demanding higher salaries than their expatriate counterparts. The majority of the working class still lacks the same safeguards one would expect in a country that boasts a business friendly, economically diversified, and liberal working environment to the outside world. But it is becoming all too evident, and reaffirmed by the powers that be, that this facade can only be sustained by cheap labor. It would be more responsible of the Ministry of Labor to formulate solutions to its alleged economic precariousness, which apparently will be destabilized with the implementation of responsible and stimulating safeguards that improve the economic viability of life of the working class, rather than relying on a system that continues to subjugate, demoralize, and muster resentment for tens if not hundreds of thousands of Bahrain's residents.

This same representative also added that the Ministry of Labor had no intention of bringing Bahrain's 27,000 domestic workers under the new Labor Law, but that they would receive protection and be subjected to several rules and provisions that would ensure that their basic rights are safeguarded. HOW? It continues to baffle me how government representatives can continue to release formal statements that lack any evidentiary support. If domestic workers continue to remain outside of the jurisdiction of a labor law, there are no mechanisms in place that can shield them from: abuse, trafficking, withheld salaries or documentation, and exploitation. We need to see more tangible results or proposed ACTION following comments like these.

You have to give credit to those who can release public statements that clearly perpetuate a flawed system that is negatively impacting so many peoples' lives and lacks any attempts to correct those injustices.

Bahraini MP's Call for Suspension of Expat Employment Fees

To follow-up on a recent post presented in this blog last week on new methods the Bahraini Government is pursuing to address rising unemployment of its national population, the Labor Market Regulatory Authority (LMRA) has received backlash from Parliament demanding the suspension of monthly employment fees, according to the TradeNews Arabiaa New Source. To briefly elaborate, the LMRA recently instituted monthly employment fees totally 10 Bahrain Dinars (26 USD) for all expatriate employees to be paid by their employer. Some members of Parliament have encouraged a temporary suspension to this system, arguing that the "crippling fees" have led to the bankruptcy of several small and medium size business since the law's inception in July 2008, according to reports. The urgent proposal has been submitted to Bahrain's upper house (Shura Council) by a cross-section of MP's despite the objection of the Minsiter of State of Parliament and Shura Council Affairs, who commented that a suspension would negatively affect other schemes being carried out by the LMRA.

The submission of the proposal follows two separate demonstrations this month by businessmen in front of Bahrain's National Assembly, as well as their submission of a formal letter to His Royal Highness Prime Minister Prince Khalifa bin Salman Al Khalifa.

MP Sheikh Ali Slaman noted that small and medium-sized business owners have become victims of the improper implementation of the fee system, underscoring that the purpose of the fees is to make Bahraini citizens more attractive for employment in businesses that are already dominated by expatriate workers.

The temporary suspension would provide one year for the LMRA to properly reassess the law and assemble economic charts providing data outlining the specific businesses that should be obliged to pay employment fees.

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 has been a topic that has been discussed since the inception of this blog and 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.

Bahrain's Minister of Labor Speaks on Sources of Current GCC Unemployment Levels

The Bahraini Minister of Labor, Dr. Majeed bin Mohsen al Alawi submitted a valuable lecture at the 15th Annual Conference of the Emirates Center for Strategic Studies and Research (ECSSR) on rising unemployment in the GCC Countries; a battle whose source he argues, traces back to the initial phases of development following the independence and subsequent economic boom as a result of exceptional natural resource wealth in the region; a blessing incompatible with small local populations.

"The basic problem with the Gulf countries is that they have laid down, with the beginning of the oil boom in the 1970s, the foundations of a process of development whose target is not all the citizens of the region. This has led to recruiting 14 million workers from abroad to fill essential roles...I reiterate that the essence of the problem of unemployment in the Gulf is the model of development. How can we conceive of the presence of 14 million jobs occupied by foreigners while we have more than a million unemployed Gulf citizens? I refer here to the figures that express this imbalance; these include the fact that 80 percent of the jobs in the Gulf are occupied by an unskilled and semi-skilled workforce. While the construction sector represents 8 percent of GDP in the UAE, it employs 40 percent of the total workforce."

Dr. al Alawi also spoke directly about Bahrain's historically high unemployment rate which has recently been "controlled" and driven down to 4% partly thanks to the Kingdom's regionally unique insurance fund for unemployment that provides safeguards for the unemployed and enhances their ability to enter the workforce by offering training and entry-level education in a variety of fields.

Bahrain Jobs Geared Towards Expats

A recent article released by the Gulf Daily News included precise figures showing a rise in the unemployment of Bahraini citizens. In the Kingdom's Labor Market Regulatory Authority's (LMRA) final report of 2009, data indicates that Bahrainis have felt the effects of diminishing job numbers in the national market, since employment percentages remained relatively consistent throughout the reporting period. While simultaneously, the number of foreign workers increased by 6 percent, showing a general increase in employment opportunities - just not geared towards Bahrainis, which once again highlights the unique conditions Bahrain's labor market hosts with the atypical inclusion of its local population in the workforce.

Bahrainis earned an average basic salary of 630 Bahraini Dinars (BD) per month (approximately 1,671 USD) in 2009; a wage that is considerably higher than the average 202 BD (approximately 535 USD) earned by expats. It is obvious that employers would look to Bahrain's endless supply of cheap labor when recruiting employees, assuming the workers are qualified for the position and willing to accept a third of the pay expected by Bahrainis.

The report also shows the Bahraini Government's recent interest in limiting the distribution of work visas to migrant workers, perhaps in a move to revamp its labor market and offer new job opportunities to Bahrainis. However,the majority of work visas offered jobs in the construction industry that certainly do not interest Bahrainis. Low wages, uncomfortable work conditions, long hours and a general lack of respect for jobs centered around manual labor shared by many in the region encourage employers to continue outsourcing cheaper labor, directly preventing local participation in the job market.