Friday, July 04, 2008

Bahrain labor market reforms

The Financial Times reports:
When it comes to labour issues, Gulf governments have a habit of talking about reform but producing little in the way of action.

But two years after a law was passed – and in the face of opposition from the business community – Bahrain has pushed through a series of increases in the price that sponsors of foreign employees must pay for their work permits.

The increases, which came into force this week, form part of a package of reforms designed to make employing Bahrainis more attractive to employers.

A permit for a non-Bahraini worker has risen to BD200 ($533), payable every two years. Sponsors must pay a further BD10 monthly fee on every expatriate worker and BD90 for each family member of expatriate workers.

The additional revenues are being recycled into training schemes for Bahrainis.

Reformers say the old system of fees and quotas created disincentives to employing Bahrainis. Expatriates were cheaper.
The article doesn't say, but if there has been a thorough reform, then employers would be able to fire Bahrainis as easily as expats, and expats would be able to change jobs within Bahrain as easily as Bahrainis. See my discussion here.

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Anonymous Oman said...

Oman is moving along the same carrot and stick approach quite effectively

11:53 PM  
Anonymous Dubai Entrepreneur said...

I think they are heading in the right direction. A lot of employers here have the employees pay the permit fees (illegal? yes, but common practice). So, it would make employment here less attractive.

It also seems to make a difference for low-paying jobs. Would this work for the UAE? It might still be cheaper to hire an expat for an officeboy than an Emirati, who might have different expectations of salary compensations.

9:53 AM  

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