Emphasis on employment: Development of labour-intensive industries is a priority

The Economic Development Board (EDB), the kingdom’s investment agency, reported in February 2013 that one of the most important tasks for the economy is to develop more labour-intensive industries. While it has a relatively diversified economy, Bahrain still relies heavily on its hydrocarbons sector, which does not provide significant employment opportunities. Building up more labour-intensive industries is increasingly important because of an expected rise in the number of Bahraini jobseekers.

UNEMPLOYMENT: Current unemployment figures are fairly low in Bahrain. The most recent numbers published by the Ministry of Labour report that unemployment was 3.9% in December 2012. And aside from a short period in May and June of 2012, when the unemployment rate hit 4.5% and 4.8%, respectively, the unemployment rate has remained below 4.3% since mid-2010. In addition, employment for Bahrainis in the third quarter of 2012 had surpassed levels in the fourth quarter of that year – its highest point before the political unrest at the beginning of 2011 – by 1.6%. Expatriate employment rose even more quickly, exceeding its highest point before 2011 by 9.9% in the second quarter of 2012.

A steady growth in the number of new work permits issued in the kingdom is a further indication of the strength of the current job market. Bahrain’s Labour Market Regulatory Authority reported that it had already issued close to 103,000 new work permits in 2012 as of August, compared with around 117,000 new work permits in 2010 and 125,000 in 2011. In addition, the wage earned by the average Bahraini worker increased by 11.1% year-on-year in 2011, according to early 2013 EDB data. The number of job vacancies grew to almost 9500 in September 2012 – the highest point reached since April 2011.

PRIVATE SECTOR: Figures published by the Central Bank of Bahrain (CBB) in June 2012 indicate that the vast majority of jobs in the kingdom are offered by the private sector. Indeed, private sector companies accounted for just over 92% of total employment during the third quarter of 2011 – a trend that has varied little over the recent past. Although males still accounted for nearly 90% of private sector jobs in the third quarter of 2011, the number of female employees at private sector firms rose by almost 24%, from about 41,000 at the end of 2008 to close to 51,000 at the end of the third quarter of 2011.

The number of Bahraini nationals working in the private sector has also risen substantially. According to the CBB, the private sector labour force included about 82,000 Bahrainis at the end of 2008. This rose, however, to almost 87,000 employees at the end of the third quarter of 2011, meaning that nationals accounted for about 17% of total private sector employment. The portion of female employees among Bahraini private sector employees also increased in recent years to reach more than 30% at the end of the third quarter in 2011. The percentage of Bahrainis working in the financial services sector is particularly high. According to a report published in January 2013 by the EDB, nationals account for 66% of total employment in the kingdom’s financial services industry, and 37% of these employees are women. Financial services represent a key segment of the economy as the sector’s labour force totals more than 14,300. Furthermore, the Central Informatics Organisation reported that the financial services industry accounted for more than 17% of real GDP in 2012.

Total employment in Bahrain stood at around 541,000 at the end of the third quarter of 2011, which represents an increase of nearly 15% when compared to the end of 2008. The percentage of the population employed also grew over the period, rising from 42.7% in 2008 to 43.8% at the end of the third quarter of 2011, according to the CBB.

LABOUR LAW: One of the most important developments in the Bahraini job market is the recent adoption of a new labour law. Issued in July 2012, Law No. 36 replaces the previous law, which was adopted in 1976, and brings Bahrain’s labour legislation into agreement with several international and regional labour conventions and treaties that have come into effect. With a pro-employee approach, the new regulations are expected to lead to better working conditions and increased salaries.

The law also aligns private sector labour practices with the government sector, a move that should result in improved working conditions for employees. An expedited process for labour disputes is an additional expected benefit of the legislation, as labour disputes under the 1976 law could take several years to be resolved through the court system. The 2012 legislation increases the scope of the previous law by extending legal protection to domestic staff, including cooks, gardeners and drivers. Employers in the kingdom are now obligated to place domestic staff under explicit contractual conditions. Bahrain is the first country in the GCC to adopt such a regulation, and this part of the new legislation is believed to be a key element in efforts to inhibit human trafficking.

EMPLOYEE BENEFITS: The 2012 law also increases employee benefits. The previous legislation mandated that employers provide between 21 days and 28 days of annual leave, depending on how long an employee had worked for his or her employer. The new law, however, requires that employers provide all workers – irrespective of their length of service – a minimum of 30 days of annual leave, according to Grant Thornton Bahrain (GTB), a division of the international accounting and consultancy firm Grant Thornton.

Sick leave entitlement has also been extended from 45 days per year under the previous legislation to 55 days annually under the 2012 law – 15 days of full pay, 20 days at half pay and 20 days without pay. The new law also increases maternity leave from 60 days per year (45 days of paid leave and 15 days unpaid) to 75 days annually (60 days of paid leave and 15 days of unpaid leave). In addition, women with children under the age of six are entitled to as much as two years of leave without pay, not to be granted more than three times while employed, according to GTB.

The 2012 legislation also includes some important changes to the labour dispute process. A new body known as the Labour Case Administrative Office has been established to handle all labour-related claims, a task previously handled by the Ministry of Labour and Social Affairs. Labour disputes will now be heard by a labour administration judge who, after hearing the facts of the disagreement, will propose a settlement. If the parties choose to reject the settlement, the dispute will be passed to the High Civil Court, which is mandated to hear disputes on a high-priority basis and hand down a decision within 30 days of the first hearing, according to GTB.

TAMKEEN: While the recent legislation is expected to improve the kingdom’s labour market, work is also under way to help Bahrainis better compete for jobs. A government organisation known as Tamkeen, for instance, was created to foster the formation and growth of local firms in addition to helping Bahraini nationals obtain employment in the private sector by funding training initiatives. This second responsibility is carried out through the authority’s Human Capital Development (HCD) division. Tamkeen, which means “empowerment” in Arabic, was set up in 2006 and is a semi-autonomous organisation.

As of early 2013, the HCD was providing funding for 86 training programmes, according to Tamkeen figures. The Employability Skills initiative, which was announced in September 2012, is one such programme. The scheme will help jobseekers without a university degree to gain skills in areas such as problem-solving, language and communication, working well with others and ICT. Another programme, the Nationwide Professional Certification Scheme, supplies funding to students who want to earn a professional qualification. Certificate programmes approved by the initiative include a broad span of subjects such as accounting and finance, human resources, health and safety, engineering and surveying. Tamkeen intends to invest BD42.9m ($112.8m) for current and new projects in the HCD division in 2013, ultimately assisting close to 29,000 individuals in 2013 alone.

UNIVERSITY INVOLVEMENT: Traditional universities are also working to help increase the employability of Bahraini jobseekers. For example, the public university Bahrain Polytechnic (BP) was established in 2008 to address the gap between university education and practical preparedness for entering the workforce. The institution has developed its own curriculum to ensure it fits with the needs of local employers. BP is also building industry advisory groups composed of both academics and industry professionals. These groups meet regularly to assess BP’s academic offerings. Bahrain’s private universities are also working to better prepare students for competing in the labour market. The Royal University for Women has set up a system of advisory committees similar to those at BP and the school requires its students to complete a final-year project which focuses on an industry problem.

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