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Ground-Breaking Reform

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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Ground-Breaking Reform

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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 effective

    8. 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 Capelli Professor of Management; also Senior Advisor, Kingdom of Bahrain Jere Behrman Director of Economics Mustafa Nabli Regional Chief Economist for Middle East/North Africa Vincent Palmade Lead Economist of Private Sector Development Manollo Abella Chief International Migration Branch Augusto Lopez-Claros Chief Economist and Director, Global Competi-tiveness Programme Hui Weng Tat Department of Economics International experts

    17. Thank you

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