In Bahrain, the Economic Development Board (EDB) together with the Crown Prince's Court have moved to address joblessness amongst Bahraini nationals. They have correctly concluded that the solution to the employment challenge lies in reforming the labour market, educational system and, above all, the economy.

The jobless rate for Bahrainis stood anywhere between 13 and 16 per cent in 2002. According to a commissioned study (carried out by the American firm McKinsey & Company), some 16,000 to 20,000 Bahrainis were jobless as of two years ago.

Still, the study warns that based on existing economic conditions, the number of unemployed Bahrainis could reach as high as 70,000 in 2013. The study estimates that some 100,000 Bahrainis will enter the job market during the next 10 years. The figures reflect 50,000 standard entrants, 30,000 additional women looking for work in light of social trends and up to 20,000 who are currently unemployed. Thus, the jobless rate could jump to 35 per cent in a span of one decade.

Remedies

Furthermore, the study cautions that unless remedies are found, the situation could lead to more Bahrainis accepting jobs below their capabilities. Thus, in the period 1990-2002, some 15 per cent of Bahrainis accepted jobs below their skill level but this might reach as high as 70 per cent by 2013.

Additionally, the study fears that real salaries for Bahraini workers are on the decline. Specifically, the monthly wages averaged 420 Bahraini dinars ($1,114) only to drop by 16 per cent in 2002. Worse, the figure is bound to decline by a further 11 per cent by 2013.

The study has concluded that policies such as forced allotment of jobs for Bahrainis or a minimum wage cannot address the jobless problem. Rather, forced Bahrainisation discourages inward investments in the country.

Also, imposing the minimum wage will only benefit expatriate workers. Foreign workers constitute about 60 per cent of the workforce in Bahrain. Still, expatriates have been soaking up the majority of new job opportunities in the private sector. Official statistics point out that between 1990 and 2002, the private sector created some 84,000 jobs. Yet, foreign workers obtained 58,000 or 69 per cent of these new jobs. The fact is that foreign workers enjoy extraordinary privileges in Bahrain, including the right to switch jobs and change sponsors.

Solution

According to the study, the solution to the employment debacle in Bahrain requires reforming the economy, labour market and educational and training system. Economic reform calls for stimulating the private sector to provide highly paid jobs for Bahraini nationals. As for labour market reform, the recommendation calls for ensuring that Bahrainis, notably the low and medium skilled, are able to benefit from economic growth without facing barriers.

Lastly, the educational and training reform aims at improving the skills, knowledge and attitudes of Bahrainis towards jobs while ensuring that they can be productive and useful to the private sector.

The report has not said much about employment prospects in the public sector and for good reasons. The fact is that Bahrainisation in governmental departments is already over 90 per cent. Worse, job opportunities in the public sector grew by just over two per cent from 1990 and 2002. Jobs in the sector must grow by at least four times more in order to accommodate new entrants, in turn beyond the reach of Bahrain's scarce resources.

The EDB and the Crown Prince's Court have undertaken the right approach in addressing the labour market conditions in the country by first admitting the existence of the problem and then devising solutions to potentially one of the most daunting economic challenges facing Bahrain.

Jasim Ali is assistant professor, College of Business Administration, University of Bahrain