Fallout of Bahrainization

Fallout of Bahrainization

Bahrain’s government imposes a labor fee on every expatriate employed in the country to encourage the hiring of locals. Now the local owners are angry.

March 23, 2009 10:21 by Aarti Nagraj

More than 500 Bahrainis, most of them contractors and small business owners, protested for several hours outside the Labour Market Regulatory Authority (LMRA) headquarters in Sanabis on Sunday. They were demanding the abolition of the BD10 ($26.5) monthly labor fee that they have to pay to the LMRA for each expatriate employee they hire.

Nader Alawi, who runs a small advertising agency and employs seven expatriates, was one of the protesters. “These people are no less than bloodsuckers and they have no concern for our lives. The time is not far away when our families will be disowning us,” he told Gulf Daily News.

“We are told the only way to get over this problem is to hire Bahrainis, but where do I get Bahrainis from?” Ebtisam Abdulla, another protester, told the paper. “Getting Bahrainis is one thing, where do I get Bahrainis who work and want such jobs?” she added.

The law was implemented in July 2008 to increase the financial costs of hiring an expatriate. Along with the monthly fee, companies also have to pay BD200 ($530) every two years in visa fees for every expatriate. The money collected by the LMRA is transferred to the Labor Fund, which claims to invest in Bahraini job creation and training.
When introduced, the move came under fire from business owners. But Ali Ahmed Radhi, the CEO of the LMRA justified the law. “The fees have only raised the average cost of hiring a foreign worker by about 10 percent. In another three months, people will be used to it,” he told the Financial Times in November last year.

But going by the recent protest, owners are far from getting used to it. A spokesman during the protest told Gulf Daily News that 50 companies have closed down already and owners are in debt because of the high fee structure.

The Bahrain Contractors Association, which led the protest, said that agitations will continue for the next five weeks.

The LMRA continues to defend the law, saying that statistics show the demand for expatriate labor to be increasing; therefore, owners must not be having a problem with the fees.

But then if demand for expatriate workers is rising, it doesn’t seem like the law’s objective is being met. If owners are protesting and are closing shop rather than hiring Bahrainis, it could be that they are not able to find the talent and skill they need in the country.