Bahrain bids its economic reform farewell


A fierce political battle is currently being waged between the government and the opposition over the labour unions.


Hasan Tariq Al Hasan
8 July 2012

The Bahraini government may have finally driven the last nail into the coffin of the economic and labour market reforms that the Crown Prince initiated in 2006. These reforms, whose goal was to discourage local businesses from hiring cheap expatriate labour and instead encourage them to employ Bahrainis, were unpopular with businesses from the onset. Since the declaration of a State of National Safety (i.e. State of Emergency) on March 15, 2011, the government has made it clear that it intended to backpedal on the reforms in an attempt to secure political support from the business community.

Over the past two weeks, under pressure from the merchant class the government made two important announcements: an extension of the suspension of fees levied on business owners for every foreign worker they hire and a reduction in the minimal quota for hiring local workers imposed on firms. Ironically, it also emerged through statements made by the Labour Market Regulatory Authority’s (LMRA) new head Mr. Osama Al-Absi that the LMRA – a body set up in 2006 tasked with actually implementing the said reforms – is to be at the forefront of this government-led, business-backed campaign.

These announcements come against the backdrop of a fierce political battle between the government and the opposition that is currently being waged on the level of the opposition-controlled labour unions. Incidentally, labour unions and the opposition – exemplified by the Shiite Islamist Al-Wefaq bloc – provided political support for the Crown Prince’s reforms in 2006 both in and out of parliament, allowing them to go through despite resistance from the merchant class and more loyalist political societies.[i]

Since the General Federation of Bahrain Trade Unions (GFBTU) organized a series of strikes mid-March of 2011 that affected the sensitive oil, gas and aluminium sectors, the government has worked tirelessly at breaking the opposition’s firm grip over labour groups. These efforts whose aim is to fragment the labour movement, materialized with the introduction of a law allowing for the creation of more than one labour union per firm. The battle has been spearheaded in large part by Mr. Ali Binali, the head of Aluminum Bahrain’s (Alba) labour union, who has been advocating breaking away from the opposition-leaning GFBTU and creating a rival organization. However, critics of Mr. Binali have cited his baffling shift in position between when strikes broke out during March last year and today, pointing to footage of him in GCC (Pearl) Roundabout pledging to take part in the strikes and calling upon the Al-Khalifa royal family to ‘leave’.

Moreover, over the past year and a half since the government regained control of the country in March 2011, yet another blow has been dealt to the economic and labour market reforms as, one by one, the former heads of the institutions created to implement them were reassigned. These include the late Mr. Ali Radhi former CEO of LMRA who was grilled on state television and accused of laxity with dissenting employees, Mr. Abdulelah Al-Qassimi former CEO of Tamkeen and Mr. Talal Al-Zain former CEO of Mumtalakat, Bahrain’s sovereign wealth fund. It is believed that they have been replaced by successors more sympathetic to the government rather than to the Crown Prince’s reformist agenda.

While halting the economic and labour market reforms package, weakening the opposition’s hold on labour unions and side-lining reformists at the head of economic, labour market and financial institutions may constitute a huge political victory for conservatives in government, these measures are bound to impede any effort to tackle the country’s chronic economic problems including, first and foremost, soaring youth unemployment and the social and security consequences they are likely to bring with them.

[i] AlHasan, Hasan (forthcoming) “Labor Market Politics in Bahrain” in Hertog, S., forthcoming, Market, Unemployment and Migration in the GCC, Berlin: Gerlach Press 

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