Scarce transparency in services policies
It is expected that Bahrain, with increasing poverty and unemployment, will soon be the first Gulf Cooperation Council state to legislate privatisation. After beginning in a few sectors, such as transportation and sanitation, privatisation is expected to gain momentum and be extended to the ports and the electricity production.The Kingdom of Bahrain is afounding member of the WTO. As a developing country, it was given a period ofadjustment and exceptions under the GATT before being completely integrated intothe WTO. As a member of Gulf Cooperation Council (GCC), a regional political andeconomic block whose members (except Saudi Arabia) are WTO members, Bahrain’sintegration within GCC keeps pace with the WTO as the two organisations requirethe implementation of similar steps.
Lackof transparency in transportation privatisation
The State has declared itsintention to privatise many state enterprises and services. It is expected thatBahrain will soon be the first GCC state to legislate privatisation. Afterbeginning in a few sectors, such as transportation and sanitation, privatisationis expected to gain momentum and be extended to the ports and the production ofelectricity.
The State privatised thePublic Transport Corporation in 2002 for which the Ministry of Transport chose aprovider of the service without receiving a monetary offer, an action which iscontrary to transparency and the public interest. It became known that the jointventure includes local business officials and a Malaysian company. It isexpected that most Bahraini drivers currently employed by the Public TransportCorporation will be dismissed and partially replaced by foreign drivers, thusadding to the serious unemployment problem. No official study on the effect ofprivatising transportation has been done. Public transport fares are likely to triple,with the promise of better service, such as air-conditioning, and more frequentbuses.
The privatisation ofsanitation services undertaken by the Central Municipality Corporation inMuharaq, the second largest city, is a pilot scheme for the total privatisationof this sector. As result of the privatisation, garbage truck drivers weredismissed (with compensation), adding to the ranks of the unemployed. However,garbage is now collected earlier than before, and more garbage containers havebeen provided, including special ones for recycling. Recycling of glass bottlesand paper, undertaken by an NGO, resulted in employment of some Bahrainiworkers, boosted the economy, and benefited the environment as a result ofprivatisation.
Telecommunications:will rates go down?
The State has also liberalisedthe telecommunications sectors. The national communication company, BATELCO, hasbeen a monopoly for decades, but the government declared that this sector willbe opened to competition in a few months. There have been complaints thatBATELCO charges higher rates than similar companies in the GCC fortelecommunications services. It is yet to be seen whether liberalisation willresult in lower rates.
Qualityof education may suffer
In 2002, the governmentlicensed several private universities and colleges, along with the officialuniversity (the University of Bahrain), the Nursing College, and the GCCuniversity (the Gulf University). The Bahrain Training Institute is the largestin the country. Private specialisedinstitutes also exist.
In September 2001, HM the Kingordered the reduction of university fees (around USD 1,327) to 25% of theirformer cost, and exempted poor students, making university education affordableto wider sectors of the population. However, with more than 20,000 students andthe same facilities and staff, the quality of education may suffer. This yearthe Faculty of Law opened, and more schools are expected to follow. The fees forthe National Training Institute were also slashed. In addition, more governmentand private sector funds have been allocated for training, which will contributeto alleviating unemployment and poverty.
Oil:restructuring and dismissals
The restructure and merger ofthe two national oil companies in 2002 (BAPCO and BANOCO) is expected to resultin the dismissal of hundreds of workers. The restructuring of GULF AIR (GCCcarrier) has already resulted in the dismissal of more than 150 employees whilethe merger of two local domestic banks has also resulted in the dismissal oftens of the staff. These layoffs are examples of a wider trend that will prevailas a result of integration withinthe WTO and GCC Custom Union.
The professed thesis is thatprivatisation, restructuring and mergers will produce more efficient andcompetitive firms in a global free-market economy. This remains to be seen.
Increasedpoverty and unemployment
Until now no official povertyline or measurement has existed, and thus the percentage of the populationliving in poverty is not officially reported. Some economists estimate that theminimum income for a decent standard of living for a family of six is BHD309/month (USD 820). The Social Insurance Fund statistics show that manyBahrainis earn less than BHD 120/month (USD 318). This is below the minimum wageguideline adopted by the Ministry of Labour for some sectors of the economy andthe minimum wage at the government sector, which is BHD 150/month (USD 398).Consequently, this segment of the population is under the poverty line assuggested from official wage statistics.
According to such differentsources as the Ministry of Labour and Social Affairs, the organisations,especially women’s groups, and the charity funds, the amount of people livingin poverty has increased, which the government has acknowledged. The kingrealised the inadequacy of the assistance provided to the poor and ordered theestablishment of permanent funds (BHD 25 million - USD 66.25 million) for theassistance of widows, orphans and the temporarily unemployed.
To reduce the burden of lowerincome people, HM ordered the slashing of public housing loans to 50% andelectricity bills for the past two years to 50% for those with limited income.These steps are designed to alleviate the burden of impoverished people.Recently, HM ordered a study to be conducted on whether Bahraini workersemployed by companies completely or partially owned by the government areentitled to own shares in the firms as well as share in their profits. DuringOctober of 2002, aid benefactors from the Ministry of Labour were granted sharesworth 30% of Alseef Mall. Currently, the government is considering making theLabour Ministry’s minimum wage guideline an official legal requirement.
Unemployment and unwillingnessto accept employment contribute greatly to poverty, as Bahrain lacks a socialsecurity system for the unemployed. Because of this, the toughest problem ishigh unemployment, currently estimated at 15% among the Bahraini workforce. Thisis in contrast to the fact that foreign labour constitutes two thirds of theworkforce. There is consensus that not all foreign workers are needed, as thereis open or not declared unemployment among them, especially among the Asians.The Asian workforce competes with local workers and pushes salaries downward.Consequently, many unemployed Bahrainis will not accept prevailing salaries andtherefore prefer unemployment. Currently, the foreign workforce is 65% of thetotal labour force. The Ministry of Labour and the Directorate of Immigrationauthorise the employment of Asian workers, who are willing to work for lowerwages. However, many importers inflate their needs and secure monthly fees fromthe foreign worker.