CROWN PRINCE TO PROPOSE CONTROVERSIAL DRAFT LABOR

C O N F I D E N T I A L MANAMA 001824 SIPDIS E.O. 12958: DECL: 12/07/2014 TAGS: PREL PGOV ECON ELAB BA SUBJECT: CROWN PRINCE TO PROPOSE CONTROVERSIAL DRAFT LABOR LAW IN COMING MONTHS REF: MANAMA 1489 Classified by Ambassador William T. Monroe for Reasons 1.4 (b) and (d). ¶1. (C) In a meeting with the Ambassador and Embassy Baghdad Political-Military Counselor and former Ambassador to Bahrain Ronald Neumann, Crown Prince Sheikh Salman Al Khalifa said he would submit a draft labor law to the Cabinet by late January or early February. He hoped the parliament would approve the law before concluding its annual session in May. The proposed law imposes employer paid entry fees (BD6000/USD16,000) and monthly fees (BD10/USD27) for expatriate workers, a recommendation endorsed by the recent McKinsey and Company report on the Bahraini economy (reftel). Fees collected would go into an account to train Bahraini workers and pay for various public works projects. The Crown Prince insisted that household help (70,000 of the 220,000 workers in Bahrain) be included to prevent employers from exploiting the distinction and hiring laborers without paying tariffs. ¶2. (C) The Crown Prince reported that a November 23 conference to discuss labor law reform brought together 150 people from various sectors of society. Participants' biggest concern was that the proposed reforms would be impossible to implement. The Crown Prince stressed that reforms would be implemented gradually to mitigate potential shocks to the economy. He acknowledged that the draft law would be controversial. He stated that opposition group Al Wifaq and labor unions like it, but business does not. The Crown Prince noted that the private sector would be more agreeable to the tariffs if it could have at least partial control of the account for worker training programs. He also acknowledged a need to gain active support of the cabinet ministers, who to date have not helped lobby for the reforms. ¶3. (C) Comment: The Crown Prince correctly characterizes the labor reform program as controversial. Debate of the draft law in the cabinet and parliament will likely be intensive and could result in substantial modification of the law. Although the Crown Prince talks optimistically of getting the active support of cabinet ministers, others warn that opposition by the Prime Minister and his key allies in the cabinet will make passage difficult. MONROE