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