MINISTER ADDRESSES LABOR REFORM

C O N F I D E N T I A L SECTION 01 OF 03 MANAMA 000404

SIPDIS

SIPDIS

NEA/ARPI, DRL FOR JDEMARIA
STATE PASS TO USTR FOR AUSTR LKARESH, DBELL, JBUNTIN AND
AROSENBERG
DEPARTMENT OF LABOR FOR PACCOLA AND SHALEY

E.O. 12958: DECL: 10/23/2015
TAGS: ELAB PREL PGOV ECON BA
SUBJECT: MINISTER ADDRESSES LABOR REFORM

REF: A. MANAMA 20


B. 05 MANAMA 1325

Classified By: Ambassador William T. Monroe, reasons 1.4 (b) and (d)

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SUMMARY
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1. (C) The Ambassador and Labor Minister Dr. Majeed Al-Alawi
March 11 discussed the status of pending labor reform
legislation, including reforms that were the subject of close
U.S. congressional attention in the late 2005 run-up to FTA
ratification. The FTA-related legislation has been submitted
to parliament. Dr. Al-Alawi also provided details on the
progress of the National Employment and Training Project
(NETP),a comprehensive, state-sponsored bid to tackle
unemployment (Ref. A).

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LABOR LAW REVISIONS ON TRACK
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2. (C) Dr. Al-Alawi confirmed that specific provisions
designed to bring Bahraini labor law in line with ILO
standards had been submitted to parliament. These provisions
include: multiple unions per employer, multiple trade union
federations, mandatory reinstatement of workers dismissed for
union activity, amended strike provisions, compensation to
employees due to delayed payment of wages, compensation to
employees due to discrimination on account of union activity,
and a clarification of worker visa violations that justify
imprisonment (grand theft, murder, etc.) as opposed to
deportation.


3. (C) On the provision allowing for multiple unions per
employer, Dr. Al-Alawi stated that "People should have the
choice to join this union, that union or no union." He
acknowledged that, ironically, local unionist leadership was
currently opposed to multiple unions and federations, viewing
these reforms as diluting their power. However, Dr. Al-Alawi
saw scant hope of union leaders being able to block these
reforms. "I tell them if they have anything to say on the
legislation they should go to the parliament, but they don't
recognize the legitimacy of the parliament because they
belong to Al-Wifaq. (Note: Local trade unions are dominated
by Shia. Leading Shia opposition society Al-Wifaq is the
largest of the four political societies that boycotted the
2002 elections. Al-Wifaq appears poised to participate in
2006, although it has not yet made a formal announcement.
End note.)

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THE APPEAL OF ISLAMISM
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4. (C) On the broader issue of democracy in the region, Dr.
Al-Alawi stated that we should not be surprised or concerned
if the Islamists initially did well. "There are strong
Islamist feelings in the region," Dr. Al-Alawi observed, "and
they have to be expressed." He pointed to the conservative
trend in Middle Eastern countries as evidenced by recent
elections in Egypt, Iraq, and the Palestinian territories.
"The stronger the environment of dictatorship, the more
Islamist the people will be. If there were free and fair
elections throughout the Muslim world tomorrow, the Islamists
would win - except in Iran, because they've already tried it
and know what it means." (Comment: Dr. Al-Alawi has
benefited directly from political reform in Bahrain. A Shia
activist, he spent years in exile in London, returning only
after the King introduced political reform in 2001. He is
now a Minister. End comment.)

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NATIONAL EMPLOYMENT AND TRAINING PROJECT
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5. (C) Dr. Al-Alawi expressed satisfaction in his belief that
the NETP had succeeded in eliminating unemployment as a
divisive social issue. Referring to periodic local
demonstrations, he observed, "The word 'unemployment' no
longer appears on any protesters' signs. Demonstrators are
no longer talking about unemployment." Under the terms of
the NETP, any Bahraini wishing to be recognized as unemployed
was required to register within a widely-publicized two-month
window (Ref. A). Dr. Al-Alawi said the program had
identified 12,172 unemployed, which he accepted as an

MANAMA 00000404 002 OF 003


accurate accounting of unemployed Bahrainis. Of the total,
74 percent of the registrants are women. Some 89% of the
male registrants are high-school drop-outs. (Note: The GOB
does not yet have an unemployment insurance program and has
not previously kept official unemployment statistics.
However, the generally accepted estimate had been 20,000.
End note).


6. (C) Asked by the Ambassador what he believed these numbers
meant, Dr. Al-Alawi replied this was proof of the accuracy of
his previous claims of the success of the Labor
Ministry-sponsored Bahrain Training Institute (BTI) in
reducing the rolls of the unemployed. Training plays a
prominent role in the NETP and each registrant is required to
undergo five hours of job aptitude testing. Some 110 Labor
Ministry psychologists administer aptitude tests to roughly
one thousand applicants per week. BTI then enrolls these
applicants in one of its corresponding training programs.
Dr. Al-Alawi said he continues to fine-tune BTI's offerings
and appeals to private-sector leaders with the mantra, "Help
me develop a training program that works for you."


7. (C) Dr. Al-Alawi noted that Bahrain's economy created
67,000 jobs in 2004, 10% of which went to Bahrainis. He
presented this a proof that there are plenty of jobs
available to unemployed Bahrainis, provided they receive
adequate training and are matched to jobs appropriate to
their aptitudes. "There is a job for everyone; anyone who is
unemployed, I have a suitable job." (Comment: Dr. Al-Alawi
has been tireless in trying to promote the NETP, personally
visiting villages to explain the program and encourage
participation. End comment.)

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EMPLOYMENT STATISTICS VIEWED AND REVIEWED
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8. (U) Local paper Gulf Daily News cites Economic Indicators,
the Bahrain Monetary Agency's (BMA) quarterly publication, as
reporting that total employment in Bahrain rose by 5.3
percent in the third quarter of 2005. Total private
sector-employed Bahrainis stood at 67,435 compared to
non-Bahrainis at 214,656. Total public-sector employed
Bahrainis were 33,433 compared to 3,630 non-Bahrainis. The
total number of employed was 319,154.


9. (C) Beyond the published story, however, Post analysis of
the report reveals that year-on-year (YOY) Bahraini job
growth was just 3.7 percent, compared to a YOY increase of
23.1 percent for non-Bahrainis. Nearly a third of the
Bahraini job increase occurred in the public sector, compared
to less than one percent for non-Bahrainis. (Comment: In
discussing local unemployment, GOB officials and
private-sector sources frequently point to Bahrainis' general
preference for government jobs, which are perceived as higher
paying, less demanding and more secure. Also cited is the
private sector preference for hiring expat workers, who are
seen to be less expensive, less demanding and more loyal.
The BMA statistics highlight both of these trends and suggest
that, despite declining unemployment, real challenges remain.
End Comment.)

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LABOR REFORM
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10. (C) On the status of the lengthy labor reform bill
introduced into the parliament September 2005 (Ref. B),Dr.
Al-Alawi said the lower house has completed work on most
articles, with articles 4, 7, 42 and 43 to be resolved.
However, these articles represent the most controversial
aspects of the bill and include a proposed levy on
non-Bahraini workers and increased protections for household
workers. Dr. Al-Alawi states there are 80,000 housemaids
employed in Bahrain, and that he is working to have
legislation regarding domestic workers harmonized throughout
the GCC. He noted that Bahrain's labor law was drafted in
1976 and had been drawn from Egypt's 1950s-era labor
legislation.

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UNEMPLOYMENT INSURANCE
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11. (C) Dr. Al-Alawi stated that the GOB had commissioned a
study from Canadian, British and Swiss consultants for a
Bahraini unemployment benefit system plan. The consultants

MANAMA 00000404 003 OF 003


issued their report on February 13 and it has been forwarded
to the cabinet for review. The plan would pay unemployed
Bahrainis 60 percent of their former salary for six months
and would culminate with three suitable job offers, one of
which the recipient would be required to accept.

MONROE