The failure of the Bahrainisation policy

23 Sep, '04

Not unlike the majority of business people in Bahrain, we have been suffering from the Bahrainisation policy adopted and enforced by the government which regulates the labour market and shoves unqualified, unwanted, unproductive and completely useless Bahraini job seekers down our throats and penalises us if we dare fire them. Thus disregarding the basic premise of business which is to make a profit and sustain the economy. The private sector has been used for decades as the scape-goat and the virtual geriatric unit in forcing us to absorb the unqualified labour force.

This apparently is going to change. For the last week, the local papers have been running editorials and reports about the labour market and how bad the situation would become in as close as 2013 – with unemployment figures then standing at 100,000 – if nothing radical is done about it. There is no smoke without a fire…

Well, today the Crown Prince is launching his initiative to correct and balance the situation. We don’t know the extent of the changes yet nor their forms, but they are expected to be nothing short of revolutionary.

From what I have gleaned from the various reports in the papers is that employers will pay fees (taxes) on every foreigner they employ, be that an engineer, scientist, professional or house maid. We don’t know what these fees are and in what situations they are to be paid, but that will become clear by tomorrow. There is also talk of setting a minimum wage which essentially will be the same for locals and foreigners. The figure most often quoted is BD 250 (US$663) per month. While I do not agree with governments setting minimum wages which I believe should be left to a free market to determine, I can understand why they want to bring that on.

Also implied by these articles is that now employers can hire and fire Bahrainis at will (within limits of course and set procedures just like hiring and firing anyone else). If true, this is the most important aspect of these changes and sends a signal to Bahrainis that if they want employment they have to be efficient, hard-working and fight to keep their job, and more importantly they will come to realise the value of education and at least bother to finish high-school and attempt university. It will also at last encourage employers to actually hire Bahrainis without fear. Hopefully this will redress the problems of unemployment Bahrain has been experiencing for the last 30 or so years.

Another thing that I want to see done to strengthen this is to dissolve the Labour Courts and solve labour problems through honest arbitration, rather than the current trend of side with the (fired) employee no matter what!

We’ll see what tomorrow brings, I hope we won’t be disappointed.

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  1. [deleted]0.01191600 1099323613.647 says:

    The failure of the Bahrainisation policy

    If you really want to bring about a sea-change in attitudes, it would be better to reduce basic salaries, but enroll all your staff in a profit-sharing bonus scheme. It re-inforces the link between careful conscientious work and the reward at the end of the month. It also means that slackers incur the displeasure of their colleagues.

  2. esraa says:

    We have the same thing in Qatar

    “Qatarisation” and it was producing the same results as Bahrainisation. One thing that started turning the tide, though, was to enhance educational opportunities in all sectors. We now have a number of university programs, diploma & certificate programs, trade schools, etc., that are aimed at producing a better trained and qualified work force at all levels.

    The other thing that has helped has been getting the Qatari population off of governmet welfare, ie., stipends. Why work when you can sit around at Starbucks and collect your check at the Post Office once a month? Hmmmm…. seems like someone figured out that this was having a negative effect on developing a national work ethic.

    If the goal is to be more self-sufficient as a country, while at the same time lowering unemployment rates, it cannot be accomplished by having a sub-standard, poorly motivated workforce. All you will wind up with is an inefficient bureaucracy that ultimately will give rise to more nepotism and wasta.

    And that will put us all back to where we started…. 🙁


  3. medo_185 says:

    The failure of the Bahrainisation policy

    Looks like the government’s serious about adopting the McKinsey report and ending the low wage culture. Everyone’s gonna have to make sacrifices as costs for services rise.

    Although the pain of knowing I’m gonna have to pay more for my latte is ameliorated somewhat by the knowledge that the most immediate losers will be those businesses dependent on paying slave wages to third world expats. Good. F**k em. Don’t come crying to me if you can’t afford an extra Mercedes in your drive as a result – I hope you go bankrupt, you evil emissaries from utter c**tdom.

  4. fekete says:

    The failure of the Bahrainisation policy

    Actually, I dont know if Bahrainization per se hasn’t worked. I think what they are saying is that the future problem cannot be solved through Bahrainization policy alone.

    PM .. Bahrain has a very different makeup than Qatar. First of all, we have real unemployment. I doubt the Qataris have that. Also, we have a higher population than Qatar, and, compared to Qatar and Saudi Arabia, Bahraini’s are more willing to work blue collar jobs.

    We just need to create more of these jobs. Ideally, more medium and high wage jobs. Many many more of them.

  5. esraa says:

    The failure of the Bahrainisation policy

    Yes, I am sure that there are differences. But what people don’t realize is that Qatar — for all its wealth — also has a significant poverty level population among its citizens (not foreign workers). Those are the people who are benefitting by the job training programs and educational opportunities that I mentioned, and are willing to work in the service sector. The trick is to make this pay off in a manner that they can support their families and at the same time contribute to the country’s desired independence from a 75% foreign workforce.

    Of course, I better be careful or I may find MYSELF out of a job 😉

    Salaam Alaikum JJ,

  6. [deleted]0.01191600 1099323613.647 says:

    The failure of the Bahrainisation policy

    You know there is one thing I really can not understand about the Gulf.
    I have a relative who has worked on the oil rigs out there for decades. He is a diver, and the money is good. While I think the world of him, I have to say this. He is a fine big strong lad, but no Einstein if you get my drift.
    And it makes me think, why the hell are you importing workers like that? Why aren’t you training up your own folk to be riggers? It is a great solution for the young lads who aren’t University material but still want a steady job.
    And why aren’t all the world’s finest geological surveyors and seismic experts, Arabs? Why be so “hands-off” about your very lifeline?

  7. esraa says:

    The failure of the Bahrainisation policy

    Part of the problem is that most of the oil (and gas) companies are foreign owned and operated. They have their own concerns when hiring and often that doesn’t include local development. 🙁

    In Qatar, though, the universities are beginning to look towards the development of specialists to serve the local industries. It takes time, but the times they are a’changin’…


    [Modified by: peacefulmuslimah (peacefulmuslimah) on September 24, 2004 12:15 AM]

  8. [deleted]0.01191600 1099323613.647 says:

    Re: The failure of the Bahrainisation policy

    PM, I take your point.
    But surely the owners, be they foreign or local, will always seek and find the most cost effective workforce. haven’t we seen this so many times before in other industries? (Hint- try finding a semi-skilled job in a western shipyard. )
    Why did Scotland provide more expertise in the exploration sector, than the Gulf? That’s crazy, and we know it is.

    What the blazes happened here?

  9. mohd says:

    The failure of the Bahrainisation policy

    There’s a book by Thomas Lippman “Inside the Mirage”, it’s one of the few that devotes more than a few chapters to the subject of Saudi labor in the oilfields. It details some of the many concerns that sprang up when roughneck oilmen from the west started working with desert scrubs. Many did advance in the organization and took advantage of the opportunities that came. In fact, they were the first Saudis working class, and subsequently, the last.

    My guess is that unlike the steel and coal towns of the US, oil rig work was what you did so your kids didn’t have to. No one I grew up with wanted to work in the heat, even if their fathers did. Every one wanted a nice safe career in an air-conditioned office. My generation all wanted to be bankers, financiers and the brave few who wanted to be ‘petro-chemical’ engineers. Good for us too, we are the few that want to earn our keep in life and do it right. My brother studies Chemical Engineering in the US, no doubt because growing up less than a kilometer from the power station smoke stacks in Adliya and another 3 from the Banoco tank farm in Sitra probably inspired him.

    Things did work in the favor of the multi-nationals since limiting the national workforce, it gave them more insurance against the work becoming nationalized (huge concerns for them in early part of the century). Arabs probably weren’t encouraged to work the production lines so as to keep from a repeat of Iran, Iraq and the Suez Canal.

    Regardless, some of us braced for the end of the oil days, especially in Bahrain. The fortunate ones may still find market for their labor abroad when the gravy train finally comes to an end. How ironic will that be?

  10. kategirl says:

    The failure of the Bahrainisation policy

    This is great news for Bahrain that the govt has recognized that they need to transition to a free(er) labour market. That’s step 1. The next step, which is even more important to determine is how this transition will take ploce smoothly without jolting the economy too much. Let’s hope they can manage. (I still can’t believe they had to hire a bloody consulting firm to carry out the study… consultants are so highly skilled at telling their clients what the rest of the world already knows, and taking lots of money in exchange).

  11. mohd says:

    Re(1): The failure of the Bahrainisation policy


    Oh yeah absolutely, none of us need any reminder of the many older Bahraini’s with calloused hands and prematurely aging skin from all the years in the sun. Yemeni, Omani and Bahraini labor had a proud tradition of putting in the effort because they never expected a welfare check.

    My observation was that when the welfare state arrived after the 73 embargo (incidentally, the suspension of parliament came not too long after), there was a sea change in attitudes. No one I grew up with HAD to work in a labor intensive environment.

    My hope is that we go back to the attitudes of our grandparents that put in a days work and expected fair renumeration. Of course what that means is that the Big Kahunas better invest their money and capital in the kingdom and bring in the kind of industries that are viable and sustainable, rather than flight it out.

  12. mohd says:

    Kleptocracy in action

    Recent events have had us railing on the separation of Mosque and State, but it would only be a matter of time before we got back to the enabling entities, namely the affairs of state and business.

    It’s been a while since anyone rankled on the robber barons, but that’s what you get when you have ill-defined constitutions and a kangaroo court system to prop up it up. Sure beats workin’ for a livin’! Our esteemed public servants sure have their fingers in a lot of private pies.

    Repeat after me “Public officials playing games with matters of public concern, while the public sits on the sidelines.”

    To these oligarchies, a labor budgets spends a lot better on a compliant workforce that doesn’t ask for too much and is happy with what it can get. Get the technical help from westerners who want some adventure and don’t care much for the local politics. And your cheap labor from the sub-continent who you can abuse so he wants out as soon as he can pay off the dick who’s been screwing his family for generations for indentured servitude money.

    Most expats are bewildered when they face resentment from the locals “We’re helping you out!”. To the common Bahraini, the reply is “You’re helping out a fat cat AND you’re denying me any opportunity to advance”. The strange thing is that up until the 80s, many Indians and Pakistanis did very well in Bahrain and were a very welcome addition to Bahraini society. The forefathers of the Dadabhai’s, Jashanmal’s and Ashrafs are mainstays in Bahraini society. The list could go on.

    Without the welfare state, we become Egypt or Jordan. Lots of money in First Class and every one else relegated to the cargo hold. And possibly even a net exporter of labor. The question is if labor pools itself into one common market, how long will it take for local Bahraini labor to be a permanent fixture?

    Ultimately, the playing field needs to be level for everyone. As Mahmood’s experience has shown, small entrepreneurs and skilled labor (who are the backbone of every developed nations economy) are fighting uphill.

    So I agree with Chan’ad, I hope the transition happens smoothly and it be done right. I’d hate for the familiar pattern of setting up the carnival, only to find a heap of pooh-pooh when they decide to prematurely pack up and leave, to repeat itself.

  13. mama says:

    The failure of the Bahrainisation policy

    Whatever comes of Bahrainisation, Qatarisation, and so on, this is the kind of information I came to blogs for. I stumbled across Salam Pax back in April, just after he quit, and I’ve found ME blogs invaluable ever since. This posting and the comments tell about things I couldn’t possibly know otherwise.

    Does anyone know a good Iranian blog? I’ve looked but can’t find one up to the level of Mahmoud’s Den.


  14. fekete says:

    Meggie – Brilliant Question

    You have actually tapped into the crux of the problem methinks.

    There are two sides to the equation here. First, is the mentality of the employer. Second is the mentality of the Bahraini employee.

    Our private sector has largely invested in industries that are reliant on low cost labor. We dont have a thriving value add manufacturing sector, and I dont think we have yet really figured out how to best exploit the FTA in order to take full advantage of a market the size of the US. Hence, the jobs that are being created in the private sector are largely low skill, low cost ones. And since we dont have any real immigration blocks between us and the countries of south east asia, our wages are tied de facto, with the wages of those countries. Which is why our wages have been declining over time.

    The other issue is productivity. The system as it stands today has given the Bahraini employee a feeling that a gov’t job is his god given right. Productivity is not really rewarded, and there is zero chance hat a poor work ethic will result in him being fired.

    Is this a problem with the Bahraini individual? Or is it a result of an ad hoc fundametally flawed system that governs the labor market? It is the system. So the first step is to fix the system.

    Incidentally, in the old days, there was a tremendous amount of technology and cultural transfer from the Oil Industry foriegners into the locals. In Bahrain alone, BAPCO provided the training ground for most of the current leading members of society. Ditto for Aramco in Saudi Arabia.

    If the government is serious about implementing the McKinsey report, then there will have to be a fundamental shift in attitudes and thinking as governed by new laws and penalties. This cannot be done by the government alone, nor by the parliament. The private sector has to be on board, as will every single Bahraini citizen – since the costs of reform are not going to be cheap, and will be borne by everyone.

    Meggie .. what happened was that instead of us taking control of our future through strategic thinking, we allowed the status quo to take us on a trajectory that has led us to where Singapore was pre reform. A significant reliance on low cost labor in an economy that structurally does not generate the kinds of medium/high skilled jobs that are required.

    Perhaps now our MP’s will start discussing the real issues in this country than the appropriate length of a beard ..

  15. fekete says:

    Re: The failure of the Bahrainisation policy

    BT ..

    This may be true in Saudi, Kuwait and Abu Dhabi – but I am not so sure if this applies to Bahrain and Oman .. there were quite a few working class citizens that climbed up the ranks .. Bahraini’s built the Trans Arabian Pipeline .. and some died doing so ..

    I think the problem started with the oil wealth boom of the 70’s .. when people got lazy and started relying on a welfare state that would provide everything.

    Also, I am pretty sure that Aramco, Bapco, and others had some kind of a training program for locals – the Min of Oil of Saudi is ex Aramco. In Bahrain, a few of the leading players in Gov’t were all ex Bapco. I dont know about ADNOC and the Kuwaitis .. nor do I know much about what the Qataris are doing now in developing their Gas/ LNG reserves.

    Intersting times and interesting challenges for the Gulf. I wonder whether we will be able to meet them head on ..

  16. kategirl says:

    The failure of the Bahrainisation policy

    I read the reports of yesterday’s labour policy presentation to the Crown Prince, and most of it seems quite promising if they actually get to implement it properly. One thing that hasn’t been getting any mention is the issue of the labour courts and arbitration, that Mahmood is always going on about. I totally agree with Mahmood that it is just as important to level the playing field in the courts as it is important to the level the wages for locals and expats. I hope this is something they are thinking about.

    The other thing that had me slightly worried was that they would make it more costly for employers to hire expat worker,… but the workers will not get to see any of that increase. Rather, this extra money will go towards a fund, most of which will eventually be spent on Bahrainis, and not expats. It is great to help out the Bahrainis, but I feel that enough of this extra income should be reserved to cover some essential needs of expat workers, i.e. to pay for a shelter for abused workers, to pay legal fees for workers who have been mistreated or abused, and other emergency services.

    Obviously, the Bahraini unemployment crisis is the primary concern of the reforms. But I don’t think it would hurt much to give a little consideration to the underrecognized expat workers and raise their standard of living to within humane limits.

    But I don’t think anything has been set in stone yet, so maybe it’s a bit too early to start complaining. Maybe I’ll wait a bit.


  17. medo_185 says:

    Re: The failure of the Bahrainisation policy

    This personal blog by Mohammed Ali Abtahi – Iran’s vice president – is worth a look:

    Hmmm. No comments option.

  18. anonymous says:

    Re: Kleptocracy in action

    Its all about checks and balances at the end of the day, is it not? Democracy is about ensuring that there is a firm separation of the legislative, executive and judiciary branches with enough backbone in civil society to be able to operate the machinery.

    Well, Bahrain is being presented with an unprecedented challenge. It will be very interesting to see how this one plays out.


  19. anonymous says:

    Expats built this country

    Chan’ad ..

    There is no way Bahrain would be what it is today were it not for the significant contribution that expats have given to this country. In all aspects. From the first American Mission Hospital to the people who built the F1 racetrack. And I personally find it absolutely disgusting that domestic help currently are not even governed by the Labor Law. And that there is a de facto indentured servitude mentality that goes on in this country toward low cost labor.

    If it were up to me, I would be using immigration and naturalization policies a little more freely than has been traditionanally used in this country. If you get a B2 visa and work in the States, you are eligible to apply for a Green Card. If you get a work permit in the UK, you are eligible for Residency at some point. I think we sometimes have a really flawed view towards ‘foriegners’ when it comes to giving them equal rights in this society. Some of them deserve passports just based on contribution and length of service alone.

    And at the rate I am going, I would definitely never get appointed or elected into Parliament!

  20. anonymous says:

    Re: Expats built this country

    the previous post was made by me, JJ. Sorry for not signing on Mahmoud.


  21. medo_185 says:

    Re: Expats built this country

    V. true. Can expats join trade unions? Does anyone know?

  22. [deleted]0.01191600 1099323613.647 says:

    Re(1): Meggie – Brilliant Question

    Ah ha!
    Mediocrity as excellence. Yep, I have seen that here. I have been in the workforce for 30 years, and I have seen folk who specialise in this. I even tried it myself as an experiment, for two weeks.

    Try it yourselves and see.

    File everything that lands on your desk as “pending”. Make sure you have a plausible excuse for every problem you haven’t resolved. Also, and this is key, select one of your tasks as an issue that you take to your boss. “I can’t get this bloody thing resolved because no-one is responding. We should be better than this……”

    Oh and don’t forget to lose your temper. Any dilligent worker, thwarted by the circumstances, always loses his temper.

    I reckon anyone, in any enterprise, can get away with this for two weeks.

    Try it, and then take a look at the bloke in the next cubicle, and ask yourself whether he has been doing this for thirty years.


  23. markdoenitz[deleted]1101322982 says:

    Re(2): Meggie – Brilliant Question

    Been reading “The Peter Principle”?

  24. mohd says:

    Three Card Monte

    A very interesting article, I must say. Something for Americans and Bahrainis to refelect on.

    Expats in trade unions. Oh my!

    I had heard there was once a union in Bahrain for the taxi drivers. Every now and then I’d hear someone talking about how they were bled dry or how at the opportune moment they were snuffed out. From what I gathered, they weren’t called unions, but they acted like one and I think someone said something a little too controversial. Ah, the good old days of insubordination and intimidation! Anyone remember anything about it? I’ve only gleaned so much from my grapevine.

    The government claims that it is all the union that any wage-earner needs. Bahraini or otherwise. And it drafts laws every now and then that slips ten dinars in one pocket and then slides it out the other. Usually, its a show of Three Card Monte, where more often than not, the fat cats keep the money and the power and the hot babes. Once in a while, a senior government official will publicly pay a king’s ransom to make a grievance go away, or to help someone who has had a major health ailment or accident. Perhaps, it will make a difference on the Day of Judgment.

    But unions? NADA. A compliant foreign workforce won’t join a union because they know if they do they’re on the first flight to Timbuktu.

    I think there are professional organizations, but they’re about as uninvolved in political and economic issues as you can get. My father was a member of the Bahrain Society of Engineers for a number of years, but other than a couple of “meet & eats” a year, I can’t say of anything significant they did for anyone, Bahraini or otherwise.

  25. [deleted]0.01191600 1099323613.647 says:

    Re(3): Meggie – Brilliant Question

    No BM, I have just been watching the folk around me for many years,
    The sound, and the fury that signifies nothing, from people who are not actually doing anything at all, is nothing short of bloody staggering.
    Try my experiment, and learn how stressfull it is for any normal working stiff, to practice work avoidance, even for a week.
    Of course this is a very un-natural condition for the average human being.

    After 7 days, you will be able to shake the milk out of a cup of tea.

  26. mahmood says:

    Re: Meggie – Brilliant Question

    That’s certainly ONE of the problems we have been facing here Jasra, but there are others which are equally important that if the government is serious about reforms should give them equal importance in eradicating them:

    1. Free Visa workers abound, and most if not all of their sponsors are members of the ruling family.

    2. What private sector is there is Bahrain that can shoulder the responsibility? I estimate that 80 – 90% of the private sector is owned and operated by the Ruling Family and their traditional close associates. These families squeeze the Bahraini entrepreneur out of every opportunity that might haphazardly come his or her way. Look at Unitag owned by the Prime Minister who owns or has direct or indirect interest in most of the biggest projects that come into the island. Look at the hotel companies, and even MTC Vodafone’s shareholders.

    Name any “big” company that does not belong to one of the “big 5”: Al-Khalifa, Al-Moayyed (including the single-y spelling), Fakhro, Kanoo, Al-Zayani. Add to that the smaller (yet very large) traders like Yateem, Nass, Abdul-Aal. Very limited names but between them they hold the full wealth of the country.

    Let’s look also at who employs the tens of thousands of expatriate low-wage workers, dare to name a few? Let me begin by the ex-Minister of Labour Al-Sho’ala himself who is not a poor person but owns swathes of land and companies including the Yellow Pages etc. A minister of labour who was (and maybe still is) one of the biggest employers of foreigners on the island.

    Another problem we have here is the acceptance of mediocrity as excellence!© and of course the ever present problem of the lowest common denominator, ie, lowest wage, lowest price, and lowest creativity.

    Let me add to these problems of our abject acceptance that “a foreigner knows best” and much better than a lowly Bahraini. You work your guts out for 9 years on educating, cajoling, adding value, and all the good stuff at one of your customers to upgrade a facility, and when the time comes they give a contract of some BD 1.5 million to a foreign company! (Yes this has happened to me) because of “oh they know better”! So how the hell is the “private sector” EVER going to grow and provide these jobs?

    Yes I do believe we have a problem. Yes the problem resides in the welfare state. Yes it resides in the inefficiency of the majority of the Bahraini workforce, but it resides even more glaringly at the current crop of dim-witted, soulless, capitulating “leadership” of thought who OWN the middle management in government and private industry jobs.

    Can anyone create a nuke that would selectively vaporise these people? I’d pay good money for one of those!

    Manama we have a problem…

  27. esraa says:

    And this is what Bahrain has in common with Qatar

    “Yes I do believe we have a problem. Yes the problem resides in the welfare state. Yes it resides in the inefficiency of the majority of the Bahraini workforce, but it resides even more glaringly at the current crop of dim-witted, soulless, capitulating “leadership” of thought who OWN the middle management in government and private industry jobs.”

    I could change one word (Bahraini to Qatari) and post this on my own blog 😉

    Your assessment of the way the labor “laws” work to the advantage of a few — namely “royal” family and close consorts — has been the name of the game in Qatar. In the last 2 years though we are seeing some changes. Most have been cosmetic up until now but some of the latest ones may make a dent on this issue (i.e., the new laws affecting property and small business ownership).

    Another key, I firmly believe, is education. If the Qatari work force is educated — on par with the perecption of quality Western education — then what will be the excuse for importing the work force?

    But first, we must put a stop to the quadruple dipping that is allowed the most powerful in our communities. By that I refer to government stipends; owning all the industries; profits on the back of almost slave labor; and creating laws to facilitate skimming through government agencies. The ONLY answer to this problem is the democratic process and insha’Allah, the will of the people.

    Salaam Alaikum,

  28. mahmood says:

    Re: The failure of the Bahrainisation policy

    While I agree with you Steve that it is best left to the market to determine labour salaries, in Bahrain we have a critical and chronic problem of foreign labour that if nothing is done about it, we will all suffer, as some of us has been suffering for years.

    Such drastic remedies to be taken by the government is fully justified. They (for once) didn’t take a knee-jerk reaction but depended on a prolonged research by leading consultants so that their and our eyes are fully open to the problem, and once we start appreciating the problem we can jointly work towards a satisfactory solution.

    The fear is though that no alternative plans have been brought forward just in case this one (if adopted) fails. But as we are in a dire situation, I’ll go along with what has been proposed and am prepared to suffer the consequences if things do go wrong, but something HAS to be done about this problem NOW.

    If the only solution we have now is to level the competitive field then so be it. For far too long businesses in Bahrain have depended on cheap labour in order to offer cheap prices for goods and services, and reap higher than normal margins when compared with other industries in the area. For too long we have accepted the lowest common denominator that it has become our normal way of life, so rather than asking for better and more efficient service and goods, we continued to ask for cheaper prices.

    The “bottom line” is the all important mantra of almost anything in Bahrain. The question that if one would pay 10% or even 50% over the “lowest bidder” would mean better product and service almost never crops up, so we have cheap merchants, cheap labour and monkeys who live on peanuts. This is what we’ve been suffering from.

    This has led to a culture that does not demand excellence, but be satisfied with approximate solutions to problems and the continuation of this is the “In Shaa Alah” culture. A product is almost never rejected because of its inferiority, but excuses made for it! “it’s work for a couple of weeks and that’s all I’m looking for now” so abrogating responsibilities is a norm.

    The whole culture must change if we are to be part of the international society and start attracting foreign direct investments, rather than export the majority of our gross national product outside of the country.

    The situation is bad. Much worse than you can possibly imagine. Most businesses here are held by a select few, and the smaller businesses fight amongst each other for the crumbs.

    Competition at the moment does not generate a better service or product, on the contrary, competition’s only contribution to this country is still lower prices for inferior products and services, and if this is the culture it is no wonder that we continue to import cheap labour because they are cheap, we don’t look for excellence.

    It’s like Nader Shaheen said last night in his play: “Western experts who come to Bahrain are defined by gaining their expertise by knowing a bloke who did that sort of thing once!”

    So yes we do have sometimes western people here who hold high positions in companies and institutions who would probably not land a job of a janitor in their own country. We bring them here and install them at that position and listen to them because they are “white” rather than look deeply into their qualifications and how they can contribute to our local economy or knowledge. This has generated an awful lot of bad feelings, and invariably the brush gets used against people who do in fact contribute grately to this country.

  29. anonymous says:

    The failure of the Bahrainisation policy

    If those are conditions set forth by the government, you are in deep shit! But then again, it is a start, isn’t it? One has to start from somewhere, doesn’t one?

  30. [deleted]0.95776700 1099323586.392 says:

    The failure of the Bahrainisation policy

    I agree with Mahmood that enacting a minimum wage is a bad idea. If you want to bolster your economy, it won’t be done by outlawing honest work of those whose labor is worth less than an arbitrarily set minimum wage. All those young men who are currently sitting idle will not be entering the job market from the top but rather the bottom. If their labor is not worth the min wage they will not be hired and will not learn the fundamental skills that allow them to climb up the economic ladder, skills like showing up for work, taking orders, punctuality, etc. If you make those jobs illegal, then you have broken off the lowest rungs on the economic ladder, making it impossible for low skilled workers to climb up to medium-skilled jobs.

    The min wage is a job destroyer. If you are forced to overpay for labor you will find ways to avoid those labor costs by reconfiguring your business or automating it. In a fast food joint, you might reconfigure your business to have a drive-through window so that you don’t need busboys to clean tables and sweep the floors. You have the customers pour their own drinks so that you don’t need to hire people to do it. Grocery stores go to wholesale food configuration where customers pull their own stuff off pallets, bag it, and carry it out themselves. In gas stations, you go to self-serve on the pumps and have your customers pay at the pump with credit cards.

    Once those businesses reconfigure to avoid labor costs, the jobs don’t come back.


  31. mahmood says:

    6-point plan to success

    this is for the record and so I don’t forget what the main points presented at the labour market reforms workshop on Sept 23rd, 2004 sponsored by the Crown Prince:

    1. Equating local and foreign labour costs. Target set to BD 230

    2. Creation of a “Labour Fund” which is fueled by fees paid in lue of issuing work permits to foreign labour

    3. Cancellation of “sponsorship” of the foreign labour, that is, it will be completely legal for a foreign worker to move to another job freely without having to get the blessing (certificate of no objection) from his current employer. i.e. cancellation of enslavement of the foreign worker!

    4. overhaul the labour law so that it is easier for businesses to reward loyal and hard-working Bahraini staff, and to get rid of dead-wood. At the same time making it more difficult for a business to recruite foreign labour (especially in the low-skills bracket – the difficulty is translated to higher fees than those charged at the moment) but there will be no restriction to a company recruiting foreigners if they so wish as long as they pay the fees.

    5. cancellation of the Bahrainisation Policy in 3 years (2007)

    6. enforcing international labour standards and policing these standards, ie, an employer will not be allowed to crowd 20 labourers into a single room sharing a bucket for a toilet!

    I am completely for this plan and then some! I personally don’t give a flying shite what happens to the construction, textiles, and other industries who treat animals better than their own labour force and I hope that they will be the first to shut shop.

    Something to keep in mind: it is estimated that US$ 1.3 BILLION flies out of the country annually in fund transfers directly for the foreign workforce. This equates to 17.3% of the GDP.

    If nothing is done about this situation, it is estimated that unemployment in Bahrain amongst Bahrainis will pass 100,000 by 2013.

    In every 8 Bahrainis with jobs, there is one Bahraini unemployed.

    Between every 3 Bahrainis employed, 2 are unsatisfied with their jobs.

  32. [deleted]0.95776700 1099323586.392 says:

    The failure of the Bahrainisation policy

    A tax on foreign labor is a terrible idea. You can’t become competitive by avoiding competition, by rigging the game. Government price-fixing schemes like this always do harm to the economy. A better idea would be to use the market price for local labor as a metric to measure the progress of competitiveness. The market price tells you exactly how much you have developed the human capital in Bahrain and how far you need to go. It scores the effort.


  33. [deleted]0.95776700 1099323586.392 says:

    Re: The failure of the Bahrainisation policy


    I think that, more and more, there are fewer and fewer local prices for anything. My wage as a computer worker in Virginia is tied to the wages of computer workers in Bangalore. A headhunter just told a programmer friend of mine who was looking for a job in Austin that he was going to scale his salary expectations back because he was competing with programmers in India who are paid buttons for their work. You can not ignore the price of labor, or anything really, outside your borders or try to legislate it away.

    Having so many jobs available that you have essentially negative unemployment should raise the market price. I agree that tying foreign employees to an employer favors the employer at the expense of the employee and economy. They are not free to go where they are most valued and can be most productive. We have the same problem with H-2B visas, where computer programmers from India work for 70 or 80% of market price in return for being tied to the same employer for several years.

    It seems like the best solution would be to remove the restriction fixing an expat to an employer so that the price of foreign labor will rise, which sweetens the incentive for local labor to get in the business. Of course, this will never happen because employers in Bahrain don’t want laws that increase their costs no more than Bill Gates wants to pay market price for Indian programmers.

    The cost the government imposes on employers to hire an expat employer does not affect market price. The market price depends on supply and demand in the market for that labor. The market doesn’t care how much it cost you to supply that labor, only how much they have to pay. If the government effectively taxes the market price of expat labor, raising the cost of doing business, by forcing nonproductive workers on the payroll, it simply narrows the window in which businesses can employ that foreign labor profitably. It destroys businesses with marginal profitability and stops entrepreneurs from forming new businesses with low projected profit margins.

    I’d have to agree with you that having the government give free health care distorts the cost of labor. Employees should pay for their own health care through vouchers, ideally, or through private insurance. Government subsidies of employers in this manner disguises the true cost of running a business and favors unproductive businesses. It failed in the Soviet Union and caused the Soviet Union to fail.

    I don’t see any problem with remittances flowing out of the country. First, you gained by trading BHDs for labor. You made a profit in that trade. Second, no matter how far those BHDs travel, they have to return to Bahrain to have any value. I can’t buy a candy bar in Virginia with a Bahrain dinar. Ultimately, that dinar has to be traded back for something made in Bahrain. It forces consumers outside your country to participate in your economy, to buy in your market. It extends your economy. Most of the paper money printed in America circulates outside our borders and we are not exactly going bankrupt.

    My recommendation is rescind all the economic laws the government has made to improve the economy. No government can beat the free market at optimizing the economy.

    It’s something like you see when you walk around any campus where the planners have built sidewalks where they think people would walk most efficiently. Inevitably, you see the paths in the grass where people have found the most efficient routes to get where they need to go. Why didn’t the planners wait a month for people to wear these paths into the turf and then pave those routes?

    Get rid of the economic regulation and let businesses do business. Then regulate to support the best practices and suppress the worst. Those few government bureaucrats can not outthink all the brains of the entire economy working out prices and services and practices. Get out of the way of the free market and let it work.


  34. mahmood says:

    Re(1): The failure of the Bahrainisation policy

    Get rid of the economic regulation and let businesses do business. Then regulate to support the best practices and suppress the worst. Those few government bureaucrats can not outthink all the brains of the entire economy working out prices and services and practices. Get out of the way of the free market and let it work.

    That works in established economies which learned from experience and maybe as importantly where communities and community thinking has already taken place. It won’t work here I don’t think because the prevailing attitude of the business people (if you can call them that) has been to always take the path of least resistance: if to close a deal you have to bribe someone, then so be it. If to close the sale it means that you have to screw your employees out of an honourable life like at least providing them with proper lodging then so be it, if it means that you have to beat your employees to a pulp (litterally) then go ahead and do it, if it mean that you don’t provide them with overalls, or even just hats to protect them when working in 50+ degrees C in the direct sun, then so be it.

    So regulation must be enacted and has to be policed at least in the medium term so that you enculcate and engender a new work ethic and new way to treat your employees.

    Did you know that until this day construction firms transport their workers from and to the site in open trucks, open to the elements, the sun, the sand and more importantly in complete disregard to their own safety? Even though there are laws which supposedly forces these companies to only transport these workers in closed buses? The response of the enlightened construction firms is to enclose the back of the truck with plyboard!

    No matter. What I am trying to say that we need this market reform, and the only way to do it now is through legislation which attempts to equate the costs of a foreign worker and a local.

    The impression that I get as to why this is done and why they are talking primarily at the low end job is to enable the locals to start climbing the economic ladder as you correctly pointed out in one of your comments.

    In a country where the ratio of foreign to local workforce is more than 3:1 (I estimate, please correct me if I’m wrong) then this new and honest initiative to redress the balance is not just needed, but sorely required.

    In 10 – 20 years time we have to think about the labour policy again, and at that time if this policy is successful, the ratio should be foreigners to local be like 1:3 and then we can think of scrapping the tax/fees, because at that time, the employers’ psyche would have (should have) changed to prefer local, responsible and efficient workforce.

    [Modified by: Mahmood Al-Yousif (mahmood) on September 25, 2004 08:00 PM]

  35. [deleted]0.95776700 1099323586.392 says:

    Re: 6-point plan to success

    Looks like half good, half bad to me.

    Getting rid of sponsorship for foreign labor and allowing labor mobility is obviously good. It forces employers to treat their foreign employees better. Foreign employees can move to where they are most needed in the economy fast.

    Establishing international labor standards is also a good idea, not only from a humane perspective but also from a competitive standpoint. The best workplaces attract the best workers who do the best work.

    It’s also good to give employers the freedom to fire at will. Obviously, it weeds out bad employees but it also allows companies to reconfigure themselves to exploit business opportunities and to escape from losing strategies.

    It’s a bad idea to artificially equalize foreign and local labor rates. This is basically a tariff on foreign products, a form of protectionism, which will weaken the local market, not strengthen it. You become strong through direct competition.

    For example, when Japanese autos of superior quality began flooding the American market and cutting into domestic automakers market share, the US government agreed to limit imports of Japanese cars in order to allow the US manufacturers time to become competitive. The Japanese ended up selling those limited cars for a premium, reaping larger profits, and went into production of luxury cars like the Lexus, which were not covered by the import restraint, establishing a new threat to a new US market. That was a perverse effect of this wrongheaded legislation. The US automakers did nothing to improve quality during the term of the legislation because they were protected from competition. It wasn’t until the law was lifted and competition resumed that US automakers made serious efforts to improve their quality.

    I don’t think Bahraini labor will become competitive with foreign labor until it is made to do so. Rigging labor prices won’t do it.

    Creating a labour fund sounds like a recipe for corruption to me. Every person in power will want to get his hands in that pot of money.

    That said, at least somebody wants to change something for the better. Even if bad policies are enacted, they have the chance to fail in public so they can be changed.


  36. [deleted]0.95776700 1099323586.392 says:

    Re(2): The failure of the Bahrainisation policy

    I’m not sure that you can propagate a more humane attitude of employers for employees by legislating it. It sounds like those low wage workers need a union to raise hell, to negotiate wages, to strike against bad conditions.

    I am pretty far removed from the poor working conditions of immigrant labor, working at the other end of the economic spectrum. However, even in my comfortable position it’s obvious that employers rarely treat you well out of principle. The more power you have as an employee, the more respect your employee will show you.

    I have power as a high-skilled employee because I have a scarce specialized skill and can leave my job on a moment’s notice. I would think that low-skilled employees are a commodity and easily replaced, which makes them weak in the workplace. Laws protecting them make them more powerful, but even the best laws are unevenly enforced. Organizing themselves into unions is their best bet to achieve real power in their workplace.


  37. mahmood says:

    Re(1): 6-point plan to success

    I don’t think Bahraini labor will become competitive with foreign labor until it is made to do so. Rigging labor prices won’t do it.

    They’re trying to unhinge the labour market from past mistakes, and by enacting this new policy (remember it is still under discussion and nothing is set in stone untill it becomes law) is to try to correct a situation. The previous situation was complete protectionism (Bahrainisation) which is a complete failure as that policy just created completely uncompetitive and lazy workers, because the Bahraini worker was absolutely assured that s/he cannot be fired! Just like your example with cars, this exactly happened with the Bahraini labour force here on the ground. The new proposed policy is trying to equate and balance the market.

    Did you know that some reports (UN) put about HALF of the Bahraini population under the poverty line? That is because of the dirth of jobs available to sustain a comfortable life. The figure mostly quoted as the base-line is BD 309 ($820) per month. If you earn less than that then you are officially below the poverty line.

    The figure this new proposed legislation is trying to establish is a pseudo-minimum-wage line of BD 230 ($610). That is 34% below the poverty line. But I think this figure was conscienceously selected because they are trying to equate what a foreign low-skills labourer SHOULD cost an employer considering that the company should provide adequate and comfortable accommodation, sustinence and health covers. So this “tax” if you want to call it that they are charging the employer will force the employer (for the money he is paying) to provide at least proper procedures and training for his workforce to get better efficiancies out of his workforce.

    Creating a labour fund sounds like a recipe for corruption to me. Every person in power will want to get his hands in that pot of money.

    This is the only legitimate concern that I have with this plan. The workshop was not specific (I didn’t attend but this is what I understood from the various reports I have read so far in the papers) as to how this fund is going to be maintained, audited and controlled and by whom? I don’t have an answer to that. But if the workshop’s sponsor admirable transparency is anything to go by, then I can say that this fund is going to be managed transparently, or at least I have reason to believe that it will be.

    One of the movies shown to the workshop is about poverty in Bahrain! This is a phenominal and completely new thing that has happened here that the mind completely boggles. Why? Because as far as I know in the length and breadth of Arab history, NO leader admitted wrong, every one of them refused to even acknowledge that they had any kind of problem in his country, let alone admiting publicly that yes, we do have a BIG unemployment problem, and YES we DO have poverty in our domain!

    I haven’t seen the film and I hope that the development board is going to encode it and put it up on their website for people to view on their own. But, the film was done and presented by Riz Khan (of CNN) the production team was unhindered in who they want to visit and talk to, they visited villages in various parts of Bahrain and talked to their residents. The result was heart rending.

    So maybe the taxation/fees on foreign labour are artifitial and will dissapear with time, but I think that at the current time is the only solution available to help Bahrainis to genuinely start climbing the ladder. The basic wage will not catapult them above the poverty line, but at least it is going to allow them to start working, and start a new way of thinking about work.

    The past has been a welfare state where you absolutely cannot fire a Bahraini. I personally was threatened with death by one of my employees, yet when I fired him he ended up taking me to coart and fleecing me! I was the one in the wrong! Now this should no longer be the case.

    I’m not saying that these proposals are a Godsend, but to us in Bahrain, they promise to at least approach that status.

    What I am worried about most of all though is that corruption was not attacked at the same time as the labour market reform. Maybe because the effect of corruption is economical, the Crown Prince is holding his guns on this subject until he unveils his forthcoming economic reforms. I hope and pray that he will attack corruption in the same voracity he has taken a lead in the labour market reforms.

  38. [deleted]0.95776700 1099323586.392 says:

    Re(1): The failure of the Bahrainisation policy

    [quote]So yes we do have sometimes western people here who hold high positions in companies and institutions who would probably not land a job of a janitor in their own country. We bring them here and install them at that position and listen to them because they are “white” rather than look deeply into their qualifications …[/quote]

    Ummmh. Exactly how much do those positions pay, Mahmood? Are there any openings left?

    Just curious,


  39. mahmood says:

    Re(3): The failure of the Bahrainisation policy

    It sounds like those low wage workers need a union to raise hell, to negotiate wages, to strike against bad conditions.

    Oh I absolutely agree. But with the current laws there is no way that they can strike or even demand a better pay from their employer. Or even be assured that they will be paid in a strict monthly pay schedule!

    You know why? Because they are indentured to the employer. He holds their passports. He provides whatever “digs” he wants without any intervention by the authorities. He provides them with food and water.

    In this side of the scale Steve, no matter what they are called, they are virtual slaves.

    This new policy if enacted will give them a huge benefit in that (1) they can up-sticks and go work for someone else who will pay them their fair wages on time, (2) provide them with good accommodation, and (3) will expect better performance out of them, hence will train them appropriately thus increasing their knowledge and their atractiveness to other employers and jobs.

    As to unions, we have them, but they lack teeth. That’s got to change in the future as the juggernaut of democracy rolls on in Bahrain!

  40. mahmood says:

    Re(2): The failure of the Bahrainisation policy

    Oh I’m sure there are a few still left, but not as many as we used to have!

    Anyone care to shed more light on this? Have you come across such a person anywhere in the Bahraini market-place or government? I’ve come across at least one!

  41. fekete says:

    The failure of the Bahrainisation policy

    Steve ..

    As far as I understand it, the local market price for labor s not really a local market price. It is seriously skewed due to isssues such as no barriers between the seriously cheap market prices for South East Asian labor and Bahrain. It is skewed by the forced legislation of Bahrainization. It is skewed by the significantly large numbers of unregulated (free visa) expat labor in this country. It is skewed by the fact that once an expat omes to town, he/she is not able to leave their employer for another employer because of our outdated sponsorship laws. It is skewed because a lot of employers have to pay for non productive Bahraini’s on the books in order to get permission to import a low cost expat… falsely driving up overhead. Therefore, the de facto ‘market price’ is not really a market price. Market price implies a reward for productivity.

    One of the factoids that has been in the papers is the fact that Bahrain exports the largest percentage of its GDP in terms of remittances. The highest in the world. Scary, no? Why not give these workers residency of some sort, and then keep some of that money in the country? And if that isnt acceptable, then charge their employers for the use of the country’s infrastructure, electricity, health, education services .. (which are all heavily subsidized anyway).

    When I was in school in the US, I had to pay for health insurance out of pocket as part of my overall tutition fee. None of these guys have to do that here. When I worked abroad, I had to pay municipal tax on housing and corporate tax on earnings. None of the employees do that here either; neither Bahraini’s nor expats.

    The whole system, not just the labor market, needs to be addressed if the system is to be fair to everyone. Starting with government reform.

  42. esraa says:

    Re(3): The failure of the Bahrainisation policy

    Oh we have quite a few of them here in Qatar — present company excluded, of course 😉


  43. [deleted]0.95776700 1099323586.392 says:

    Re(4): The failure of the Bahrainisation policy

    It just seems like such a waste to post my opinions here for free if I could get paid for them. That’s all I’m saying.


  44. [deleted]0.95776700 1099323586.392 says:

    Re(4): The failure of the Bahrainisation policy

    So I assume Bahrainis likewise can not organize a real union, either? If so, it all returns to establishment of individual rights, huh?


  45. anonymous says:

    Re(5): The failure of the Bahrainisation policy

    Steve ..

    Only problem is that here, you have a captive audience. If people are going to start paying for opinions, they may slap on some quality control measures .. a wee bit tricky mate ..;)


  46. kategirl says:

    Re(2): 6-point plan to success

    So this “tax” if you want to call it that they are charging the employer will force the employer (for the money he is paying) to provide at least proper procedures and training for his workforce to get better efficiancies out of his workforce.

    Hmm… I think this theory will only work in reality under the condition that these workers will be allowed to switch jobs freely (since the employer does not want to pay the hiring fee repeatedly).

    One of the movies shown to the workshop is about poverty in Bahrain! This is a phenominal and completely new thing that has happened here that the mind completely boggles. Why? Because as far as I know in the length and breadth of Arab history, NO leader admitted wrong, every one of them refused to even acknowledge that they had any kind of problem in his country, let alone admiting publicly that yes, we do have a BIG unemployment problem, and YES we DO have poverty in our domain!

    Yes! This is a HUGE step. I am astounded that the establishment has accepted the existence of poverty in Bahrain. I hope we do get to watch the movie some time soon.

    More generally, I am amazed at the discussions that are taking place in the public domain about economic reform. Just two weeks ago I had no idea or reason to believe that the government was willing to go back on its Bahrainization policy, and I did not imagine it happening anytime in the future. But all of a sudden we hear that they’re getting ready to make reforms. Because pride is such a big factor in this part of the world I didn’t think the govt would have the guts to lose face over this and admit its previous actions went wrong. In that regard, hats off to the King and the Crown Prince for taking this initiative on their own. While the MPs were still squabbling over Nancy Ajram and Big Brother, the “New Guard” of the Royal Family has been taking substantial and positive steps for the people.

    Like Mahmood said, these reforms may not be perfect, but it seems that they have made a real effort, and I wholeheartedly endorse it. I’m sure that these reforms will make life better for both Bahrainis and expats if they are implemented properly.

  47. esraa says:

    Re(6): The failure of the Bahrainisation policy

    Good one JJ!

    You guys are on a funny roll tonight 😉


  48. mahmood says:

    Re: The failure of the Bahrainisation policy

    Starting with government reform

    I’ve read the report on the workshop in Al-Ayam, Al-Wasat and the GDN on Friday. Al-Ayam’s coverage is more complete than the other two papers and I have to say that the plan is very ambitious even if 50% of it comes true. It’s high time that we have a developed and encompassing strategy for the future of Bahrain, in fact I am really disturbed and dismayed that the parliament didn’t take the initiative itself since it was opened, rather than fight and bicker with their meaningless debates on beards et al.

    So praise goes to the Crown Prince for spearheading these reforms which starts with the complete overhaul of the labour market with full economic and educational reform completing the circle. There is no way that any one of these reforms can be done on its own, everything ties in with everything else to provide a complete strategy for the future of Bahrain.

    We have to wait to see what will be done about the economic reforms, the workshop of which is going to be done in November (after Ramadhan) as reported in the press, and I hope that the very thorny issue of corruption will be given top priority. Because without attacking corruption head-on, then these reforms will just be paid lip-service and will never be enacted.

    It has to be declared at the top of these workshops in unambiguous terms that these reforms will be applied to the country as a whole, and no one is going to be above the law, nor will anyone continue to receive special treatment because of his or her name, family or tribe, but everyone will be judged the same under the law. Once this happens we will see that everyone in Bahrain will jump on the band-wagon.

    There seems to be an immediate opposition movement happening from a source which I expected to be the champion of these reforms: the Chamber of Commerce and Industry! But no, they have been very vocal against these labour reforms! And why not if you think that the CoC is only there to benefit some of its members. I would never have joined the Chamber had I a choice, because if you intend to export anything, the Ministry of Commerce forces you to be a member. That’s another topic anyway, but like many small businesses I don’t feel that the chamber represents us in any way or form, so whatever they say has no weight with me.

    I stand completely for these reforms without reservation, but do have some trepidations in that if corruption is not taken out in public and shot in the head, then there won’t be any reformations no matter how or who sponsors them.

  49. anonymous says:

    The failure of the Bahrainisation policy

    I’ll tell you a story I found interesting. I have a friend…a new Egyptian-American who works for an international educational testing company. Their company hired a professor from Jordan to create questions for a test. The professor was also supposed to hir out the printing for the test in Jordan. Nothing was on time so my friend had to go to Jordan from the US to see what the problem was.

    He had an interesting analysis. He said part of the problem was the dearth of modern management techniques and the way to treat subcontractors. He said that the Jordanian idn’t treat the printer as a professional and instead tried to bargain him down too low and ordered him around. He said that there needed to be a win/win relationship doing business instead.

    There needs to be introduced the concept of equality into business relationships. I also read an article recently on why Arab armies lose. One of the reasons is that a non comissioned sergeant in the US has the same responsibilities as a colonel in the Middle East.

    Its a top-down culture in the Arab military. Information and decisionmaking is not done at the lowest possible level like it is elsewhere. In short, the way people are currently relating to people who work for them is part of the problem. If you infuse modern leadership principals into business…it will filter out into the whole society and benefit everyone.


  50. [deleted]0.95776700 1099323586.392 says:

    Re: The failure of the Bahrainisation policy

    I think the US government and public sectors followed a grassroots popular rejection of racist policies. The majority of America was against overt racism when Truman integrated the military and when the government began integrating its workforce in the 1960s. You can not implement policies like that without popular support.

    To get that popular support, you need to make your case to the public through a thousand examples and arguments.


  51. [deleted]0.95776700 1099323586.392 says:

    Re: The failure of the Bahrainisation policy


    There was an article in the June/July edition of Air & Space Smithsonian magazine about Seddik Belyamani, the top airplane salesman for Boeing. Belyamani talked about the different negotiating styles of different nationalities. He said Arabs believed in win/lose negotiations, that they weren’t satisfied until they felt they had wrung every concession from you.

    The current trend in management is to use better communication to eliminate inventories, which are essentially hedges against unpredictable supply. The bigger the variance in the supply and manufacturing process, the bigger the inventories needed to cushion against that variance. In a factory, workers at each work station of a production line often keep their own stash of parts to keep the line going if they are caught short. All those little stashes add up to a considerable amount of inventory, all of which typically is financed by borrowed money. Unpredictability costs money.

    Lean management strictly controls that inventory to reduce costs. It also believes that sloppy inventory control that allows those little stashes hide problems contributing to the variability of production. If you don’t have the stashes, the production line stops when raw materials are not punctually supplied. That focuses attention on the real problem with supply so that it can get fixed.

    With perfect information, no inventory accumulates, no inventory sits idle. It is smoothly moving from work station to work station, value constantly being added, until it reaches the customer. Those inventories are a metric of how inefficient your information is about your businesses. The less you know about the behavior of your suppliers and customers, the bigger the warehouse you will need.

    That philosophy extends outside the factory to your suppliers and customers. You have to treat suppliers as allies so that you can freely exchange information that allows you to predict each others needs and satisfy them. If you treat them as adversaries, then neither of you can trust the information you get from each other, even if offered, which results in greater variance in the supply of raw materials, lower performance, and higher costs.

    Trust reduces the transaction costs in your business and in your society. If you treat everyone as an adversary, there is a price to be paid in your efficiency. Approaching business partners with a win/lose strategy is a good way to win a battle but lose the war.

    The Soviet Union had the same problem that you mentioned with respect to their military. The Soviets would run a flight simulator with a team of junior officers. They were surprised that a similar flight simulator in the USAF was run by a couple sergeants. Part of the problem, I speculate, was that the Soviets were not as well educated as Americans.

    I was surprised to read that there were more than 9000 generals in the Iraqi military. I know the USAF has at most 300 generals. There are certainly no more than one thousand generals in the entire active US military and probably less. It looks like Iraq had generals like we have lieutenant colonels. Maybe Saddam made every Tikriti a general or something. Certainly, such a top heavy rank structure is a handicap, thank goodness. Of course, in a tyranny you need a lot of bosses to tell everyone what to do.

    I agree with your comment as to why Arab militaries lose to Western-style militaries but it’s just the tip of the iceberg. Basically, Arab militaries fail for the same reasons their economies, politics, education, et cetera are a mess. The dysfunctional Arab militaries are representative of their dysfunctional societies.

    If there is one dominant theme that illuminates the reason for Arab failure in war against the West, it is democracy. Since the Persians were beaten by the ancient Greeks, democracies have enjoyed an advantage over other political systems in war. The ancient Greeks rightly saw freedom as their most powerful weapon. When your people enjoy freedom, you engage every one of their minds on the task at hand with superior results. In a tyranny or authoritarian regime, only a handful of brains at the top are engaged in solving the problem and often prove too rigid to change course when results prove disastrous. A democracy is more flexible, and can try new strategies and leaders if the current ones fail. There are many other benefits as well, too numerous to mention.


    [Modified by: Steve The American (Steve) on September 25, 2004 11:00 PM]

  52. fekete says:

    Re: The failure of the Bahrainisation policy


    You are right about the fact that most of the Mddle East has a large public sector. It has traditionally been the largest contributer to GNP as well as the largest employer of nationals.

    If we are to do true reform in this part of the world, it is going to be painful. We will need to privatize, corporatize, and have the gov’t get out of the way and let the private sector do its job. This is going to be quite a revolutionary concept in an area that has relied traditionally on a welfare state. Reforming the modus operandi of the public sector means that people are going to get fired. Unions will act up .. and the battle of civil society will commence.

    So, true reform is not going to be easy, and needs to be managed very very carefully if it is going to succeed.

  53. fekete says:

    Re(5): The failure of the Bahrainisation policy

    No, your assumption is wrong. Bahranis are allowed, and actually have organized real unions .. and they aren’t merely paper ones …

  54. [deleted]0.95776700 1099323586.392 says:

    Re: The failure of the Bahrainisation policy

    [quote]1. Please explain your statement above in the context of why the world’s greatest democracy, (namely the US of A) failed miserably in the Vietnam war. [/quote]

    We had the means and strategy, but we lacked the will to win.

    [quote]2. Doesn’t superior technology have something to do with why wars are won? And isn’t the ability to acquire/ build superior technology the crux of it? As such, isn’t superior engineering skills and a successful market economy more important?[/quote]

    How do you get that superior technology except in a culture that favors the free exchange of ideas? For example, the Soviet Union could not compete with the US in the development of new technology partly because they were a secretive culture where people were not free to speak out and explore new ideas. That’s why the Soviets were always playing catch up with the computer revolution fomented in the States.

    Right now, there is a networking revolution sweeping through the military, where all the military assets are connected to each other at the low level and distribute information to everyone. If some platoon spies some enemy armor, they enter that data in the network and it is instantly available to everyone who can do something about it or needs to know it. Troops, aircraft, ships. All connected.

    Now that is a technological innovation but it reflects a cultural norm as well that the guys at the lowest level should have the latest info immediately and will make the best use of it. That is a value of a democratic society which believes in a free press and free speech. In authoritarian societies, the leaders hoard information to preserve their power and dole it out only when they need to do so. Naturally, the informed force has the advantage over the uninformed force.

    When I was at the Air Force Academy during the Iranian revolution, a captain came back to speak to my Middle Eastern/African history class after serving as a liaison officer in Iran. He said that the generals of the Iranian military never met because the Shah was afraid they would plot against him. I suspect that is a deficiency of the militaries of many a non-democratic nation. Meanwhile, all the generals of the US Air Force meet once per year to coordinate policy and bond together. Since our leaders are democractically elected, we don’t need to worry about some military strong man taking over like the banana republics do.

    I might also point out that many of our third world allies have the same equipment as the US military. We regularly beat them in war games to the point that the games are usually scripted so that our allies are not embarassed. Yet they can not script the outcome of individual engagements. If a USAF F-16 goes against an Egyptian F-16, the Egyptian loses. If USAF F-16 goes against an Israeli F-16, it could go either way. My own experience as an F-4 navigator is that the Third World military is so inept that you have to pull your punches during an air engagement in a war game and can not give a normal honest debrief because it will embarass them too much.

    The recent exception to that rule is that the Indian air force, flying Su-30s, were able to beat some of our F-15s in a recent war game there. To my knowledge, India is the only Third World country, other than Israel, to ever seriously challenge USAF fighter pilots in a war game. India is a democracy. So is Israel. Egypt is not.

    Individual weapons are just one tile in the mosaic. The way they are used is also important. There are additional levels of doctrine above that. Authoritarian regimes generally fail at that, too.

    An example of the difference between the militaries of a democracy and a tyranny is the Normandy invasion in WWII. Many of the American forces landed on the wrong beaches and could not perform their assigned tasks for which they had trained. Their commanders back on the ships lacked the information to give them any meaningful direction. So the individual sergeants and lieutenants stuffed their maps away and started their war where they were. They decided on their own what route to take to fight up the hills and on their own initiative led their men up off the beach. They didn’t need any orders.

    Meanwhile, the German military on the scene saw the situation. They had armor in reserve to throw against the invasion. They knew they had to stop the establishment of a beach head before the main body of the invasion force landed. They knew what they had to do. But they had to wait for Hitler’s authorization. When they called for authorization, they were told Hitler was still asleep and was not to be awakened.

    The Germans and Americans had roughly equivalent technology. The Germans had better guns and armor, well-trained troops. However, their culture of tyranny hobbled the effectiveness of that.

    A democracy is the best container for a free market. A free market infers that there are property rights, ie that you have clear title to your property and can do whatever you please with it. That, in turn, infers political freedom, ie the right to speak freely and such. How many free markets do you see in authoritarian states? Their respective values inherently conflict. What authoritarian state is technologicially innovative? It’s no coincidence that technological innovation usually pours out of democracies and only dribbles out of authoritarian regimes.


  55. kategirl says:

    Re(1): The failure of the Bahrainisation policy

    Since our leaders are democractically elected, we don’t need to worry about some military strong man taking over like the banana republics do.

    So very true. The bizarre thing, however, is that your democratically elected leaders have had a tendency in the past to support those very same “military strong men” in the “banana republics” that you criticize.

  56. anonymous says:

    Re(1): The failure of the Bahrainisation policy

    Steve, the Germans were much better fighters than you Americans in WW2 – to such an extent that your generals worked out that every German soldier was worth one and a half Americans. They took on the whole world and almost won – not surprising you’re desperate for them to now bail you out of your Iraq venture.

  57. anonymous says:

    The failure of the Bahrainisation policy


    Interesting. In the US, when we needed to change the culture of racism against blacks…we started with the military and government employees. Most of the Middle East has a large public sector.

    I guess it would be interesting to intoduce modern leadership techniques, win/win, democratic management styles, etc to the public sector to see if it could make a difference.


  58. anonymous says:

    The failure of the Bahrainisation policy

    Steve ..

    “If there is one dominant theme that illuminates the reason for Arab failure in war against the West, it is democracy. Since the Persians were beaten by the ancient Greeks, democracies have enjoyed an advantage over other political systems in war. ”

    I have two questions for you.

    1. Please explain your statement above in the context of why the world’s greatest democracy, (namely the US of A) failed miserably in the Vietnam war.

    2. Doesn’t superior technology have something to do with why wars are won? And isn’t the ability to acquire/ build superior technology the crux of it? As such, isn’t superior engineering skills and a successful market economy more important?

    Jasra Jedi

  59. [deleted]0.95776700 1099323586.392 says:

    Re(2): The failure of the Bahrainisation policy


    We can’t control the whole world and remake it in our image. If we even tried, you’d be the first to be bitching up a storm, wouldn’t you? It looks like one of those damned if you do, damned if you don’t rhetorical traps critics of the US always use: 1) The US is bad because it supports bad foreign leaders; or 2) The US is bad because it overturns foreign leaders.
    It’s a fun game for you to play, isn’t it? It’s not really an intellectually honest game though, is it?

    As I’ve said before, in most undeveloped countries, it’s a choice between dealing with murderous thieves or thieving murderers. Pick one.


  60. [deleted]0.95776700 1099323586.392 says:

    Re: The failure of the Bahrainisation policy


    I didn’t say Persians were Arabs. I’m using them as an example of tyrannies. I believe they are Aryans, aren’t they.

    The Greeks were certainly not perfect democracies. Women had no vote and they held slaves. However imperfect, their democracy was superior to Persian tyranny.

    Democracies generally have an advantage, but I’ll admit they don’t have an absolute advantage. However, the Spartans were eventually beaten by the Athenians after a long Spartan rule.

    Your idea that the guerrillas beat the US military is foolish liberal mythology. May I remind you that the US military left Vietnam in 1973 and the North did not win until 1975. If the guerrillas beat us, shouldn’t that have happenned before we left?

    In all recorded military history from 4004 BC to now, the only guerrilla force to win against a standing army was the Afghans against the Soviets. They won because their country was ideal guerrilla country, they were superabundantly financed by the US and Saudi Arabia, and they were supplied with high tech weapons from the US.

    Guerrilla fighting is a strategy of weakness. Guerrilla forces can not defeat standing armies, only harass them. Mao, the authority on guerrilla warfare, says that the whole point of guerrilla warfare is to form a regular army that can defeat the enemy regular army.

    The North Vietnamese did not conquer South Vietnam until they invaded with their regular army in 1975, supported by armor and air. In short, their regular army won the war, not their guerrillas, who were wiped out in the failed Tet Offensive of 1968. Even then, the South would have held its own had we not cut off their supplies and the air support we promised. The Soviets and the Chinese kept the North fully supplied. One short B-52 campaign would have ended the North Vietnamese offensive.


    [Modified by: Steve The American (Steve) on September 26, 2004 02:36 PM]

  61. [deleted]0.95776700 1099323586.392 says:

    Re(2): The failure of the Bahrainisation policy

    Mr. Anonymous,

    Why do you think they lost, then?

    Please provide a reference for your assertion that US generals counted Germans as worth 1.5 times a US GI. I’ve never read that anywhere. It doesn’t sound like any military metric I’ve ever heard. I think you made it up.

    The Germans were good soldiers throughout the war. I’d say our troops started out WWII as good but inexperienced and progressed to excellent. As for who was better, it is a close call if you measure the GIs against the Germans who fought in France. It would depend on the values upon which you rated each. They had very different philosophies.

    Supply tipped the balance in our favor. As one old GI told his son: We shot at the Germans from our hill. The Germans shot at us from their hill. They ran out of bullets first. We took their hill.

    Your notion that the German military is somehow superior or even equivalent to the US military today is breathtakingly clueless. The Germans have not put any money in their military for decades. The US defended Germany in the Cold War, not the Germans, and their military atrophied as a result. They’re still flying F-4s the US Air Force mothballed ten years ago. None of their military has adopted the technology developed by the American military in the last decades. Right now, the militaries of continental Europe are so backward that it is dangerous for them to be on the same battlefield as the US military except as occupation troops behind the lines. The German army is basically working with 1980s technology. They even have trouble transporting their army anywhere. We would have to carry them around.

    The US military are warfighters. The European armies, except for the Brits, are peacekeepers, armies of horse-holders. They’re one step above heavily armed police.


  62. kategirl says:

    Re(3): The failure of the Bahrainisation policy


    My point was not to claim that America is good or bad. I deeply respect American democracy, and I am aware that it is not the US’s responsibility to implement this democracy in the rest of the world. I was just making the point that on first glance it seems odd that a nation that believes so deeply in the idea of democracy has a history of foreign policy that sometimes acts against the ideals of democracy. I wasn’t trying to make any value judgements about you or America… I was merely highlighting this peculiarity (and its not unique to the US by any means).

    The choice that the US faced with regards to the Latin American “Banana Republics” was to either (i) play a hands off game and not get involved in their domestic affairs, (ii) support the democratically elected governments, even if they were Commies, or (iii) to support “military big men” against the democratically elected Lefty govts.

    In far too many occasions US foreign policy decided to go with option (iii). It just strikes me as surprising that this was the choice of a country that loves democracy so much.

    Disclaimer to Steve: I love America.

  63. mama says:

    The failure of the Bahrainisation policy

    Steve, Persians are not Arabs. They’re an Indo-European people just like the Greeks. And the Greeks were hardly democracies of the sort you’re familiar with. And anyway, how did the military caste system of the Spartans defeat the “superior” democracy of the Athenians? How did the absolute monarch of the Macedonians bring all of “democratic” Greece under its thumb? And many other examples…war is a complicated as hell business, as we’re finding in Iraq.

    jasra jedi: the U.S. lost the Vietnam war because the U.S. cannot use the necessary tactics to defeat a civilian guerilla war, for moral reasons. Think how, say, Pontius Pilate would have gone about winning the Vietnam War.


  64. [deleted]0.95776700 1099323586.392 says:

    Re(4): The failure of the Bahrainisation policy


    Well we agree on something then.

    America, for the most part, built the banana republics. The big US companies built the banana plantations, the infrastructure to support them, the ports to ship the bananas, and on and on. In many cases, it got down to social work. Some of the slash and burn farmers who came down from hills didn’t know what doors were and would smash them up for kindling. For others, they found they could not pay them regularly because as soon as they got money in their pocket they would buy as much liquor as they could and get drunk as long as they could. They had to wait until the end of the season to pay them.

    There is a limit to how much we can guide people in the legitimate conduct of their own peaceful affairs. It’s kinda like trying to help a hapless cousin who can’t run his own life. You can help him some but in the end he has to run his own life and be responsible for his own decisions. You can’t let him blame you for his bad decisions.

    I’d say that if anything the worst thing we have done in Latin America is help them too much, which keeps their governments in a form of adolescence which avoids taking responsibility for their own affairs. They know if things get too bad, Uncle Sam will come down there for a while and straighten things out.


  65. [deleted]0.95776700 1099323586.392 says:

    Re: The failure of the Bahrainisation policy

    Carpet bombing was an obsolete tactic by the time of the Vietnam war. It hasn’t been used since the Korean War.

    As Colonel Bui Tin from the NVA general staff said, the way to defeat the NVA campaign in the south was for the US to invade Laos and occupy the Ho Chi Minh Trail. That would have cut off the flow of men and supplies necessary to stage attacks on the South. Colonel Tin said nobody on the general staff could understand why we didn’t do something so obvious. Our commanders in Vietnam also could not understand why the US political leadership would not allow them to do something so obvious. Neither do I.


  66. fekete says:

    The failure of the Bahrainisation policy

    Steve ..

    Thanks for that. I will agree that the success of the military comes from the system of how information is disseminated, how decisions are made, good – if not superior technology, and the know how to use it.

  67. anonymous says:

    The failure of the Bahrainisation policy

    Steve is right about Viet Nam. Carpet bombing the cities would have won that war. Thats what the North Vietnamese say too.

    In many cases…other armies have had better technology than the US. The strength of the US is is not in its better technology, or its capitalism or its freedom or its leadership style, or anything else. It is in the combination of all these things. Mostly its culture. Forget armies.

    The Middle East should stop trying to become a world power and concentrate instead on building a civilization that is the envy of the world where people are happier, where there is opportunity, creativity, generosity, equality of spirit, etc.

    What you have to understand is that the US doesn’t really want to be a world power but feels thrust into that role. Power doesn’t come when you seek it. It comes as a natural outgrowth of success at civilization.

    It pains me to see the Middle East concentrating on the wrong things. You can’t get there that way.

  68. anonymous says:

    Re: The failure of the Bahrainisation policy

    qatarisation – most of the people are not prepared to work. Why should they when they can’t be sacked.

  69. anonymous says:

    Re: The failure of the Bahrainisation policy


    I am doing a research on the Bahrainisation Law and came across this site. Good reading and discussion.

    I just need some clarifications. What percententage of Bahrainis should be incorporated in the employees of every company? I need the percentage requirement and I cannot seem to find it.

    Do you have more specific details on the issue?

    I hope to hear from you.


  70. mahmood says:

    Re(1): The failure of the Bahrainisation policy

    Every type of business has different percentage requirements. The best bet is to contact the Ministry of Labour’s Director of Employment (who actually produces these certificates) who could tell you exactly what you need.

    Here’s their website:

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