Exploring Average Income Levels In Bahrain

The average salary in Bahrain is a complex topic influenced by various factors, including industry, job role, qualifications, and an individual's level of experience. Bahrain's economy is heavily dependent on oil and gas, but it has successfully diversified into sectors like banking, tourism, and heavy industries. The average gross salary in Bahrain is estimated to be around $3,962.77 per month or $47,606.38 annually. However, salaries can vary significantly, with some sources placing the range between $531.92 and $17,553.19 per month. The country's median salary is approximately $4,202.13, indicating that 50% of the population earns above this amount, while the other half earns less. Bahrain's taxation system also plays a crucial role in shaping disposable income, with no personal income tax and a favourable environment for expatriates.

Average monthly salary in Bahrain

The average monthly salary in Bahrain varies depending on factors such as industry, job role, qualifications, level of expertise, type of occupation, and sector. As of the second quarter of 2023, the average monthly wage in Bahrain was 866 BHD (Bahraini Dinar), equivalent to approximately 2,297.08 USD. This figure represents a decrease from previous quarters.

Bahrain's economy is heavily dependent on oil and gas, with petroleum accounting for 60% of export receipts, 70% of government revenues, and 11% of GDP. Despite this reliance on the energy sector, Bahrain has successfully diversified its economy, particularly into banking, tourism, and heavy industries. This diversification has contributed to the country's overall economic growth and the availability of various job opportunities.

The average monthly salary in Bahrain can range from approximately 450 BHD to 4,000 BHD. The median salary, which provides a more representative indication of typical income, is around 1,500 BHD. It's important to note that salaries in Bahrain are exempt from personal income tax, which increases the net take-home pay for employees.

The highest-paying occupations in Bahrain typically require specialized skills, advanced education, and extensive experience. These include positions such as chief executive officers, doctors, banking and finance managers, lawyers, and engineering managers.

In terms of annual salary, employees in Bahrain can expect figures above the average monthly salary, with an annual average ranging from 6,000 BHD to 48,000 BHD, depending on various factors. The most paid careers in terms of average income include arts, culture, and performance, with an average income of 55,660 BHD, followed by law with an average income of 50,384 BHD.

When compared to other Gulf States, Bahrain offers a competitive business environment with low taxes, low operating costs, and a liberal approach to regulations. The country's economic success has resulted in a diverse range of job opportunities, attracting both locals and foreign workers.

Factors influencing salaries

The average monthly salary in Bahrain ranges from 450 BHD to 4,000 BHD. This variation is due to factors such as the industry, job role, and qualifications of the employee. The median average monthly salary is around 1,500 BHD.

• Industry and Sector: The industry of employment is a significant factor in determining salary levels. For example, the finance and oil & gas sectors typically offer higher salaries due to the profitability of these industries and the specialised skills required.
• Qualifications and Education: Higher educational qualifications often lead to higher-paying jobs. Individuals with advanced degrees, certifications, or specialised training can usually command higher wages.
• Experience: Work experience is critical in determining an individual's salary. More experienced professionals generally earn more than their less experienced counterparts.
• Professional Skills: In-demand skills, such as those in information technology, digital marketing, or engineering, can significantly boost earning potential.
• Company Size and Ownership: Larger companies or multinational corporations often have greater resources and are able to offer higher salaries compared to smaller, local businesses.
• Economic Health: The overall economic condition of Bahrain affects salary levels. During economic growth, salaries tend to rise, while in downturns, wage growth may stagnate or decline.
• Government Policies: Government-regulated minimum wages and labour rights can impact salary structures. Additionally, Bahrain's labour market reforms and nationalisation efforts aim to increase the employment of nationals in the private sector, which may influence salary levels for Bahraini nationals.
• Supply and Demand for Labour: The balance between available jobs and job seekers influences wage levels. A surplus of candidates with similar skills may lead to lower salaries, while a shortage of skilled workers can drive salaries up.
• Negotiation Skills: An individual's ability to negotiate their compensation package can result in higher pay.
• Expatriate versus Local Salary Scales: Expatriate salary scales in Bahrain may differ from those of locals due to international market rates and the need to attract foreign expertise. Additionally, expatriates may receive benefits like housing or education allowances.
• Cost of Living: While not directly affecting salaries, the cost of living in Bahrain impacts the purchasing power and savings potential of individuals.

Income tax in Bahrain

Bahrain has a free-market economy with no personal income tax. This means that salaries in Bahrain are not taxed, resulting in higher net take-home pay for employees compared to neighbouring countries with similar average salaries. However, individuals employed in Bahrain are subject to mandatory contributions to the Social Insurance Organisation (SIO). These contributions are a form of social security that covers retirement benefits, unemployment insurance, and other welfare programs.

The absence of income tax in Bahrain is part of its free-market economy, which has no restrictions on capital flows, foreign exchange, foreign trade, or foreign investment. This economic environment, along with Bahrain's economic diversification efforts, contributes to the country's competitive average salaries when compared to neighbouring Gulf countries.

While there is no personal income tax in Bahrain, certain sectors are subject to specific taxes. Companies operating in the oil and gas sector or profiting from the extraction or processing of fossil fuels in Bahrain are taxed at a rate of 46% for each tax reporting period, regardless of the taxpayer's residence.

Additionally, Bahrain introduced a Value-Added Tax (VAT) in 2019, which was initially set at 5% until 2021 and was then increased to 10% in 2022. This VAT applies to most goods and services, with certain exceptions that may be subject to a 0% rate or exempt from VAT altogether.

Furthermore, excise taxes are levied on specific goods, such as tobacco products and energy drinks, which are taxed at a rate of 100%, while non-alcoholic carbonated drinks are taxed at 50%. A municipal tax of 10% is also charged when renting commercial and residential property to foreigners.

In summary, while Bahrain does not impose personal income tax, certain industries and transactions are subject to specific taxes, and individuals are required to contribute to social security through the SIO. These factors contribute to the overall tax environment in Bahrain, which offers a balance of salary and living costs, making it an attractive destination for expatriates seeking employment in the region.

Cost of living

The cost of living in Bahrain depends on several factors, including family size, location, and lifestyle choices. Here is a breakdown of the estimated monthly expenses for both a family of four and a single person.

Family of Four:

According to estimates, a family of four can expect to spend around 1,113.4 BHD (2,954.4 USD) to 1,156.4 BHD (3,067.8 USD) per month, excluding rent. This estimate includes basic necessities and some discretionary spending. Rent for a family of this size can range from 1,360 BHD to 1,950 BHD per month, depending on the location and size of the accommodation.

Single Person:

For a single person, the estimated monthly costs, excluding rent, range from 314.2 BHD (833.7 USD) to 325.9 BHD (864.7 USD). This includes essential expenses and some discretionary items. Rent for a single person can vary depending on the desired location and space, with estimates ranging from 450 BHD to 667 BHD per month.

Factors Affecting Cost of Living:

The cost of living in Bahrain is influenced by various factors, including the country's economic conditions and government policies. Bahrain has a diverse economy, with specific sectors, such as finance, information technology, and engineering, typically offering higher salaries. The country's focus on boosting the private sector and reducing reliance on the public sector has also impacted wage dynamics. Additionally, government initiatives like the introduction of minimum wage laws and efforts to nationalize the workforce have affected overall purchasing power.

When comparing Bahrain's cost of living to other countries, it's important to consider factors such as rent, transportation, utilities, food, and entertainment. In general, Bahrain's cost of living is lower than that of the United States, with rent prices being significantly more affordable. However, it's worth noting that currency exchange rates can impact an individual's purchasing power, especially when remitting earnings to their home country.

Salary by sector

The average monthly salary in Bahrain ranges from 450 BHD to 4,000 BHD, with a median of 1,500 BHD. However, salaries can vary significantly depending on the sector, job role, and qualifications of the employee.

Some of the highest-paying sectors in Bahrain include:

• Finance and Oil & Gas: These sectors traditionally offer higher salaries due to their profitability and the specialised skills required.
• IT and Telecommunications: Professionals in IT and telecoms holding directorial positions are well-compensated, reflecting Bahrain's emphasis on digital transformation.
• Engineering: Engineers, particularly those in chemical, petroleum, and electrical engineering, are in high demand and command high salaries.
• Medicine & Social Care: Doctors and surgeons, especially specialists such as cardiologists and psychiatrists, are among the best-paid professionals due to the critical nature of their work and extensive training.
• Legal: Lawyers and legal consultants, particularly those with expertise in international or corporate law, are highly compensated for their complex and high-stakes work.
• Aviation: Aircraft pilots, especially those with experience flying large aircraft, are well-paid, reflecting the skill and responsibility required.
• Real Estate: Real estate development managers overseeing projects from planning to completion receive substantial remuneration.

On the other hand, some of the lowest-paying sectors in Bahrain include:

• Education, Science & Research: Nursery school teacher assistants and assistant teachers fall into this category.
• Textile, Leather, and Apparel Industry: Jobs in this sector, such as tailor, seamstress, and clothing technologist, are often low-paying.
• General Labour: Positions such as porter, housekeeper, cleaner, and general labourer are typically among the lowest-paid.
• Transport, Haulage, and Logistics: Postal workers and delivery workers in this sector are often on the lower end of the salary spectrum.

Frequently asked questions