Unemployment benefits in Bahrain are a pressing issue, particularly for migrant workers who, despite contributing to the unemployment fund, rarely access benefits. The unemployment rate in Bahrain was 3.9% in 2014, with youth and women the most affected. To address this, the Bahraini government launched a national Unemployment Insurance Scheme (UIS) in 2007, providing basic income security for citizens and residents. The scheme is mandatory and covers all Bahraini and foreign nationals in the formal and informal sectors, with contributions from employees, employers, and the government. While expat workers are not entitled to unemployment benefits, they can obtain compensation for arbitrary dismissal. This compensation is equivalent to 60% of their basic salary if they apply within 30 days.
What You'll Learn
Migrant workers' contributions to the unemployment fund
Migrant workers in Bahrain make up a significant portion of the workforce and contribute to the country's unemployment fund. However, there is a notable disparity between their contributions and their ability to access unemployment benefits. Here is a detailed overview of migrant workers' contributions to the unemployment fund in Bahrain:
Contributions to the Unemployment Fund:
Migrant workers in Bahrain are required by law to contribute to the country's unemployment fund, known as the Social Insurance Organisation (SIO). As of the third quarter of 2021, there were 408,159 non-Bahrainis working in the private sector and contributing to the SIO, compared to only 95,619 Bahrainis. This means that migrant workers comprise more than 80% of private-sector contributions to the SIO. From 2018 to October 2020, migrant workers contributed approximately BD 57.5 million (US$152 million) to the fund.
Challenges and Disparities:
While migrant workers make significant contributions to the unemployment fund, they rarely access the benefits. In the same period from 2018 to October 2020, only 31 migrant workers benefited from the fund, receiving a total of approximately BD20,000 (US$53,082). This disparity is partly due to administrative obstacles and the short time frame given to migrant workers to regularise their status after losing their jobs. It can take up to two months to set up a claim for unemployment benefits, but migrant workers often have only a 30-day grace period to find a new employer or leave the country. If they fail to do so, they become irregular and lose their eligibility for the fund.
Recent Developments:
In March 2024, Bahrain's General Authority for the Social Insurance Organization (GASI) began implementing Resolution No. 109 of 2023. This resolution mandates that employers contribute an amount equal to 4.2% of migrant workers' salaries for the first three years and 8.4% in subsequent years. These contributions are intended to provide end-of-service benefits directly to migrant workers. Previously, employers paid out these benefits directly, often failing to meet their obligations or declaring bankruptcy to avoid payments. The new regulation aims to better protect migrant workers' rights and ensure the disbursement of their rightful benefits.
Comparison with Other Countries:
Bahrain is the only country in the Gulf region that officially includes migrant workers in its unemployment scheme on paper. In the United Arab Emirates (UAE), a new unemployment insurance plan will include public and private sector workers of all nationalities, providing income support while they search for new jobs. However, as with Bahrain, the effectiveness of this scheme in protecting migrant workers' rights remains to be seen.
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Disparity in accessing unemployment benefits
Bahrain's Unemployment Insurance Scheme (UIS) was launched in 2007 to provide income security to the unemployed, with a focus on youth and women, who made up 6.7% of the workforce at the time. The scheme is mandatory and covers all Bahraini citizens and foreign nationals employed in the country's formal and informal sectors. While the UIS is meant to offer financial support to those seeking employment, there is a notable disparity in the accessibility of these benefits, particularly for migrant workers.
Migrant Workers' Contributions and Access to Benefits:
Migrant workers in Bahrain make significant contributions to the unemployment fund, yet they rarely access the benefits. From 2018 to October 2020, migrant workers contributed approximately BD 57.5 million (US$152 million) to the fund. However, during the same period, only 31 migrant workers received benefits, totalling about BD20,000 (US$53,082). In contrast, the Bahraini government provided unemployment benefits to over 28,000 citizens in 2021 alone.
Administrative and Structural Barriers:
The disparity in accessing unemployment benefits is further exacerbated by administrative and structural barriers. Migrant workers often face challenges in setting up a claim account, which can take up to two months, while their grace period to find another job or leave the country is only 30 days. This timeframe constraint pushes them into irregular status, further complicating their ability to access the unemployment fund. Additionally, the sponsorship system and eligibility criteria also hinder migrant workers from claiming their rightful benefits.
Repurposing of the Unemployment Fund:
The unemployment fund in Bahrain has been repurposed for initiatives other than its intended purpose. For instance, in 2019, the government approved the transfer of BD230 million (US$610 million) from the unemployment fund to finance a voluntary retirement scheme (VRS) for Bahraini public sector employees. This transfer was made possible by partially funding it with contributions from migrant workers. As a result, the government's capacity to regulate the private sector and protect workers' rights has been diminished.
Recommendations for Reform:
To address the disparity in accessing unemployment benefits, Bahrain should actively remove administrative obstacles that hinder migrant workers from claiming their entitlements. This includes streamlining the claims process and extending the grace period for finding new employment. Given their substantial contributions to the unemployment fund, migrant workers should also be included in any initiatives or programmes that utilise the fund. Ultimately, Bahrain should strive for non-discriminatory access to social protection for both nationals and migrant workers.
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The Unemployment Insurance Scheme (UIS)
The UIS provides two types of benefits: the Unemployment Aid Benefit and the Compensation Benefit. The Unemployment Aid Benefit is available to first-time job seekers and provides a monthly payment of BHD 150 (or USD 398) to new university graduates and BHD 120 (or USD 318) to others for a maximum of six months. The Compensation Benefit is available to unemployed persons and consists of a monthly benefit calculated at 60% of the insured salary, with a minimum of BHD 150 and a maximum of BHD 500 (or USD 1,326), payable for up to six months.
In addition to financial benefits, the UIS provides job-matching, career guidance, and training services. The scheme has assisted more than 6,000 job seekers in finding employment since its inauguration in 2007. The UIS is supported by a strong legal framework, including the Law on Insurance Against Unemployment No. 78/2006, which outlines the definitions, scope of application, and powers related to the scheme.
The UIS aims to provide income security to groups such as youth and women, who are often most affected by unemployment. By providing a basic income security net, the UIS helps to ensure a continued decent living for the unemployed and promotes a competitive knowledge economy by attracting and retaining the best international talent.
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The two types of benefits within the UIS
The two types of benefits within Bahrain's Unemployment Insurance Scheme (UIS) are:
Unemployment Aid Benefit
This is available to first-time job seekers and provides a monthly payment of BHD 150 (USD 398) to new university graduates and BHD 120 (USD 318) to others. This benefit is only available for a maximum of six months.
Compensation Benefit
This is available to unemployed persons and consists of a monthly benefit calculated at 60% of the insured salary down to a minimum of BHD 150, up to a maximum of BHD 500 (USD 1,326), payable for a period of up to six months.
The UIS is a mandatory scheme that covers all Bahraini citizens and foreign nationals employed in Bahrain's formal and informal sectors. It is financed by contributions of 3% of employee wages, shared evenly between the employee, employer, and government. The Ministry of Labour oversees the implementation of the UIS and runs employment and training courses, while the General Organization for Social Insurance disburses the payment of compensation.
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The active employment policy of the Bahraini government
The Bahraini government has adopted an active employment policy since the implementation of the employment schemes in 2006 and the current Unemployment Insurance Scheme (UIS) in 2007. The UIS is a mandatory contributory scheme that covers all Bahraini and foreign nationals employed in Bahrain's formal and informal sectors. The scheme is financed by contributions of 3% of employee wages shared evenly between the employee, the employer, and the government.
The UIS provides two types of benefits: an Unemployment Aid Benefit and a Compensation Benefit. The Unemployment Aid Benefit is available to first-time job seekers and provides a monthly payment of BHD 150, or USD 398, to new university graduates and BHD 120, or USD 318, to others for a maximum of six months. The Compensation Benefit is available to unemployed persons and consists of a monthly benefit calculated at 60% of the insured salary down to a minimum of BHD 150, up to a maximum of BHD 500, or USD 1,326, payable for a period of up to 6 months.
In addition to the monthly benefit, the UIS provides job-matching, career guidance, and training services. The UIS has assisted more than 6,000 job seekers in finding employment since its inauguration in 2007.
The Bahraini government's active employment policy is part of a national social protection floor that is essential in providing basic income security for working-age groups.
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Frequently asked questions
All working-age Bahraini residents and citizens are eligible for unemployment pay, including foreign nationals employed in Bahrain's formal and informal sectors.
The amount of unemployment pay you will receive depends on whether you are a first-time job seeker or an unemployed person. First-time job seekers will receive a monthly payment of BHD 150 (or USD 398 for new university graduates) and BHD 120 (or USD 318 for others) for a maximum of six months. Unemployed persons will receive a monthly benefit calculated at 60% of their insured salary, with a minimum of BHD 150 and a maximum of BHD 500 (or USD 1,326), payable for up to six months.
You can apply for unemployment pay through the Ministry of Labour, which oversees the implementation of the Unemployment Insurance Scheme (UIS), administers registration and runs employment and training courses.
The unemployment pay is funded by contributions of 3% of employee wages shared evenly between the employee, the employer and the government.