US embassy cable - 04MANAMA1824

C O N F I D E N T I A L MANAMA 001824 
 
SIPDIS 
 
E.O. 12958: DECL: 12/07/2014 
TAGS: PREL, PGOV, ECON, ELAB, BA 
SUBJECT: CROWN PRINCE TO PROPOSE CONTROVERSIAL DRAFT LABOR 
LAW IN COMING MONTHS 
 
REF: MANAMA 1489 
 
Classified by Ambassador William T. Monroe for Reasons 1.4 
(b) and (d). 
 
1.  (C) In a meeting with the Ambassador and Embassy Baghdad 
Political-Military Counselor and former Ambassador to Bahrain 
Ronald Neumann, Crown Prince Sheikh Salman Al Khalifa said he 
would submit a draft labor law to the Cabinet by late January 
or early February.  He hoped the parliament would approve the 
law before concluding its annual session in May.  The 
proposed law imposes employer paid entry fees 
(BD6000/USD16,000) and monthly fees (BD10/USD27) for 
expatriate workers, a recommendation endorsed by the recent 
McKinsey and Company report on the Bahraini economy (reftel). 
 Fees collected would go into an account to train Bahraini 
workers and pay for various public works projects.  The Crown 
Prince insisted that household help (70,000 of the 220,000 
workers in Bahrain) be included to prevent employers from 
exploiting the distinction and hiring laborers without paying 
tariffs. 
 
2.  (C) The Crown Prince reported that a November 23 
conference to discuss labor law reform brought together 150 
people from various sectors of society.  Participants' 
biggest concern was that the proposed reforms would be 
impossible to implement.  The Crown Prince stressed that 
reforms would be implemented gradually to mitigate potential 
shocks to the economy.  He acknowledged that the draft law 
would be controversial.  He stated that opposition group Al 
Wifaq and labor unions like it, but business does not.  The 
Crown Prince noted that the private sector would be more 
agreeable to the tariffs if it could have at least partial 
control of the account for worker training programs.  He also 
acknowledged a need to gain active support of the cabinet 
ministers, who to date have not helped lobby for the reforms. 
 
3.  (C) Comment: The Crown Prince correctly characterizes the 
labor reform program as controversial.  Debate of the draft 
law in the cabinet and parliament will likely be intensive 
and could result in substantial modification of the law. 
Although the Crown Prince talks optimistically of getting the 
active support of cabinet ministers, others warn that 
opposition by the Prime Minister and his key allies in the 
cabinet will make passage difficult. 
MONROE