GRM 2010 GRM 2011

Abstract Details

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Labour Fund Impact Assessment - The Case of “Tamkeen” in Bahrain
Paper Proposal Text :
Economic diversification away from oil is one of Bahrain’s top priorities. To that end, the Bahraini government has been pursuing important reforms across a number of sectors – and most importantly in the labour market. A major package of labour market reforms was launched in the mid-2000’s, when it had become clear that high growth rates in the non-oil sectors (averaging about 10 percent per year in real terms since the beginning of the decade) were paradoxically associated with record unemployment rates for Bahraini nationals (reaching a record 16 percent in 2006). The disconnect between growth and employment was an indicator that the skills of Bahraini nationals did not match the needs of the labour market, with most jobs created by the dynamic non-oil sectors filled by expatriates. In response to such a situation, the government launched a reform package which included the establishment of a Labour Market Regulatory Authority, an Unemployment Insurance Programme, a National Employment Project, and other stimulating measures.
The labour market reform agenda included the creation of a Labour Fund called “Tamkeen” which was launched in 2006. Since then, Tamkeen has grown rapidly and has become a household name in Bahrain. It administers a large number of training programmes, provides financing and loan guarantees to SMEs investing in expansion or technology upgrades, and facilitates communications and cooperation among firms domestically and internationally through exhibitions, fairs and promotional events. Tamkeen is run at arm’s length by the government and its operational costs are fully funded by a levy on expatriate salaries. According to the IMF, in 2006-2012 its costs averaged about 0.6 percent of Bahrain’s GDP, making it a significant initiative relative to other programmes funded by the government.
Bahrain’s labour market reform initiative is widely perceived as a success. Following the initiation of the reform measures, labour market indicators started to improve across the board. For example, the unemployment rate fell from a high of 16 percent in 2006 to 4 percent in 2013. The growth of employment of Bahraini nationals in the public sector slowed down to about 2 percent in the early 2010’s, whereas the same rate in the private sector increased. Also, the participation of women in the labour force has increased notably.
Tamkeen, in particular, has been credited with some of these achievements. Yet, there is little systematic and independent evidence on the extent to which the massive public investment that has been channeled through Tamkeen has directly contributed to the labour market achievements described above. After ten years of operations, we believe that it is the right time to take stock of Tamkeen’s achievements by looking more closely at evidence about the outcomes that it has achieved and how those outcomes have interacted with other factors that have shaped Bahrain’s labour market and economy.
Our proposal consists of three components – (i) defining a set of outcomes which Tamkeen is hypothesized to have achieved; (ii) collecting data on those outcomes by surveying a sample of beneficiaries; and, (iii) submitting the data to a rigorous analysis based on a clear model for how those outcomes have been generated and how they might have contributed to the broader impact in the labour market. In addition to data generated from the survey, the research will also involve data collected from secondary sources, such as Tamkeen’s strategic and operational documents, interviews with Tamkeen staff and government officials in the Ministry of Labour and the Economic Development Board, etc. Some key questions that will drive the research are: What strategic objectives have Tamkeen activities pursued? What outcomes has Tamkeen achieved and how has it has deployed its resources towards the achievement of those outcomes? What has been the ultimate effect of Tamkeen’s activities on key labour market dimensions – i.e. skills and qualifications of certain demographic groups or in specific sectors, participation of women in the labour force, employment rate of Bahraini nationals in the private sector, and so on?
We believe that this research will enable a more accurate assessment of Tamkeen’s contribution to labour market changes in Bahrain. We also expect that it will generate useful policy guidance to authorities and management for further improvements in the way Tamkeen is structured and operated. Moreover, it will provide a wealth of information and lessons for other GCC countries pursuing similar labour market reforms.