On calculating unemployment rates.. Written by: Jamil bin Muhammad Ali Humaidan.. Minister of Labor and Social Development

02-02-2020

The definition and specification of the term “unemployment” or unemployment rates, and how they are calculated in our society and across various societies, have been the subject of controversy and multiple interpretations, with the latter being either raised or lowered. This underscores the urgent need to adopt a clear, decisive and approved definition of the term, as well as to set out the international, legislative and local standards and requirements necessary to resolve disputes and accurately and credibly define concepts and principles, thus resolving any controversy surrounding them. This is in addition to formulating action plans and programmes aimed at addressing unemployment and reducing its rates on sound and realistic bases. Definition of “Unemployed” The term “unemployed” is an important term that has been defined and circumscribed by international experts, lawyers and specialists in the field of labour, to determine who is unemployed. The International Labour Organisation (ILO) has adopted a comprehensive definition that eliminates any ambiguity, according to which a person may be included in the list of unemployed. Not everyone who is not employed is considered unemployed according to the definition of unemployment. There are conditions and regulations that define the meaning to avoid ambiguity. Accordingly, the question arises: what definition is adopted by the competent labour authority represented by the ILO? The International Labour Organisation (ILO) has defined unemployment as "any person who is not working, is able to work, is willing to work, is actively seeking work, and is not engaged in any professional or commercial activity." Based on this, the countries affiliated with the ILO have adhered to this definition, as it identifies the actual unemployed. Countries seeking sustainable development cannot allow this term to remain vague or ambiguous. Therefore, we see the first building blocks of combating unemployment as the initiative to codify and formalise the true meaning of unemployment, so that it becomes the focus and goal of solutions. Legislative Decree No. 78 of 2006 with respect to Insurance Against Unemployment—which aligns with international labour standards—sets out the definition of who is unemployed, as referenced in Articles (10) and (17) of Chapters Three and Four of the Law, including that the person be able and willing to work, not be a student or retired, not be engaged in a commercial or professional business on his own account, and be seriously seeking work in accordance with established conditions and controls. He must also enrol in the prescribed training, attend regularly and pass successfully. Registration of Job Seekers and Assessment of Seriousness This is undertaken in employment centres in the Kingdom’s governorates, which are electronically linked to the database of the Information and e‑Government Authority and the Social Insurance Organisation (SIO). Upon registering job seekers and accessing the e‑government database, it is verified that the applicant is of legal working age, is not employed, has no commercial record, and is not a student. After submitting supporting documents and proving that he meets the established conditions, the applicant is registered as a job seeker with the Ministry and benefits from three services or privileges as follows: Unemployment benefits and compensation A job seeker, upon registering, receives unemployment allowance for the first time. This allowance is a monthly financial sum of 150 dinars for university graduates and 120 dinars for non‑university graduates. For those who have previously worked and were dismissed from their jobs, unemployment compensation is immediately available upon registering as a job seeker. This is a monthly financial sum equal to 60% of their salary. The allowance and compensation continue to be paid subject to periodic review by the Ministry or its employment centres, in addition to other eligibility requirements. Free training and qualification for job seekers One of the benefits available to job seekers upon registration is free training and qualification. The Ministry of Labour and Social Development, in cooperation with the Labour Fund (Tamkeen), offers over 500 skills-based and professional training programmes for job seekers of both genders and at various educational levels. It also mentors and coaches them to the best training programmes that match the job seeker's qualifications and interests, as well as to bridge the skills gap between education and training outcomes and the actual labour market needs for qualified workers. Accordingly, job seekers are obligated to complete the training programme they voluntarily choose to improve their professional skills. The unemployment benefit or compensation will continue to be paid during the training period, in accordance with the terms and conditions of the law. Offering Employment Opportunities Among the benefits that job seekers receive upon registration is that the employment counsellor arranges interview dates, summons job seekers, and offers them suitable jobs generated by the electronic employment system after matching the job seeker's qualifications and information with the vacancies available in the Ministry's vacancy bank. During the first visit, the job seeker is offered more than one suitable job, up to five. If the jobs offered during the first visit are rejected, they are invited to a second visit to be offered several suitable job opportunities. If suitable job opportunities are rejected during the second visit due to the job seeker's desire to work exclusively in the public sector or for any other unconvincing reason, the job seeker's file is closed due to a lack of seriousness. They can file a grievance with a specialised grievance committee if they feel the job opportunities offered are not suitable for them and have convincing justifications. If the grievance is accepted, the job seeker is offered suitable job opportunities again and is nominated for job interviews, as was the case the first time. According to this system, anyone who completes the specified period for receiving unemployment benefits or compensation and has not yet been employed is not excluded from the unemployment list. They remain listed as a number when calculating unemployment indicators. The Ministry's employment and training services remain available even if individuals become ineligible for unemployment benefits or compensation for any reason. Therefore, anyone who fails to register as a job seeker with the Ministry and waives the aforementioned benefits (financial, training, and job opportunities) offered by the Ministry to job seekers is not counted on the unemployment list or in calculating unemployment rates, according to the Unemployment Insurance Law or even according to international standards. Their seriousness cannot be measured, noting that most employers require job seekers to be registered with the Ministry to be eligible for benefits offered by the Ministry, such as wage subsidies, wage improvements, training, and other benefits. Role of active State policies in attracting investment and creating opportunities Among the most vital and effective factors in the success of employment programmes and reducing unemployment rates are policies that attract investment and international companies, create more job opportunities, and position Bahrain as a hub for their businesses in the region. These are policies that have enabled Bahrain to achieve remarkable accomplishments and success stories, and their role and effectiveness in supporting ongoing employment efforts cannot be overlooked. These accomplishments enjoy the generous patronage of the government, headed by His Royal Highness the Prime Minister, may God protect him, and the diligent and personal follow‑up of His Royal Highness the Crown Prince, First Deputy Prime Minister, may God protect him.   Unemployment Insurance Law's Reference in Determining the Seriousness of a Job Seeker The definition of job seekers in the Unemployment Insurance Law is consistent with international labour standards. Since its issuance, the Kingdom of Bahrain has been working in accordance with this law. The unemployment rate is calculated based on the number of unemployed persons who meet the requirements, including those eligible for unemployment benefits and compensation. Consequently, the Unemployment Insurance Law has become a primary reference for defining a job seeker who is included in the list of the unemployed. This law, along with other ministerial decisions regulating the legislative infrastructure, has effectively established a comprehensive and credible database, particularly Ministerial Resolution No. (15) of 2007 regarding the conditions and controls for the seriousness of a job seeker's search for eligibility for unemployment benefits or compensation. The most important of these controls are not rejecting suitable job opportunities, committing to visiting employment offices, and not refusing scheduled training. The unemployed must also be provided with work principles and ethics, such as ensuring a decent appearance during job interviews, preparing a CV, and other controls to demonstrate seriousness. How is the unemployment rate calculated? To determine unemployment rates according to the aforementioned regulatory standards and controls, and given that the total national workforce is 188,724 citizens according to the Information and eGovernment Authority (which is the sum of the total number of insured Bahraini workers according to data from the Social Insurance Organization (SIO), in addition to the remaining uninsured workers who are self‑employed, such as taxi and bus drivers, driving instructors, fishing licence holders, and others, as well as self‑employed unit owners such as lawyers, doctors, and others according to the Information and eGovernment Authority), if the average number of monthly unemployed people during the year 2018, which amounted to 8,399 job seekers, is added to this, the total national workforce becomes 197,123 citizens. Using a simple calculation, the unemployment rate is calculated by dividing the number of job seekers, 8,399, by the total number of national workers, 197,123 citizens. The resulting division results in an unemployment rate of 4.3% for the year 2018 (8,399 ÷ 197,123 = 4.3%). Can the unemployment rate be zero? This is a common misconception, one that many people often ask. No country, regardless of its level of development, whether developed or developing, can achieve zero unemployment. A 0% unemployment rate means that the country has no education and training graduates constantly flowing into the labour market, waiting to be recruited. It also means that there are no people leaving or being fired from their jobs or seeking better job opportunities. This effectively means that there is no real labour market, subject to the system of supply and demand. The labour market must be constantly dynamic, with workers entering, leaving, and rotating. It is natural for workers to leave their jobs to move to jobs with higher benefits. Investment cannot grow without a workforce seeking employment. The presence of an unemployment rate is an indicator of the dynamism and development of a country's labour market. Therefore, all government efforts worldwide are not aimed at zeroing unemployment, but rather at maintaining it at a minimum, safe, and stable level. This is a healthy and natural state of affairs, reflecting the strength and cohesion of the labour market and its ability and readiness to welcome new graduates, or the departure of others for any reason within the natural cycle of the labour market. Why do survey and questionnaire results differ in determining unemployment rates? The surveys and questionnaires conducted by some civil society organisations target limited samples and numbers. These organisations also rely on oral information and direct statements from individuals in society without verifying their credibility according to established principles and controls, such as those outlined here. Therefore, survey results may provide useful indicators, but they may not be sufficiently accurate, unlike relying on the controls and standards established by legislation and relying on an accurate and documented database linked to the relevant government agencies. Bahrain: Completing an Integrated System for Monitoring Market Indicators The unemployment issue is a priority in the government's work programme, due to its negative impact on social stability and security. Therefore, Bahrain is one of the leading Arab countries with a structurally and legislatively integrated system for monitoring labour market indicators, most notably employment activity, the number of unemployed, and their qualifications. These indicators reflect the true reality of the labour market, free from fragmented definitions. Accordingly, the Ministry of Labour and Social Development issues comprehensive quarterly bulletins that clarify labour market indicators and specify the numbers of those entering the labour market and those employed, with complete transparency. It also maintains an integrated system of databases linked to other relevant government agencies, through which those who qualify as "job seekers" are identified and included on the lists of the unemployed. The unemployment insurance system in force in the Kingdom of Bahrain is admired by specialised organisations and many countries around the world, especially since the system offers numerous benefits to job seekers, most notably the provision of unemployment benefits and compensation, access to free specialised training courses tailored to labour market needs, and the provision of suitable and available jobs for the unemployed, benefiting from the opportunities and capabilities available in the Ministry's vacancy bank. Reform Project and Addressing Unemployment Based on this, and with the dawn of the reform project of His Majesty King Hamad bin Isa Al Khalifa, the country's great king, may God protect and preserve him, and within the framework of labour market reform, the Kingdom of Bahrain has adopted a comprehensive programme to address unemployment, which reached approximately 16% in 2005, with the aim of eliminating the sources and causes of unemployment. The unemployment rate has stabilised within a safe range of 4% over the past ten years. The Ministry, God willing, will continue to launch various initiatives to accelerate the integration of citizens into the private sector, given the annual increase in new graduates from various educational and training institutions.