Potential for leakage is substantial

The overall principle of the reform is to apply the policies as consistently and uniformly as possible to limit the opportunities for abuse of the system. That is why the proposed policies will apply equally across all industry sectors, skill levels, and the public and private sector. Differential fees or exemptions would allow some people to bring in foreign workers without paying the required amounts and then use them illegally in their businesses.
The challenge is substantial with domestic workers because of their sheer numbers. Currently, there are approximately 70,000 domestic workers in Bahrain. If they were all exempted from the labour fees, or even if the fees were lower, the potential for abuse in the system would be significant, and very difficult to control, since they would constitute approximately 40% of the projected expat labour force in 2013. And with approximately 76,000 Bahraini households, even if each household received permission for just one domestic worker at a reduced fee, the potential for abuse would be greater.

The possibility of abuse seems quite likely given the economic incentive to leak. Currently 18% of the Bahraini labour force holds low wage employment. This number is expected to rise to 40% by 2013. These employees receive an average of 150 BD/month. Under these wages, a typical employee can almost double his or her wages by leaking their domestic worker and receiving the equivalent expat fee of 100 BD/month.

Furthermore, the demand for leaked employees could be quite large considering the number of roles domestic workers can perform given their current skill sets. The low wage job market in Bahrain currently hires 129,880 employees. At least 30% of these jobs lie in the hospitality, service and low end retail sectors. Domestic workers can perform a majority of these functions given their cleaning, cooking, driving and even English skills.

The consequences of such abuse would be serious. Not only could it reduce the impact of the reforms in aggravating Bahraini unemployment, it would also put law-abiding companies at a disadvantage because companies abusing the system could operate at lower costs. The best way to ensure these consequences do not materialize is to eliminate opportunities for abuse in the first place.
Social services could be provided by the government
Approximately, 40% of Bahraini households do not currently have a domestic worker and will not be affected if labour reform is applied. But there is a portion of the population, mostly middle to low wage families, that needs domestic workers to fill social functions that family members can not currently perform given economic circumstances.
The government could explore social services programs to meet the needs of this segment. Internationally, many of the functions currently offered by domestic workers are provided to the needy through government sponsored social programs.

Professionalizing these services could have significant economic benefits

 
Internationally, domestic services are professionalized and contribute significantly to the economy. Singapore’s contract cleaning industry was worth approximately BD 90 million in 2003 and is expected to grow substantially in the next few years. The US’s industrial cleaning sector currently hires 1.1 million people a year, while the social services sector, including child care and elderly care, employs approximately 2.6 million employees. Together, these two sectors make up 3% of the US labour force. This would be equivalent to over 10,000 jobs in Bahrain in 2013. The economic impact of professionalizing these industries in Bahrain could be substantial.