Bahrain: MPs Scrap BD500 Bahrainisation Fee

Gulf Insider

05-02-2025

A plan to remove the BD500 fee that allows firms to bypass Bahrainisation quotas was passed by MPs yesterday, despite strong objections from the Labour Market Regulatory Authority (LMRA) and the Bahrain Chamber of Commerce and Industry (BCCI).
The LMRA cautions that scrapping this arrangement may lead businesses to rely more on foreign hires instead of locals. It believes the fee — tacked onto each extra expat permit — currently encourages companies to stick to Bahrainisation quotas.
Without it, the regulator contends, employers will lose a key nudge that keeps Bahraini workers front and centre.
The chamber also raised concerns, arguing that several jobs need expertise from abroad.
In its view, removing the fee system could trigger workforce gaps, dampen quality, and weaken Bahrain's economy.
Joblessness
It favours an all-encompassing overhaul of labour rules that tackles joblessness at the roots yet still gives firms enough room to operate.
Since 2016, this scheme has run under a Cabinet directive on LMRA charges.
It has been tweaked over the years to adjust to changing conditions, and officials say it lines up with Bahrain's goals for the labour market between 2023 and 2026.
Steps
The LMRA has likewise introduced other steps to shore up local hiring — firms must post vacancies in-country and interview Bahraini applicants before picking expat workers.
Employers are also required to wait 21 days while these steps unfold, so that foreign recruitment isn't the default.
'The plan is meant to lift Bahraini employment in the private sector,' explained MP Bader Al Tamimi, one of its backers.
'Right now, some businesses hand over the fee rather than bring on local staff. This was originally designed to help companies needing extra permits who hadn't met their Bahrainisation target, but it's turned into a handy escape hatch.'
Al Tamimi referred to LMRA figures showing 12,251 new permits and 27,849 renewals in 2023 alone.
'This surge in foreign permits reveals where employers are putting their focus,' he said. 'We've got a dire job crunch, and we need to prioritise Bahraini workers.'
Home-grown talent
'It's not about punishing companies,' he added. 'It's about giving Bahrainis a proper go. If a firm truly backs homegrown talent, it shouldn't need a fee to steer it in that direction.'
Parliament's Services Committee examined the plan and gave it the green light.
Most members believe it will help steady the employment scene.