Establishing the Labor Fund (Tamkeen) Initiative
Labor Fund (Tamkeen)

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
Bahrain is a small, highly open island economy in the Arabian Gulf (600 sq. km, 2005 population of 724,645). In spite of being a mature oil producer with depleting reserves, most of Bahrain’s GDP (US$11,012 million in 2004) was generated through hydrocarbons extraction, refining, and related activities a decade ago. The oil revenues supported government spending with the public sector making up an additional 14.1% of GDP and employing 90% of the Bahraini national workforce. Public sector employment was the preferred choice of nationals for reasons of job security and attractive compensation. However, rapid population growth and stalling oil production were expected to push up unemployment from 26,500 in 2004 to nearly 140,000 over the subsequent decade. Although the urgency of economic diversification was mounting, the private sector in Bahrain was highly fragmented, dominated by micro enterprises. The vast majority of these companies were characterized by very low productivity and near-total dependency on low cost expatriate labor. Sustained by generous subsidies of key inputs, easy access to low-cost labor, and high levels of government spending, these companies tended to be quintessential rent-seekers. They had little reason to invest in good governance of management, let alone pursue growth. Similarly, the ability to grow was limited by a lack of vision, proper accounting systems, IT infrastructure, and competitive marketing. Such companies tended to have weak brand identities, little mechanization, and were almost invariably purely focused on the small domestic market. Moreover, small companies struggled to access finance, being largely shut off from conventional bank credit. This state of affairs presented the authorities with profound challenges. The government’s ability to absorb the projected increase in Bahraini national jobseekers was becoming increasingly questionable. Yet the willingness and capacity of the private sector offer a credible alternative was nearly non-existent as most companies could not offer attractive jobs and preferred to rely on low-cost manual labor on flexible contracts. Bahrain had developed a dual labor market where the de facto exclusion of the nationals from private sector jobs was cemented by a combination of excessive salary expectations, lack of suitable qualifications and work ethic, as well as deeply entrenched attitudes which viewed many sectors of the economy as unattractive. This presented the country with the alarming prospect of growing economic imbalances, mounting national unemployment, and a failure to meaningfully capture of the demographic dividend that the country’s growing young population represented.

B. Strategic Approach

 2. What was the solution?
The Government launched a comprehensive economic reform program in 2006 in order to drive economic growth and diversification. The Labor Fund (Tamkeen) was set to up help drive the development of the private sector through broad-based support to companies and entrepreneurs. It further supported Bahraini human capital development with the objective of making Bahrainis the employees of choice, especially in the middle and high-wage segments.

 3. How did the initiative solve the problem and improve people’s lives?
During Tamkeen just over a decade of existence, it has had a profound impact on the economy through its role in implementing the government’s reform agenda. Through its activities, Tamkeen has helped achieve economic diversification and sustainability while activating the Bahraini national workforce. In doing so, it has delivered substantial indirect benefits. It has dramatically increased awareness of the reform agenda and recognition of the importance and value of human capital development. The acceptance of private sector employment as a career choice has become the norm among Bahrainis. The thrust of Tamkeen’s work has above all on four areas: Encourage economic participation and entrepreneurship. Tamkeen has helped boost labor force participation by equipping Bahrainis with skills and qualifications sought by the private sector. Targeted solutions for Bahraini women have dramatically boosted female economic participation. It has supported companies through targeted solutions that have allowed them to draw on local labor resources. Tamkeen has played a profoundly transformative role in encouraging and supporting entrepreneurship, to a point where 70% of young Bahrainis now see this as an attractive career choice. Encourage human capital development: Tamkeen has given Bahrainis opportunities to advance in their careers through ongoing skill development, thereby boosting income and productivity. Through remedial interventions, it has helped overcome limitations of the pre-reform education system while also stimulating more diverse training offerings also by the private sector. Encourage company growth and development. A robust economy is impossible without a healthy and dynamic corporate sector. Recognizing that many local companies employed low cost expatriates because of their suboptimal scale of operations, Tamkeen has invested in company growth and productivity. Local companies are given access to new funding options, supported in the acquisition of equipment, consultancy, and training. Support is provided for export development to overcome the limitations of the small domestic market. This has created more dynamic, growth oriented companies, which no longer base their business models of cost minimizations. Drive economic sustainability. By helping put the private sector at the forefront of growth, Tamkeen has reduced the country’s reliance on government and helped mitigate the risk of economic imbalances. Partly due to Tamkeen’s efforts, Bahrain’s economy has diversified to a point where more than 80% of GDP comes from the non-oil sector while national unemployment has remained consistently below 5%. Two-thirds of Bahrainis now work in the private sector while the fastest-growing sectors of the economy (e.g. ICT, private education, and health care) are increasingly characterized by high productivity, innovation, and entrepreneurship.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
In an attempt to tackle a complex set of structural challenges, the government of Bahrain, recognized the critical importance of creating a dynamic, flexible organization, rather than another bureaucratic government agency. By funding Tamkeen through an ongoing levy on expatriate employees, the organization was assured an independent revenue source and operational autonomy that allowed it to fully focus on its main mission of driving economic development through support to the private sector and Bahraini human capital development. Tamkeen’s approach has been holistic in recognition of the interrelated nature of many of the challenges it is seeking to tackle. It has devised a broad array of solutions and services for companies and individuals alike. The development of its strategy and offering has been subject to an ongoing, data-based, critical review and public consultations. Where appropriate, Tamkeen has partnered with other organizations to increase the impact and reach of its services. Throughout the past decade, Tamkeen has been keen to ensure that people not systematically excluded from its reach. In order to maximize its socio-economic impact, Tamkeen has developed targeted solutions for particular groups such as women, youth, and people with special needs, farmers, fishermen, and micro-businesses, including home-based businesses.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
Tamkeen has since the beginning recognized the importance of creating an organization of excellence through the rigorous selection and ongoing training of its own staff. Tamkeen started with 25 full-time staff in 2006. In the interests of time, its programs were initially largely implemented by external partners with specialized expertise in the relevant areas. Over time, in-house capacity was development through these partnerships, in-sourcing, and learning. Today, nearly all Tamkeen programs are run in house and the organization has reached a headcount of 280. Tamkeen has strived over the years to bring its offerings directly to the people. Its on-line portal has been regularly updated and it is regularly conducts outreach activities and events with the people. Tamkeen has set up service centres at the three main cities and has a presence at popular shopping malls where accessibility is at ease for everyone. In order to best meet customer needs and expectations, Tamkeen introduced flexibility within its solutions. Tamkeen’s business clients are given the freedom to select their preferred suppliers to procure the required product and services. Tamkeen is playing a vital role in co-financing by providing at least 50% of the cost while ensuring legitimate suppliers in Tamkeen’s supplier list. Similarly; individuals who seeks to up-skill, is given the same freedom and flexibility for selecting accredited and licensed training service providers. In many cases, Tamkeen has been able to enhance its reach and impact through the Public Private Partnership (PPP) model. Tamkeen partners with suppliers and training service providers which can in turn develop further growth opportunities through their relationships with Tamkeen. Over a decade of existence, Tamkeen’s services have reached the vast majority of Bahrain’s economically active nationals and its corporate population. The organization has served 103,294 individuals with a total spending of $ 232,187,000 and 166,844 businesses by investing $ 946,832,000.
 6. How was the strategy implemented and what resources were mobilized?
The creation of Tamkeen was a central pillar in the reform agenda launched in connection with the Bahrain Economic Vision 2030. Tamkeen was seen as instrumental for realizing the central goal of putting the private sector at the forefront of growth and improving the competitiveness of Bahraini human capital. The work was overseen and supported by the Bahrain Economic Development Board, an independent quasi-government agency chaired by HRH the Crown Prince. The approach adopted during the design and development of Tamkeen deliberately sought to include all interested parties in Bahrain. The formation ideas were developed and tested in public consultation forums where all key stakeholders were invited to contribute their views. Subsequently the strategy and programs were put to test through pilot studies in companies from different economic sectors to validate their viability and ease of implementation as well as to assess the impact. As a result of this, a number of key Tamkeen programs were launched: • Enterprise Support Scheme is co-finance program designed to provide 50% co-finance grants to enable businesses to grow. Support is provided for equipment, ICT, marketing, consultancy, as well as quality certifications. • Finance Scheme: In collaboration with local banks, Tamkeen offers enterprises at all stages access to capital through partial; guarantees and profit rate subsidies. • Micro-Finance Scheme allows Tamkeen to collaborate with other stakeholders to fund 50% of the cost of investment. The program is designed in particular to appeal to less advantaged groups such as women; farmers; fishermen and others. The Mega-Finance Scheme supports major projects with qualifying large clients which have received an average of $6.4 million per client. • The Training and Wage Support Program seeks to assist private companies to employ Bahrainis by providing skill developments and salary subsidies. The objective is to boost economic participation and career development. • Tamkeen Professional Certifications Scheme supports eligible candidates in attaining professional qualifications from international accredited bodies. • The Basic Skills Certification Scheme is designed to help Bahraini’s acquire essential skills & capabilities to enhance their chances in finding a suitable job. • The Business Award Scheme presents an opportunity for young Bahraini students to gain practical experience in the world of business and to stimulate entrepreneurship. • The Work-ethics Program is designed to develop soft skills and attitudes that will lead to improved employee productivity. Each scheme is subjected to rigorous evaluation on an ongoing basis. This typically involves focus groups, impact assessment surveys (quantitative and qualitative), performance audits conducted by external auditors, and overall assessments by the National Audit Office. Tamkeen also has an internal monitoring team which is responsible for conducting site visits and verifying the utilization of fund. The programs are reviewed and validated continuously and modified or replaced as appropriate. Tamkeen is entirely funded from an employee levy collected by the Labor Market Authority from companies hiring expatriates. In recent years, it has received annual revenue of over $219 million from the expatriate levy fees collected by the Labor Market Regulatory Authority (LMRA) and channeled to Tamkeen annually. By not being dependent on the state budget or the civil service regulation, Tamkeen enjoys a high degree of operational autonomy, with an operational budget of $187 million; allowing it to be flexible and adjust to evolving market conditions in a timely fashion. To date, Tamkeen has invested around $2 billion to support 270,000 Bahrainis since its inception a decade ago, with many of the beneficiaries are being youth, women, people with special needs, farmers, fishermen, and micro-businesses, including home-based businesses.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
In order to accurately understand Bahrain’s labor market dynamics and challenges, Tamkeen involved several stakeholders in the design and implementation of its initiatives. The involvement of these stakeholders’ varied from contributing in the design of the initiatives to implementing part of or whole initiative itself. The stakeholders included representatives of the government and the private sector alike. The key public bodies included but not limited to the Ministries of Industry and Commerce, Education, Labor, Youth, and Social Development, as well as the Social Insurance Organization, the Supreme Council for Women, the Quality and Qualifications Authority, and the National Health Regulatory Authority. The private sector entities involved in the endeavor include the Bahrain Chamber of Commerce and Industry, small and medium-sized enterprises, large corporations, commercial banks, and development banks, along with individual Bahrainis. Key NGO number the Bahrain SME Society, Bahraini Women’s Society, and UNIDO. Since its inception, Tamkeen has maintained strong communication channels with its stakeholders through direct visits, workshops and related events, consultation forums, community visits by geographic area, and partnerships with suppliers. Such pro-active involvement with stakeholders has ensured awareness and while attracting potential customers. In an effort to further its understanding of the needs of the economy, Tamkeen has further engaged a dedicated team in community visit in mosques, community halls, and clubs. In 2013 Tamkeen launched community partnership initiative to consolidate relations between all segments of Bahrain’s society and raise awareness about Tamkeen’s services. Through this initiative a direct and solid relation with all local community organizations and NGOs were established.

 8. What were the most successful outputs and why was the initiative effective?
Tamkeen has been constantly evolving as an organization since its inception in 2006. It has adopted a unique approach in analyzing market dynamics, understanding its stakeholders and building on lessons learnt, which has enabled it to emerge as a key support system for both individuals and enterprises in the private sector with a view to shaping Bahrain’s future and prosperity. By introducing flagships programs like Enterprise Support, Finance Scheme and Training & Wage Subsidy, Tamkeen has been able to influence the lives of a large number of individuals and enterprises in the Kingdom: • Tamkeen served a total of 129,432 customers through its different support programs (103,294 individuals and 38,080 businesses). The total customers served to date is approximately 270,000. Tamkeen has also provided services to 46% of all active companies (as measured by commercial registrations) in the Kingdom of Bahrain; i.e. 82,563 enterprises. • By developing partnerships and co-financing models, Tamkeen has enabled companies to access $40.4 for every spent by $2.6 Tamkeen in its operations. These funds have typically been offered at a highly competitive cost. • The wage increment offered by Tamkeen, as part of the Training and Wage Support (TWS) program contributed to an average increase of 9% in the salaries of program beneficiaries. To date, a total of 18,961 individuals and 1,580 employees were served under the scheme. On the other hand, 94% of licensed Training Service Providers / Institutes in Bahrain are currently registered with Tamkeen. Over the years, Tamkeen has injected over $202 million of its budget towards training / consultancy service providers. This has allowed companies in Bahrain to benefits from a wide variety of service options in upgrading their operations. • Based on Tamkeen’s internal impact assessment 71% of employers witnessed improvement in their employees’ performance in terms of speed and quality of deliverables and work ethics standards due to the Training & Wage support program. In addition, 70% of employees stated that the certifications they have acquired have enhanced their work and added to their current qualifications, know-how and expertise, career progression. In fact, 86% of employers witnessed a positive difference in the performance of their staff that have experienced / availed the Training & Wage Support. Around 74% of employers served under the Training & Wage Support and the Professional Certification Support Scheme reported to have witnessed improvement in staff skills in terms of the speed and accuracy of employee performance, quality of deliverables, professionalism…etc. due to the trainings provided. • To date, over 50,000 women (representing 47% of Tamkeen’s total served customers) have been supported through Tamkeen’s training programs. A full impact analysis report that highlight as the achievements of Tamkeen’s schemes can be found in the attached supporting documentations.

 9. What were the main obstacles encountered and how were they overcome?
Tamkeen has faced a number of challenges during it’s just over a decade of operations. It has been able to overcome them through its commitment to ongoing collaboration with the private sectors as well as effective communication and liaison with a wide range of stakeholders. The main challenges faced by Tamkeen have been the following: 1. Private Sector Perceptions: When the labor market initiative was launched, it introduced a monthly levy for every expatriate worker. The labor market perceived this as additional tax on their business. The market was not immediately convinced that Tamkeen’s operations would represent added value that would compensate for the additional cost burden. This resulted in resistance to the initiative and lobbying by businessmen. Tamkeen responded in part by closely involving private business in a dialogue designed to understand and better address their business needs. 2. Customer Demand: The demand on Tamkeen’s programs was not appealing enough to attract enterprises. At the beginning, Tamkeen struggled to obtain customer buy-in for its products and services. Tamkeen had to adopt a proactive approach and it invested massively in preparing a qualified team to build awareness and reach out to potential clients to explain how they could benefit from its products and services. 3. IT System: For Tamkeen to offer its services effectively with its client base; it had to build a robust system that is efficient dynamic and can accommodate the complexity of its operations. With the advancement of the new system it enabled enterprises track their applications; enhancing delivery of services as well cutting down administration burden. Ensuring timeliness of delivery is a key challenge and instrumental to allowing the public to see value.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
The government of Bahrain created Tamkeen as a single government agency dedicated to support the private sector becoming the engine of growth. Such formation helped in directing investments supports through a single untraditional organization as oppose to providing scattered initiatives through several agencies. It also added a value of economy of scale in which a single organization provides various funding supports under one roof. Therefore, Tamkeen has been of critical importance in building awareness of entrepreneurship and supporting new business. During its existence, the number of new businesses in Bahrain has risen by 58%. Over the past 10 years (i.e. between 2005 and 2015), the number of new economic units registered annually rose by 73% and able to reach 9,390 units in 2015. This achievement above all is due to Tamkeen’s public outreach and ongoing collaborations with other organizations. Tamkeen has further worked to facilitate the establishments of companies through support to incubators as well as a range of financial support options. On the other hand Tamkeen had a focus on up-skilling Bahrainis to up left their competencies making them the employees of choice. Furthermore, individuals with special needs and disadvantaged segments were given a priority in Tamkeen’s agenda. Nevertheless, targeted support for the young people of Bahrain has always been a key strategic priority for Tamkeen. A number of achievements were made in this area including: • A dedicated program for young entrepreneurs helped a number of students to successfully open their businesses • Publish Career Guidance Publications to inform students and young jobseekers about the opportunities available in different sectors in the economy • Introduction of work ethics education • Launch summer programs to encourage creativity with a view to developing capable, confident young people that can be contributors to the economy and change makers with entrepreneurial mindsets. To maximize the outreach of individuals and businesses Tamkeen offered its services through; not only; several centers but also an online portal. Tamkeen adopted several approaches to review and evaluate its initiatives through conducting assessments, internal & external audits. All of the above assessment methods helped Tamkeen in measuring the impact and effectiveness of its strategy, operation and assess how it resulted in improving the socio-economic development of Bahrain.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
Before Tamkeen a number of government agencies offered different support services for individuals and businesses alike. Different visions with a lot of bureaucratic policies were practiced creating walls of silos between these government agencies. Thus, the government jumped into creating an extraordinary organisation which integrated all scattered efforts into a single entity; i.e. Tamkeen; by utilizing the expatriates levy in developing enterprises and individuals. This in turn, enhanced integrity via centralizing accountability on a single organization in addition to rising standards and broadens the depth of governance to ensure operating a transparent system. Tamkeen has always sought and valued the insights of the private sector in designing its programs, rather than trying to dictate its offering to companies or individuals. Such an approach has helped Tamkeen to foster a business friendly environment that can be as conducive as possible to sustainable private sector growth and development. Consequently, this integrated the public’s insights in developing programs that can fulfil their needs and requirements. Although imposing levy on expatriate workers was initially highly controversial, it proved critical in generated the necessary tools for proactively fuelling sustainable growth in Bahrain’s private sector. To achieve this, Tamkeen opened several channels to encourage potential enterprise, start-ups, mature and mega enterprises as well as students, job seekers, youth, women and people with special needs to benefit from Tamkeen’s offerings whilst ensuring transparency as key criteria for programs operations. It is also worth mentioning that Tamkeen system is integrated with relevant government institutions such as; Ministry of Industry and Commerce, Ministry of Labor, Social Insurance Organisation and Labor Market Regulatory Authority (LMRA). This integration facilitated data integrity and faster application processing by automating the authentication of data with minimal human intervention. Due to such, the internal and third party audit and compliance became much easier for the relevant parties. Tamkeen observed rigorous governance standards in order to make sure that its support is used as agreed and to the maximum impact. Tamkeen is mandated to protect public funds through the establishment of a strong monitoring system which includes physical site visits to beneficiary enterprises and suppliers; ensuring correct fund utilisation. Such an approach enabled Tamkeen to accurately monitor its fund utilization and evaluate the impact on individual, private sector and economy at large using the above integrated system. * Please refer to Appendix for the Tamkeen’s published financial statement.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
Tamkeen has made continuous efforts to empower Bahraini women. To date, Tamkeen has developed nearly 180 programs that have benefited over 15,000 women. One of the major programs offered for women is the Microfinance Scheme with a portfolio of $2.7 million to support microbusinesses, start-ups and small businesses. The scheme is offered in cooperation with a business development Bank (Ebdaa) where Tamkeen support mainly involves a 50% subsidy to the cost of the loan in order to allow for greater access and affordability. Through the finance scheme Tamkeen has support not only female-owned businesses with commercial registrations women owned businesses but also reached out to women running business from home, helping them to increase their customer base. As a result, they were able to move their business to rented premises. Such a transformation to a commercialized business has boosted the financial strength and scale of these businesses.Furthermore, Tamkeen has also made it part of its mandate to support children with special needs through tailor-made programs developed by experts in the field in association with parents. These programs provide special education for these vulnerable children. Moreover; Tamkeen supported adults with special needs to develop their skills in order to enable them to enter the workforce.

Contact Information

Institution Name:   Labor Fund (Tamkeen)
Institution Type:   Public Agency  
Contact Person:   Reem Jasim
Title:   Corporate QA  
Telephone/ Fax:   +973-71383383
Institution's / Project's Website:  
Address:   P.O.Box 18131
Postal Code:  
City:   Manama
State/Province:   Manama

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