Comments on The Redbelt: LMRA Taxes, are they any good?

Moodz, thanks for commenting. Your example is flaw...

2009-06-21T14:35:57.464+03:00

Moodz, thanks for commenting.
Your example is flawed.
If this Mr. Gupta IS willing to work for BD 80 and Mr. Emploer man IS willing to pay up to 300, then by all means, Mr. Gupta WILL take that bloody 300!
Moodz, have you ever been given a job offer where you said: "Well, yknow, I would work for a lot less than that! Let us cut that down."
Impossible.
I have been given several offers in my life where they were higher than what I expected, but I still argued to raise it up just to hide the fact that I would work for less.
And even IF Mr. Gupta worked for 80 in a market willing to give him 300, it will be a matter of weeks before someone says "Hey Gupta, I'll pay you 100. Come work for me!"
Gupta will either negotiate back and forth with his employer to reach 300 eventually or he will keep jumping from one employer to another until he reach that 300. Then the other offers will be the same so he will stop jumping.
That is one point, on the other hand, you do know how this sponsorship system is freakingly cruel and unjust. If you do not believe me, come with me, I'll show you people and places then make up your mind if it is a fair way to live.
The hardships they feel at the bottom of the employment pyramid are felt all the way to us. Not as severe but felt nonetheless.

Thank you for raising this issue, I've been meanin...

2009-06-12T00:31:27.282+03:00

Thank you for raising this issue, I've been meaning to talk about this for a while now. I guess it's not exactly the hot issue at the table right now especially after the cancelation of the "sponsorship" laws and the fuss it followed not only within Bahrain but the gulf at the whole.
Anyway.. on taxes. I have a couple of points I'd like to point out in reply to what you have noted.
Unemployment in Bahrain is at an all time low of 5.3% on Jan 2009 according to governmental figures. Which such a low rate, we are considered an economy in full employment (5% is the benchmark btw, anything lower than that is just frictional and structural not cyclical unemployment).

Point being, 5% is not an epidemic by any measure and does not need governmental intervention in anyway, you can in no way have 0% unemployment.
As for the low wages, you have noted the classical supply and demand curve but wrongly interpret it. Now, when assuming an efficient market (i.e one without governmental intervention via quotas, subsidies taxes etc.) one can assume that the market will always move towards equilibrium, (where supply and demand meet) Now if we assume Mr. Gupta here is willing to offer his services for 80 BD per month, and Mr. 3bood on the other hand is willing to pay up to 300 dinars for anyone who will get the job done, Demand and Supply will meet at 80 bd not anywhere else.

Where is the problem there? Cheap labor is a fact of life we have to live with; all economies rely on cheap labor in one way or another. What exactly are you trying to achieve by imposing the taxes? We are not leveling the field for the Bahrainis in any way as the 10BD doesn’t even cut it as it will not encourage business owners to replace cheap labor with Bahrainis. You are not helping the poor expat or the consumer of the final product in any way as the employer will pass on the tax burden because of the inelsastic demand of the labor market. So you tell me, who will bear it but me and you? It's basic elementary economics in action here.
It's all fancy and nice on paper, but it doesn’t stand in the real world. You are talking about an economy that relies on cheap labor, introducing taxes will not fix this in anyway, it will only make money from the fees… I just hope it will be properly invested.

Couldn't agree more. Business owners have to be sl...

2009-05-09T17:00:00.000+03:00

Couldn't agree more. Business owners have to be slightly less greedy and exploitative. Oh NO! If you are going broke because of 10BD per person per month, how the hell were you making money in the first place? Lying, stingy, whiny muppets.

:) I'm not an owner of anything I just like debate...

2009-05-03T22:00:00.000+03:00

:) I'm not an owner of anything I just like debates you should write something about debate teams but that's another story.

Dear redbelt we both know that only few people would prefer private sector even if the pay is higher people like the secure government job, private sector already pay more than public but people insist on working, they like it and why shouldn't they like a job where thing take ages to change it just becomes a habit a job with no mind effort, will that's also another story.

even if you think that salaries will be raised "organically" which is highly unlikely to happen until that happens should companies incur all the harm? and again why don't government raise the pay with all the "profits" they declare because of their "wise" economic strategy if they don't why do they request owners to do so? isn't giving an edge or advantage to any kind of employees even nationals goes against all the principles of free market and globalism that was agreed on between Bahrain government and U.S.A, I know that this is a touchy subject but in other country such as UK they would be counted as unequal opportunity an possibly RACISM.

Dear Abuali Something tells me that we are speakin...

2009-04-14T09:09:00.000+03:00

Dear Abuali
Something tells me that we are speaking about you. I have tried to answer that in the article and I'd recommend reading it again. But let me shed some light on the topics you addressed:
For your first question:
Will the government raise salaries? No. Why should they? The whole argument is that change happens organically. The word "organically" means it happens by itself, without someone important signing an increase salary memo. The government here will be affected like any other company. The government cannot keep people working for her for BD 300 if the private sector will give them 600. Eventually: a) they run out of employees because they move to better jobs, or b) offer comparative salaries.
and... well... your other questions are actually answered by the same answer.
OK Let me rephrase and summarize the whole post:
The EDB's initiatives, through Tamkeen and LMRA, are not meant to CHANGE the labour market. They are meant to CHANGE the DECISION MAKING REASONS for the market. Just like water, people will flow in the path of least resistance.
Work is a product, people do not work for anyone, they sell their services. Thinking of it this way, the people and the businesses make decisions on what they think is best, and the rules are changing.
Finally:
"Is consistency a bad thing?" No. But it is impossible. دوام الحال من المحال. the world is changing. The only things that remain still are dead things. Even trees move and grow.
The world changed Abuali. It's not the same any more.
Your friend should stop being nostalgic and wake up.

I don't have a company but for the sake of the arg...

2009-04-13T13:31:00.000+03:00

I don't have a company but for the sake of the argument I will present the "Dark Side" :).
If I was going to raise prices as a result of raising employee’s salary will the government ensure that they will raise the salaries of all public sector employees with the same rate?
if not then my business will fail for sure cause the largest sector will find my prices unaffordable I don’t think that would be done looking at all the hassle they made to give 50 B.D. to those in need, and oh wait why should I raise my employees salary if the government won’t raise theirs? Didn’t they just incur a 2 billion raise due to the GAT and last year oil revenue were sky high, why should I do what they don’t isn’t it hypocrisy from them to ask for that? And aren’t we a country the signed the GAT and encourage capitalism isn’t it against the rule of globalism and capitalism to be punished cause I’ve chosen to follow the same rules you approved? And why should I change my business process specially when I’m a 70 something small private business owner that is happy with his current way of doing things? Is consistency a bad thing? Is profit a bad word?
That’s what one of them would say  what should I answer him with?.

Well written my friend.

2009-04-13T03:00:00.000+03:00

Well written my friend.