Bahrain is rightly proud of the significant role that small and medium enterprises (SMEs) play in the kingdom. The sustainability of the wider business ecosystem largely depends on the performance of this sector.
The new salary regulation introduced by the Labour Market Regulatory Authority to protect private sector employees’ rights is undoubtedly important and necessary. However, this raises a critical concern: in force majeure situations, how can any business entity realistically meet its salary commitments?
A similar challenge arises when business activities continue, yet payments are delayed or not realised. SME and micro-SME sectors face this issue on a daily basis – how are they expected to mitigate such commitments under these circumstances?
This brings us to a pressing issue: who can step in to ensure that salaries are paid on time, month after month?
One viable solution is for banks to extend more flexible credit lines to SMEs and MSMEs. Irrespective of the balance in their accounts, salary payments should be facilitated, with banks charging their normal credit line fees for this extended service. Such mechanisms already exist in certain banks in other countries.
By adopting this approach, Bahrain can set an outstanding example in safeguarding employee rights by ensuring timely salary payments without fail and positioning itself as a regional leader in best practices.
Unnikrishnan Patinharapat
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