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Bahrain’s Unemployment Fund has been demonstrating strong financial resilience, with contributions exceeding payouts – generating a surplus of nearly BD54.4 million in 2023, it has been revealed.
The Shura Council’s financial and economic affairs committee has recommended the approval of the fund’s audited financial statements for the fiscal year ending December 31, 2023, following its review by the Social Insurance Organisation (SIO).
The matter is set for debate during the council’s session on Sunday.
The committee praised the fund’s sound financial health, but emphasised several areas for improvement to enhance transparency and sustainability.
“The Unemployment Fund has generated a surplus of nearly BD54.4m in 2023,” said committee chairman Khalid Al Maskati. “This reflects the fund’s stability and its ongoing role in supporting Bahraini workers.”
According to the audited report, total assets of the fund stood at BD614.9m at the end of 2023, up 2.3 per cent from the previous year.
However, net assets declined by 21pc to BD463m due to the one-time allocation of BD200m under Decree-Law No 20 of 2023 to finance Bahraini workforce integration programmes. Only BD67.67m of this amount was transferred during 2023, with the balance recorded under ‘other liabilities’.
“The fund has operated effectively for nearly two decades, meeting its objectives and providing vital social protection,” Mr Al Maskati added. “Yet, we must continuously review its structure and investment strategies to ensure long-term sustainability.”
The committee highlighted several recommendations for strengthening the fund’s governance and financial reporting.
Inclusion of a comprehensive income statement: The report currently lacks a full income statement, a critical component that provides a clear picture of revenues, expenses and investment performance.
Asset classification: Net assets should be clearly categorised as current and non-current to improve liquidity analysis and decision-making.
Balanced investment strategy: While securities account for 77pc of the fund’s investments, diversification across asset classes, including real estate and bank deposits, is advised to reduce risk and enhance returns.
The fund was set up in 2006 and its revenues are made up of 1pc of monthly wages each from employee, employer and the government – adding up to a total of 3pc. Unemployed citizens with a high school diploma or school dropouts are eligible for monthly payments of BD150, while those with a bachelor’s or master’s degree receive BD200 a month.
The report noted that contributions to the fund continue to exceed benefits paid – with surplus rising from BD51.3m in 2022 to BD54.4m in 2023.
Administrative costs remain capped at 7pc of annual revenues, in line with Decree-Law No 78 of 2006, amended in 2023.
The committee also commended the co-operation between the legislative and executive authorities, noting that this marks the first time the fund’s audited report has been submitted to the legislature under the updated legal framework.
“Transparent reporting and constructive legislative oversight are crucial for enhancing public trust,” Mr Al Maskati said. “The committee’s observations aim to support improvements without undermining the fund’s achievements.”
The Shura Council committee recommended the adoption of the audited financial statements, alongside the noted observations, to ensure both financial sustainability and continued support for Bahraini workers.
The fund has been earlier used to finance early retirement packages for government employees in 2019 and private sector employees’ wages during the Covid-19 pandemic.
mohammed@gdnmedia.bh
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