|21 August, 2019

New evaluation of poverty line urged amid increasing inflation in Bahrain

MP Mahmood Al Bahrani said the government should conduct a new study to determine the poverty line in Bahrain while taking into account recent social and economic changes

Bahrain Financial Harbour (L) and Bahrain World Trade Center are are seen in diplomatic area in Manama, Bahrain, February 28, 2018. Image used for illustrative purpose.

Bahrain Financial Harbour (L) and Bahrain World Trade Center are are seen in diplomatic area in Manama, Bahrain, February 28, 2018. Image used for illustrative purpose.

REUTERS/Hamad I Mohammed

Bahrain - A study to re-examine the poverty line in Bahrain is being urged amid increasing inflation and high cost of living.

Latest statistics released by the Social Insurance Organisation for the second quarter of 2019 show that 6.03 per cent Bahrainis (2,873) have a monthly income less than BD400 in the public sector as opposed to 45pc (42,722) in the private sector.

A comparison of the salaries of Bahrainis in the private and public sector as per the second quarter of 2019

The salaries of expatriates in the private sector as per the latest statistics in the second quarter of 2019

While 73pc (350,135) of expatriates working in the private sector earn less than BD200, followed by 15pc (71,307) earning between BD200 and BD399.

According to the United Nations, one in 10 people in developing regions still live on less than $1.9 per day (the equivalent of 714 fils), which is the internationally agreed poverty line, while millions of others live on slightly more than this daily amount.

However, MP Mahmood Al Bahrani said the government should conduct a new study to determine the poverty line in Bahrain while taking into account recent social and economic changes such as the lifting of subsidies, the introduction of Value Added Tax (VAT), and increases in the price of fuel and utilities.

The MP, who is a member of parliament’s financial and economic affairs committee, also stressed the importance of collaborative work with the government to increase the financial aid provided to Bahrainis under the Labour and Social Development Ministry.

“The government is discussing restructuring the financial aid provided and as legislators we share the same principle but it is crucial to complete a new study that addresses the current poverty line of people eligible for support,” he said.

“The Labour and Social Development Ministry is currently granting the social security allowance to families based on criteria determined in 2003 – which is 16 years ago – and it’s not realistic to still use the same criteria today.

“The ministry considers any individual earning less than BD56 to be poor and eligible for support while six-member families with an income of BD337 are also considered eligible for support.”

He said this criteria was determined based on a study conducted by the Bahrain Centre for Strategic, International and Energy Studies (Derasat) in 2003 and was no longer applicable as a basis to determine eligibility for financial aid.

He also stressed that the poverty line must be raised to include a wider segment of beneficiaries in society – adding that a joint committee will be formed between the legislative and executive authority to tackle this issue.

“We are looking forward to working with the government to increase the allocations and social allowances currently granted, as inflation hasn’t stopped since its adoption,” he added.

“Financial burdens have doubled on citizens in recent years and many things have turned into necessities and we can’t leave the Bahraini citizen to face them alone.”

Prominent Bahraini economist Dr Akbar Jaffari also called for updating statistics of those in need and widening the segment of beneficiaries, while also stressing the importance of looking at the issue on a case-by-case basis.

He said the uplifting of the prices in recent years has greatly impacted Bahrainis in the low and limited income category.

“In Bahrain the poverty line now is totally different than it was a year or two years ago because of the withdrawal of the subsidies by the government and an increase in the prices of fuel and utilities,” said Dr Jaffari, who is the chief executive of Jaffari Consultants (Jafcon).

“With the uplifting of the prices and the introduction of VAT, of course, the cost of living has gone up but those with high income don’t really feel it because it’s a small percentage but for the low and limited income this uplifting is huge.

“We can’t generalise, however, we have to take case by case because by generalising we harm some and over-benefit others, so we have to assess each family’s situation individually.”

He explained that three years ago BD188 per person was enough to meet the basic requirements of life, which he estimates has now increased to BD230 per person – adding that the poverty line in Bahrain was determined through a commodity basket.

“We put what a person needs in a basket and we weigh it in terms of money and the basics rule out any luxury items,” he said.

“There are items, however, that are luxuries in other societies but they are necessitates in the Gulf such as luxury foods and it’s very difficult to convince decisions makers that what is called a luxury is actually a necessity.

“The government can always help you meet the necessities but luxuries are open ended.”

He also stressed the importance of periodically updating the existing database of those requiring social allowance under the Labour and Social Development Ministry.

A series of austerity measures was adopted by the government in 2015 to offset the drop in oil prices, including lifting subsidies, increasing the price of fuel and increasing electricity and water rates.

Consumers in Bahrain also pay a 5pc VAT on utility bills, among other products and services which went into force from January 1 this year.

© Copyright 2019 www.gdnonline.com

(Image: gdnimages/20190821\20190821090710bkic.jpg)

A STUDY to re-examine the poverty line in Bahrain is being urged amid increasing inflation and high cost of living.

Latest statistics released by the Social Insurance Organisation for the second quarter of 2019 show that 6.03 per cent Bahrainis (2,873) have a monthly income less than BD400 in the public sector as opposed to 45pc (42,722) in the private sector.

A comparison of the salaries of Bahrainis in the private and public sector as per the second quarter of 2019

The salaries of expatriates in the private sector as per the latest statistics in the second quarter of 2019

While 73pc (350,135) of expatriates working in the private sector earn less than BD200, followed by 15pc (71,307) earning between BD200 and BD399.

According to the United Nations, one in 10 people in developing regions still live on less than $1.9 per day (the equivalent of 714 fils), which is the internationally agreed poverty line, while millions of others live on slightly more than this daily amount.

However, MP Mahmood Al Bahrani said the government should conduct a new study to determine the poverty line in Bahrain while taking into account recent social and economic changes such as the lifting of subsidies, the introduction of Value Added Tax (VAT), and increases in the price of fuel and utilities.

The MP, who is a member of parliament’s financial and economic affairs committee, also stressed the importance of collaborative work with the government to increase the financial aid provided to Bahrainis under the Labour and Social Development Ministry.

“The government is discussing restructuring the financial aid provided and as legislators we share the same principle but it is crucial to complete a new study that addresses the current poverty line of people eligible for support,” he said.

“The Labour and Social Development Ministry is currently granting the social security allowance to families based on criteria determined in 2003 – which is 16 years ago – and it’s not realistic to still use the same criteria today.

“The ministry considers any individual earning less than BD56 to be poor and eligible for support while six-member families with an income of BD337 are also considered eligible for support.”

He said this criteria was determined based on a study conducted by the Bahrain Centre for Strategic, International and Energy Studies (Derasat) in 2003 and was no longer applicable as a basis to determine eligibility for financial aid.

He also stressed that the poverty line must be raised to include a wider segment of beneficiaries in society – adding that a joint committee will be formed between the legislative and executive authority to tackle this issue.

“We are looking forward to working with the government to increase the allocations and social allowances currently granted, as inflation hasn’t stopped since its adoption,” he added.

“Financial burdens have doubled on citizens in recent years and many things have turned into necessities and we can’t leave the Bahraini citizen to face them alone.”

Prominent Bahraini economist Dr Akbar Jaffari also called for updating statistics of those in need and widening the segment of beneficiaries, while also stressing the importance of looking at the issue on a case-by-case basis.

He said the uplifting of the prices in recent years has greatly impacted Bahrainis in the low and limited income category.

“In Bahrain the poverty line now is totally different than it was a year or two years ago because of the withdrawal of the subsidies by the government and an increase in the prices of fuel and utilities,” said Dr Jaffari, who is the chief executive of Jaffari Consultants (Jafcon).

“With the uplifting of the prices and the introduction of VAT, of course, the cost of living has gone up but those with high income don’t really feel it because it’s a small percentage but for the low and limited income this uplifting is huge.

“We can’t generalise, however, we have to take case by case because by generalising we harm some and over-benefit others, so we have to assess each family’s situation individually.”

He explained that three years ago BD188 per person was enough to meet the basic requirements of life, which he estimates has now increased to BD230 per person – adding that the poverty line in Bahrain was determined through a commodity basket.

“We put what a person needs in a basket and we weigh it in terms of money and the basics rule out any luxury items,” he said.

“There are items, however, that are luxuries in other societies but they are necessitates in the Gulf such as luxury foods and it’s very difficult to convince decisions makers that what is called a luxury is actually a necessity.

“The government can always help you meet the necessities but luxuries are open ended.”

He also stressed the importance of periodically updating the existing database of those requiring social allowance under the Labour and Social Development Ministry.

A series of austerity measures was adopted by the government in 2015 to offset the drop in oil prices, including lifting subsidies, increasing the price of fuel and increasing electricity and water rates.

Consumers in Bahrain also pay a 5pc VAT on utility bills, among other products and services which went into force from January 1 this year.

reem@gdn.com.bh

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