Labour Market Basic Concepts and Definitions

Labour market basic concepts and definitions

Sound labour market policy must rely on adequate labour market information, both in the form of data and analysis. LMRA is responding to this challenge by establishing a quarterly system of Bahrain Labour Market Indicators (http://www.lmra.bh/blmi) releasing this annual Bahrain Labour Market Report. The report presents key data and analyses of the main features and current trends of the labour market in the Kingdom.

The purpose of this note is to introduce the reader to the basic concepts and definitions of the labour market in line with the international standards. It covers the concepts of economically active population or labour force, employment and unemployment, underemployment, wages and hours of work, status in employment, branch of economic activity, occupation and sector of employment.1

Economically active population (or labour force)2

The economically active population refers to all persons of either sex who furnish the supply of labour for the production of economic goods and services as defined by the UN systems of national accounts and balances during a specified time-reference period.3

The economically active population may be measured in terms of a short reference period such as a week or a day, or a long reference period such a year:

 When measured in terms of a short reference period, it is called the “currently active population” or equivalently the “labour force.”

 When measured in terms of a long reference period, it is called the “usually active population.”

The short reference period (one week) is the most common approach in measuring the economically active population. It is the base of the remaining part of this chapter.

The minimum age limit for measuring the economically active population is not specified in the international statistical standards, but it is recommended that the data

1 Topics not covered here include labour productivity, occupational injuries and diseases, labour disputes, informal employment, consumer prices, household income and expenditure. For the full scope of labour statistics see International Labour Organisation (ILO) Convention No. 160 and ILO Recommendation No. 170, http://www.ilo.org (click Statistics and databases; click Statistical guidelines and standards). 2 ILO, Resolution concerning statistics of the economically active population, employment, unemployment and underemployment, Thirteenth International Conference of Labour Statisticians, Geneva, October 1982. 3 UN System of National Accounts 1993, http://unstats.un.org/unsd/sna1993/introduction.asp. 2 should at least distinguish between persons under 15 years of age and those 15 years of age and over. The latter population is often referred to as the “working age population”. Compulsory schooling or the legislation on the minimum age for admission to employment should not necessarily be the basis for setting the minimum age limit for measurement purposes. Work in family enterprises, work as part of vocational or technical education, light work, work in the performing arts, and many other types of work are generally legally admitted and should be covered in the statistical framework.

Similarly, the international standards do not refer to a maximum age limit for the measurement of the economically active population and in principle any person of working age (15 years and older) could be economically active.

The economically active population is composed of the “employed” and the “unemployed”. The population not economically active is generally classified according to the reason for inactivity as: (a) attendance at educational institutions; (b) engagement in household duties; (c) retirement or old age; (d) other reasons such as infirmity or disability.4 The overall framework is represented schematically in the following diagram:

Labour force framework

4 It is important to note that persons classified as not active because of school attendance do not include all students, and persons classified as not active because of engagement in household duties do not include all homemakers. In such a system, therefore, it would be wrong to label these categories of the population not in the labour force as “students” or “homemakers”. 3

Working age population (15+ years)

Economically active population Population not (Labour force) economically active

(a) attending educational Employed Unemployed institution

(b) engaged in household duties

(c) in retirement or old age

(d) other reason of inactivity, e.g., disability Employment

According to the international definition of employment, the “employed” comprise all persons above the age specified for measuring the economically active population, who during the reference period were in the following categories:

 Paid employment

o “at work”: persons who, during the reference period, performed some work for wage or salary, in cash or in kind; o “with a job but not at work”: persons who, having already worked in their present job, were temporarily not at work during the reference period but had a formal attachment to their job,5

 Self-employment

o “at work”: persons who, during the reference period, performed some work for profit or family gain, in cash or in kind;

5 Formal job attachment is to be measured according to one or more of the following criteria: the continued receipt of wage or salary during absence; an assurance of return to work following the end of the contingency, or an agreement as to the date of return; and the elapsed duration of absence from the job which, wherever relevant, may be that duration for which workers can receive compensation benefits without obligation to accept other jobs. 4

o “with an enterprise but not at work”: persons with an enterprise, which may be a business enterprise, a farm or a service undertaking, who were temporarily not at work during the reference period for some specific reason.

Students, homemakers and others who combine their activities during the reference period with paid employment and self-employment as defined here should be considered as employed on the same basis as other categories of employed persons.

Also, members of the armed forces, regular as well as temporary members, should be included among persons in paid employment.

The international standards further specify that for operational purposes, the notion of “some work” may be interpreted as work for at least one hour during the reference period. The one-hour criterion in the definition of employment is to cover all types of employment that may exist in the country, including short-time work, casual labour, stand-by work and other types of irregular employment. The criterion is crucial in defining unemployment as a situation of total lack of work. It is also a necessary criterion in the measurement of labour productivity if total employment in the denominator is to correspond to aggregate production in the nominator.

The international definition of employment defines “work” in a broad sense covering all economic activities as specified by the production boundary of the System of National Accounts. According to the most recent version of this system, the production boundary covers all production of goods whether intended for sale on the market or not, as well as production of services for the market but with the exclusion of services not intended for sale on the market such as cooking food for own consumption, sewing or mending clothes for own use, or teaching or nursing own children. There are two exceptions concerning collecting fire-woods and carrying water over long distances.

The following diagram presents schematically the definition of work or economic activity in terms of the SNA production boundary: 5

Definition of “work”, or “economic activity,” in terms of the production boundary of the System of National Accounts, SNA 1993

Production of goods and services

Goods6 Services7

For own final For own final For market For market consumption consumption

Collecting Fire woods

Carrying water at long distances

In Bahrain, current data on employment are generally obtained from the administrative records of the General Organisation for Social Insurance (GOSI), the Pension Fund Commission (PFC), and the Civil Service Bureau (CSB). The data cover employees and employers registered at these organisations. The system, however, does not cover all workers in the Kingdom. For example, domestic workers engaged by households are not covered by the mandatory insurance scheme of GOSI, nor are all employers, own-account workers and unpaid family workers. There are also duplications with records of persons registered in more than one organization.

Combining these administrative data on employment and adjusting them against each other and against available census and survey data, LMRA has prepared quarterly estimates of civilian employment, to the extent possible, in line with international standards, starting from the fourth quarter of 2004.

Unemployment6 7

According to the international standard definition of unemployment, the “unemployed” comprise all persons, above the age specified for measuring the

6 Goods are physical objects for which a demand exists, over which ownership rights can be established and whose ownership can be transferred from one institutional unit to another by engaging in transactions on markets. 7 Services are heterogeneous outputs produced to order and typically consist of changes in the conditions of the consuming units realized by the activities of producers at the demand of the consumers. Services are not separate entities over which ownership rights can be established. They cannot be traded separately from their production. By the time their production is completed they must have been provided to the consumers. 6 economically active population, who during the reference period satisfy the following three conditions simultaneously:

 “without work”

i.e., not in paid employment or self-employment, as specified by the international definition of employment described above;

 “currently available for work”

i.e., available for paid employment or self-employment during the reference period (or shortly after); and

 “seeking work”

i.e., had taken specific steps in a specified recent period (typically the last four weeks) to seek paid employment or self-employment.

Special provisions apply to: (a) persons without work who made arrangements to start work at a date subsequent to the reference period (future starts); and (b) persons whose employment contract was temporarily suspended (lay-offs). These two categories are classified as “unemployed” irrespective of their job-search activity, provided they were without work during the reference period and currently available for work.

The purpose of the “without work” criterion is to ensure that employment and unemployment are mutually exclusive, with precedence given to employment. “Without work” means total lack of work. Thus, a person is considered as “without work” if he or she did not work at all during the reference period (not even for one hour) nor had a job or enterprise from which he or she was temporarily absent.

The “availability” criterion is meant to exclude from the count of the unemployed those persons who were not available for work during the reference period, although they might have been without work and seeking work for the future, such as students looking for a job after graduation, or other persons who cannot currently take up work due to family responsibilities, illness, or commitments to volunteer community services. The “seeking work” criterion covers not only seeking full-time full-year paid employment, but also seeking self-employment, part-time employment, temporary, seasonal or casual work, and, in general, seeking any type of work falling within the definition of employment.

The job-search period (generally four weeks) is allowed to be somewhat longer than the basic reference week in order to take into account the time-lag that often follows an initial step to obtain work, and during which the job-seeker may not take any other initiative to find work while waiting for the result of the earlier job-search. 7

“Seeking work” means taking active steps to look for work whether through government channels, or direct contacts with employers, or personal efforts to seek work or establish one’s own enterprise. The active steps mentioned in the international standard definition of unemployment are listed below.

Active steps to seek work

Registration at public or private employment exchange (for the purpose of obtaining a job offer) Direct application to employers Checking at worksites, farms, factory gates, market or other assembly places Placing or answering newspaper adversitements Seeking assistance of friends or relatives Looking for financial resources, land, building, machinery or equipment, or permits or licenses to establish own enterprise

It is important to note that the definition does not make any reference to institutional or legal provisions, such as receipt of unemployment insurance benefits or registration at government provided training schemes. The measurement is intended to refer exclusively to the person’s activities during the reference period, and not to the person’s institutional or legal status.

For this reason, many statistically developed countries measure unemployment through specially designed household surveys called labour force surveys8 rather than through administrative registration records of jobseekers at the Ministry of Labour or elsewhere. The following table compares the number of unemployed persons obtained from labour force surveys and the count of registered unemployed jobseekers for several countries. In recent years, Bahrain has conducted two labour force surveys (2004 and 2007), but because the results have not been officially released no data are shown here.

Unemployment Comparison: Labour Force Survey versus Registration Data Country Year LFS Registered Ratio Unemployed Unemployed Bahrain 2004 26,000 6,293 24.2% Bahrain 2007 20,300 8,532 42.0%

8 International Labour Office (ILO), Surveys of economically active population, employment, unemployment and underemployment. An ILO manual on concepts and methods, Geneva 1990. Also available in Arabic. For national labour force surveys, see http://www.ilo.org/dyn/lfsurvey/lfsurvey.home. 8

Pakistan 2006 3,103,000 420,000 13.5% Singapore 2006 84,200 22,200 26.4% Russian Federation 2005 5,263,000 1,830,000 34.8% Norway 2006 84,000 63,000 75.0% France 2005 2,717,000 2,425,100 89.3% Germany 2006 4,487,000 4,279,000 95.4% Source: ILO labour statistics, http://laborsta.ilo.org.

Underemployment

Underemployment reflects underutilization of the productive capacity of the employed population, including those which arise from a deficient national or local economic system. It relates to an alternative employment situation in which persons are willing and available to engage.

The international standards on this topic are limited to the measurement of time- related underemployment.9 According to these standards, time-related underemployment exists when the hours of work of an employed person are insufficient in relation to an alternative employment situation in which the person is willing and available to engage.

Persons in time-related underemployment comprise all persons in employment, as defined earlier, who satisfy the following three criteria:

 Willing to work additional hours

in present job, or in an additional job, or in a new job in replacement of the current one;

 Available to work additional hours

ready, within a specified period of time, to work additional hours, given opportunities for additional work;

 Worked less than a specified number of hours

hours actually worked in all jobs during the reference period were below a threshold defined according to national circumstances.

Two particular categories of persons in time-related underemployment are: (a) Persons who usually work part-time schedules and want to work additional hours, and (b) Persons who during the reference period worked less than their normal hours of work

In addition to time-related underemployment, the international standards recognize three other major types of inadequate employment situations: 9 ILO, Resolution concerning the measurement of underemployment and inadequate employment situations adopted by the Sixteenth International Conference of Labour Statisticians, Geneva, October 1998. 9

 Skill-related inadequate employment

wanting or seeking to change current work situation in order to use current occupational skills more fully, and available to do so.

 Income-related inadequate employment

wanting or seeking to change current work situation in order to increase income, limited as result of low level of organisation of work or productivity, insufficient tools or equipment and training or deficient infrastructure, and available to do so

 Inadequate employment related to excessive hours

wanting or seeking to work less hours either in the same job or in another job, with a corresponding reduction of income.

Data on the economically active population, employment, unemployment and underemployment need to be supplemented with data on wages and hours of work for a proper understanding of the labour market situation.

The system of wage statistics distinguishes three aspects of wages: (a) wages as a price of labour called wage rate; (b) wages as income to the worker called earnings; and (c) wages as a cost to the employer called labour cost. These three aspects are shown schematically in the following diagram:

 Wage rate:

rate of pay per period of time or per unit of production for an employee on a given job. It includes basic wages, cost-of-living allowances and other guaranteed and regularly paid allowances. It excludes overtime payments, bonuses and gratuities, family allowances, and other social security payments by employers, payments in kind, supplementary to normal wage rates. . 10

Three aspects of wages1

Market’s point of view

Price Wage rate

Worker’s point of view Wages Employer’s point of view

Earnings Income Cost Labour cost

1 “System of wages statistics”, Twelve International Conference of Labour Statisticians, Geneva, October 1973. “Labour cost”, Eleventh International Conference of Labour Statisticians, Geneva, October 1966. “Employment related income”, Sixteenth International Conference of Labour Statisticians, Geneva, October 1998.

 Earnings:

remuneration in cash or in kind paid to employees, as a rule at regular intervals, for time worked or work done together with remuneration for time not worked such as annual vacation and other paid leave or holidays. It includes direct wages and salaries, remuneration for time not worked, bonuses and gratuities, and payments in kind. It excludes Employers’ contributions to social security and pension schemes, severance and termination pay

 Labour cost:

cost incurred by the employer in the employment of labour. It includes earnings, employers’ social security expenditure, cost of vocational training, cost of welfare services, taxes and fees regarded as labour cost, and other expenditures such as transport, clothing and recruitment.

Three measures of labour cost are generally distinguished:

- Basic labour cost defined as average labour cost per worker - Hourly labour cost defined as average labour cost per hour worked - Unit labour cost defined as average labour cost per unit of output

The change in labour cost is generally measured by a labour cost index defined as the change in labour cost during a given period adjusted for employment shifts among occupations and branches of economic activity in that period. 11

 Employment-related income:

In addition to the three concepts of wages described earlier, new international standards have recently been established for a broader concept called employment-related income. It covers all payments, in cash, in kind or in services, which are received by individuals, for themselves or in respect of their family members, as a result of their current or former involvement in paid or self- employment jobs.

It consists of income related to paid employment including earnings, profit-related pay, employment-related social security benefits received directly from employer, or from social security or compulsory insurance schemes or the State, as well as income related to self-employment including gross profit (or share of profit), remuneration received by owner-manager of corporations or quasi-corporations, and employment-related social security benefits received. It excludes income derived from property income, annuities, gifts, etc. and allowances paid by social security schemes or the State without regard to employment status.

The LMRA Establishment Survey on Wage Structure and Distribution March 2006 conducted by the Central Informatics Organisation (CIO) provides estimates of wage rate, earnings and labour cost of Bahraini and non-Bahraini workers, separately.10 The final estimates are shown below. (The details may not add to totals due to rounding.)

Component of wages in BD Non- Bahraini Description (March 2006) Bahraini

1 Basic wages 442 168 Wages paid for normal work hours

2 Regular allowances 35 18 Allowances for housing, social, shift, call- out, transport, communication, remote, Wage rate 477 186 hazardous work 3 Overtime 38 13 Premium payment for overtime

4 Family allowances 14 1 Allowances for large family. Provision of housing, food, beverage, fuel, transport, 5 In-kind payments 5 8 clothing, footwear, coupons, club,..

6 Bonuses 22 7 Year-end, profit-sharing bonuses,..

7 Other 1 0 Education, language increments,.. Earnings 557 215 8 Social security contributions 31 0 Statutory, voluntary social security contributions by employers (GOSI, PFC, 9 Work injuries, accident insurance 12 6 Work injuries) 10 Life insurance 1 0 Health ministry

11 Training 11 8 Levy, fee, reimbursement, material

12 Termination 2 2 Severance, termination indemnity

13 Hiring and renewal 10 17 Administrative cost, travel, advertisement Labour cost 628 246 Hours of work

Data on hours of work are needed to classify the employed population according to the number of hours of work and, in particular, to identify short-time work and

10 See “Labour Cost and Employment Prospects in Bahrain,” LMRA Policy Directorate, 25 Sept 2006. 12 measure time-related underemployment. Also, the aggregate number of hours worked by workers in each branch of economic activity or occupational category provides comparable estimates of total labour input, used for the analysis of labour costs, productivity and other studies of labour force utilisation.

Four concepts of hours of work are generally distinguished:

Hours of work1

Normal hours of work Actual hours worked Usual hours of work Hours paid for

1 ILO, Tenth International Conference of Labour Statisticians, Geneva, October 1962.

 Normal hours of work:

hours of work fixed by or in pursuance of laws and regulations, collective agreement, or arbitral awards. Where such hours of work are not fixed, normal hours of work may be defined as the hours of work in excess of which remuneration is at overtime rate, or forms an exception to the rules or customs of the establishment relating to the class of workers concerned.

 Actual hours worked:

hours worked during the normal hours of work plus overtime. It includes time spent at the place of work on preparation of work, waiting or standing by for work, and short rest periods such as coffee and tea breaks.

 Usual hours of work:

hours worked in an activity during a typical period. It is often calculated by the modal value of actual hours worked per unit of time over a long period.

 Hours paid for: 13

sum of actual hours worked and hours paid for, but not worked such as paid annual leave, paid public holidays, paid sick leave, paid meal breaks, and, in certain cases, time spend travelling between home and the workplace.

A numerical example should clarify the different concepts of hours of work. Consider a person working in an establishment with official working hours from 7:30 to 15:30 for five days a week, Sunday to Thursday. The normal hours of work of this person are 40 hours per week (40 = 8x5).

If on a particular week, the person worked 1 extra hour per day for the first three days and took leave of absence for the remaining two days, the actual hours worked of this person on that week was 27 hours (27 = 3x[8+1]+2x0).

If this person regularly works the full normal hours of work and generally works also 4 hours on Saturday mornings, his or her usual hours of work would be 44 hours per week (44 = 40+4).

Finally, for the week in which this person worked 1 hour paid overtime for the first three days and took leave of absence for the remaining two days, the hours paid for would be (43 = 3x[8+1]+2x8).

Status in employment

Status in employment classifies jobs held by persons at a given point of time (the current job or jobs of an employment or the last job of an unemployed person with past work experience). The job is classified with respect to the type of explicit or implicit contract of employment of the person with other persons or organizations. The International Standard Classification of Status in Employment (ICSE-1993) identifies:11

 Employees:

Persons working in “paid employment jobs”, i.e., holding explicit (written or oral) or implicit employment contract with remuneration not directly dependent upon the revenue of the unit for which they work. Remuneration could be in the form of wages or salaries, commission from sales, piece-rates, bonuses, or in- kind payments such as food, housing or training.

 Employers:

Persons working on own-account or with one or a few partners in “self employment jobs”, i.e., (a) remuneration is directly dependent on the profits (or potential for profits) derived from the goods and services produced or for own consumption, and (b) engaging one or more “employees,” on a continuous basis.

11 ILO, International Classification of Status in Employment, ICSE-93, Fifteenth International Conference of Labour Statisticians, Geneva, 1993, http://laborsta.ilo.org (click classifications). 14

 Own-account workers:

Persons working on own-account or with one or a few partners in a “self employment job”, not engaging any “employees,” on a continuous basis.

 Contributing family workers:

Persons working in a market-oriented establishment operated by a household member, who cannot be regarded as partner, in a “self employment job”, not engaging any “employee” on a continuous basis.

 Members of producers’ cooperatives:

Persons working in a cooperative producing goods and services, in a “self employment job”, not engaging any “employee” on a continuous basis

In Bahrain data on status in employment are available from population censuses and surveys. According to the latest population census conducted in 2001,12 more than 96% of the employed persons are employees. Employers constitute 2% and own account workers 1½%. There are virtually no contributing family workers, less than ½%.

Branch of economic activity

Branch of economic activity is a characteristic of an economic unit, or more precisely, an establishment. It refers to the kind of goods produced or services supplied by the establishment. An establishment may be a farm, a mine, a factory, a workshop, a store, an office or a similar type of economic unit. An establishment constitutes an autonomous part of an enterprise which exclusively or principally carries out a single type of economic activity at a single physical location.

Because the classification of economic activities is based on the homogeneity of activities carried out by the economic unit, it is important to distinguish enterprises from establishments. “Enterprise” is a broader concept than “establishment”. An enterprise is a legal entity (or group of legal entities) and may have a number of establishments with different economic activities and different locations.

The International Standard Industrial Classification of All Economic Activities, ISIC Rev 3.1, classifies economic activities into 17 broad categories as follows:13

International Standard Industrial Classification of All Economic Activities ISIC Rev 3.1 Tabulation category Divisions Groups Classes

12 Central Informatics Organisation, Census of Population, Housing, Buildings and Establishments – 2001. Part Two, Kingdom of Bahrain, December 2004, p. 437. 13 United Nations, International Standard Industrial Classification of All Economic Activities, ISIC-88, Rev. 3, http://unstats.un.org/unsd (click Methods & Classifications). 15

A Agriculture, hunting and forestry 2 6 9 B Fishing 1 1 1 C Mining and quarrying 5 10 12 D Manufacturing 23 61 127 E Electricity, gas and water supply 2 4 4 F Construction 1 5 5 G Wholesale and retail trade, repaid of motor vehicles, motorcycles and personal and 3 17 29 household goods H Hotels and restaurants 1 2 2 I Transport, storage and communication 5 10 17 J Financial intermediation 3 5 12 K Real estate, renting and business activities 5 17 31 L Public administration and defense, 1 3 8 compulsory social security M Education 1 4 5 N Health and social work 1 3 6 O Other community, social and personal service 4 9 22 activities P Private households with employed persons 1 1 1 Q Extra-territorial organizations and bodies 1 1 1 Total 60 159 292

The data received by LMRA from the Ministry of Industry and Commerce (MOIC) as well those obtained from the Central Informatics Organisation (CIO) and the Ministry of Finance (MoF) appear to be consistent with ISIC Rev 3 (1988), while those from the General Organisation for Social Insurance (GOSI) and the Ministry of Labour (MoL) seem to be based on an early version, ISIC Rev. 2 (1968).

Occupation

Occupation refers to the kind of work done by a person employed (or the kind of work done previously or wanted if the person is unemployed), irrespective of the branch of economic activity or the status in employment of the person.

An occupational classification system assembles together occupations of similar tasks and duties or in terms of the similarity of skills required to fulfil the tasks and duties of the job. The existing International Classification of Occupations (ISCO-88) categories the occupations in four levels of aggregation in a hierarchical order: 10 major groups subdivided into 28 sub-major groups, 116 minor groups and 390 unit groups comprising in most cases of a detailed number of occupations.14

Structure of the International Standard Classification of Occupations

14 ILO, International Standard Classification of Occupations, ISCO-88, http://laborsta.ilo.org (click classifications). 16

ISCO– 88 Major Sub- Minor Unit ISCO Groups major groups Groups skill groups level 1 Legislators, senior officials and managers 3 8 33 - 2 Professionals 4 18 55 4th 3 Technicians and associate professionals 4 21 73 3rd 4 Clerks 2 7 23 2nd Service workers, shop & market sales 5 2 9 23 2nd workers 6 Skilled agricultural and fishery workers 2 6 17 2nd 7 Craft and related trades workers 4 16 70 2nd 8 Plant and machine operators and assemblers 3 20 70 2nd 9 Elementary occupations 3 10 25 1st 0 Armed forces 1 1 1 - Totals 28 116 390

Skill level measures the range and complexity of tasks and duties associated to a job. ISCO-88 uses the International Standard Classification of Education, ISCED (UNESCO 1976)15 to define four broad categories of skill levels: 1st level – Primary education or first stage of basic education; 2nd level – Lower secondary or second stage of basic education; 3rd level – Upper secondary education; and 4th level – Higher education.

In Bahrain, the occupational classification systems used by the statistical and administrative agencies differ substantially from each other. The need for the development of a national standard classification of occupations is greatly felt.

Sector of employment

Sector of employment relates to the legal organisation and principal functions, behaviour and objectives of the enterprise with which a job is associated. There is no international standard classification of sectors of employment.

The following classification is adapted from the classification of institutional units of the System of National Accounts, SNA 1993:16

15 UNESCO, International Standard Classification of Education ISCED 1976, Paris. See also, ISCED 1997, http://www.unesco.org/education/information/nfsunesco/doc/isced_1997.htm. 16 http://unstats.un.org/unsd/sna1993/toctop.asp. See also, United Nations, “Government/Public Sector/Private Sector Delineation Issues,” Task Force on Harmonisation of Public Sector Accounting, Fourth meeting of the Advisory Expert Group on National Accounts, 30 January – 8 February 2006, Frankfurt, SNA/M1.06/17. 17

Sector of employment

Public sector Private sector

General Public Non-profit Private Households government corporations institutions (b) corporations

Government units Financial Central regional local institutions levels)

Social security Non-financial funds institutions

Non-profit, non- Non-profit market (aiii) institutions (aii)

1. Public sector: all market or non-market activities which at each institutional level are controlled and mainly financed by public authority.

a. General government: (i) all central, state and local government units together with (ii) social security funds imposed or controlled by those units, and (iii) non-profit institutions engaged in non-market production controlled and financed by government, or by social security funds; b. Public corporations: all institutional units that produce for the market and are controlled and mainly financed by public authority.

2. Private sector:

a. Private corporations: (i) all non-financial and financial corporations (i.e., incorporated enterprises, private companies, joint-stock companies, limited liability companies, registered cooperatives, limited liability partnerships, and so forth) and quasi-corporations, as well as (ii) non-profit institutions, such as hospitals, schools and colleges, that charge fees to cover their current production costs; b. Non-profit institutions serving households: all units engaged in the production of non-market goods and services for households and whose main resources are from voluntary contributions; c. Households: unincorporated enterprises directly owned and controlled by members of private and institutional households, either individually or in partnership with others, who may be members of the same household or from different households.

It is customary in Bahrain to refer to data obtained from GOSI as “private sector” and to data from PFC or CSB as “public sector.” Examination of the coverage of these organisations, however, indicates that this distinction is not consistent in all respects with 18 the definition of public and private sector described here. It is therefore desirable to develop, in particular, a suitable definition of public sector corporations, and to identify them for statistical purposes. Such a list will permit the adjustment of GOSI and PFC data to obtain more accurate data on employment and wages in the public and private sectors.

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