Shura approves unemployment fund accounts after net assets drop

TDT | Manama

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Shura Council has approved the 2023 accounts of Bahrain’s Unemployment Insurance Fund after a 21 per cent drop in net assets from a BD200 million transfer to the state, while senior members questioned the need to keep deducting 1 per cent from wages.

At its sitting yesterday, the council backed the Financial and Economic Affairs Committee’s call to adopt the audited report for the year ended 31 December 2023, with the committee’s written remarks attached.

The accounts show total assets of BD614.9 million against liabilities of BD151.8m, leaving net assets of around BD463.2m.

Liability

The fall is mainly tied to Parliament’s earlier move to draw BD200m from the fund to pay for labour market programmes; by the end of 2023, BD67.67m had been transferred and BD133.3m was recorded as a liability.

According to the committee, the core insurance activity continues to produce a surplus.

Contributions again exceeded benefits, leaving a gap of about BD54.4m in 2023, compared with roughly BD51.3m in 2022.

Contributions

Total contributions from the public and private sectors reached BD89m, while benefits paid to unemployed Bahrainis and first-time jobseekers came to about BD34.6m.

Private-sector workers and employers supplied around 81 per cent of contributions, with the rest from the public sector.

Committee rapporteur Dr Abdulaziz Abul told members the account had reached a point where its workings should be reviewed.

“After nearly twenty years of operation, it is time to review how this account works, how its resources are used and how far its scope can be widened while serving the same social goals,” he said, noting that the audited report was being laid before the legislature for the first time under a 2023 change to the Unemployment Insurance Law.

Income

Investment income in 2023 rose to BD22.7m, compared with BD434,000 in 2022, driven by returns from financial instruments and interest-bearing assets.

That pushed operating results before the BD200m transfer to around BD75.5m for the year.

First Deputy Chairman Jamal Fakhro told the chamber that, even with that rise, the rate of return on the fund’s assets was still below the level suggested by the actuarial adviser.

Balance

He said the account held an average balance of about BD550m in 2023 and earned roughly 4 per cent, whereas the expert had pointed to 6 per cent as a more suitable target. Fakhro also questioned the need to keep the current deduction in place given the size of the fund’s surpluses.