On January 21, 2025, an increase of 1% in employer contributions to mandatory social insurance took effect in Bahrain, bringing the total employer contribution to 17%. Employee contributions will remain unchanged at 8%, with 7% allocated to social insurance and 1% to unemployment coverage. Voluntary insurance contributions will also rise by 1%, reaching a total of 21%.
What does this mean for Employers and Employees?
This adjustment is based on Law No. (14) of 2022, which keeps employee contributions at their current levels. Employees will continue to contribute 8%, with 7% directed toward social insurance and 1% toward unemployment insurance.
Additionally, voluntary insurance contributions will increase by 1%, bringing the total to 21%.
Impact on Businesses
Companies operating in Bahrain should prepare for higher labor costs. This change may have long-term implications for workforce planning and financial strategies. Employers are encouraged to review and adjust their current social insurance plans to align with the new regulatory requirements.
Author: Associated Alliance Incorporated
Associated Alliance Incorporated is an independent insurance and reinsurance broker, specializing in risk management and employee benefits. With a presence in ten Middle Eastern countries and a global reach in over 120 countries, we provide customized insurance solutions to businesses worldwide.