Target
Bahrain Economic Vision 2030 dedicated one of its three pillars — Government — to the transformation of the public sector. The vision called for a government that is lean, productive, and accountable: a public sector that delivers high-quality services efficiently, that does not crowd out private sector employment, and that operates with fiscal discipline.
The government pillar encompasses several dimensions: reducing the public sector’s role as the default employer for Bahraini nationals, improving service delivery through technology and process reform, strengthening regulatory quality, enhancing transparency and accountability, and controlling the government wage bill that constitutes the largest single item of public expenditure.
The political sensitivity of this objective is significant. Public sector employment is a core component of the social contract in Bahrain, providing stable, well-compensated careers for nationals. Reforming the public sector risks disrupting this contract, particularly if private sector alternatives are not sufficiently attractive to absorb displaced public sector workers.
Current Status
Bahrain has made notable progress in some dimensions of government efficiency while lagging in others.
E-Government and Digital Services. Bahrain has been a consistent regional leader in e-government. The kingdom’s eGovernment portal (bahrain.bh) provides digital access to hundreds of government services. The Information and eGovernment Authority (iGA) has won multiple international awards for digital government innovation. Bahrain ranked first among Arab countries in the UN E-Government Development Index for multiple consecutive editions. Digital identity systems, electronic payment infrastructure, and paperless government transactions represent genuine efficiency gains.
Regulatory Reform. The establishment and operations of the Bahrain Economic Development Board, the Labour Market Regulatory Authority, and the Central Bank of Bahrain’s regulatory sandbox for fintech demonstrate institutional innovation in regulatory design. Business registration processes have been streamlined, with company formation possible within days rather than weeks.
Public Sector Wage Bill. Despite efficiency gains in service delivery, the government wage bill remains the dominant fiscal expenditure category. Public sector employment continues to absorb a large share of Bahraini nationals, and compensation levels — including salaries, allowances, benefits, and pensions — create significant fiscal pressure. The Fiscal Balance Programme’s voluntary early retirement scheme was designed to reduce headcount, but structural reduction of the public sector wage bill requires sustained discipline against political incentives to hire.
Accountability and Transparency. Bahrain’s National Audit Office provides fiscal oversight. The Financial Investigation Directorate and anti-corruption mechanisms have been established. However, governance transparency assessments by international organisations continue to identify areas for improvement, and civil society’s ability to provide independent oversight is constrained by the political environment.
Service Delivery Quality. Healthcare, education, and social services have received investment, but fiscal constraints limit the pace of improvement. The quality of public services — as distinct from their digital accessibility — depends on sustained investment that the fiscal position makes challenging.
Analysis
Bahrain’s government efficiency record is a study in partial reform. The kingdom has genuinely excelled in e-government and digital service delivery — an area where its small scale is an advantage, enabling rapid deployment of new systems across a compact public sector. Regulatory innovation, particularly in financial services through the CBB sandbox, demonstrates institutional competence.
The structural challenge is the wage bill. A lean government, as the vision describes it, requires fewer public sector employees compensated at levels that do not distort the private sector labour market. Bahrain has not achieved this structural change. The public sector remains the preferred employer for many nationals, the wage bill consumes a disproportionate share of government revenue, and the political barriers to meaningful public sector workforce reduction are substantial.
The tension between government efficiency and employment creation is fundamental. The vision calls for both a lean government and full Bahraini employment. In a small economy where the private sector does not yet generate sufficient high-wage jobs for nationals, reducing public sector employment risks increasing unemployment — directly contradicting the employment objectives of the same vision.
Data Sources
United Nations E-Government Development Index. Information and eGovernment Authority annual reports. Bahrain National Audit Office publications. IMF Bahrain Article IV Consultations on public sector finances. World Bank Doing Business indicators (historical).
Assessment: At Risk
Bahrain has achieved genuine progress in e-government and digital service delivery, earning international recognition for digital government innovation. Regulatory reform, particularly in financial services, demonstrates institutional competence. However, the structural objectives of the government pillar — a lean public sector, controlled wage bill, reduced role as default national employer — remain substantially unachieved. The public sector wage bill continues to dominate fiscal expenditure, and the political economy of public sector reform constrains the pace of structural change. The At Risk designation reflects strong performance in digital government offset by limited progress on the structural dimensions of public sector transformation.