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One Prof’s Mid East Crusade

What can a Wharton professor do in Bahrain, a tiny Persian Gulf monarchy? Peter Cappelli, a human resources guru at America’s top management school, spearheaded a campaign that could shake up the kingdom’s economy.

A Knowledge@Wharton article chronicles Cappelli’s experience. Like many developing nations, Bahrain — only four times the size of Washington, D.C. with a population of 675,000, less than that of Indianapolis — has a surplus of unskilled workers, with official unemployment standing at 10%. This is made worse by cheap labor from Pakistan and Bangladesh, workers who are subject to no minimum wage and not allowed to switch jobs.

Cappelli suggested that Bahrain not boot the foreign workers — Bahrain needs them — but instead to let them change jobs to free up labor competition. As a result, employers that suppress wages will have to raise them and improve working conditions, which may also attract native Bahrainis and add jobs.

Cappelli also tipped Bahrain to become the Singapore of the Persian Gulf, featuring stellar infrastructure, professional civil servants, and skilled white-collar workers. It helps Bahrain not to rely on its oil reserve, which some say will run out in a decade. Instead, Bahrain may emerge as a regional banking and commercial hub.

Do you find Cappelli’s lessons helpful to your organization? Or region?

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