Exploitation of Handicrafts in Bahrain’s Local Handicraft industry

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Table of Contents

Introduction
Background of the Issue
What is Outsourcing?
Labor Economics at Work
Understanding the Legal Implications
Labor Economics: Traditional versus Progressive
Is a solution to this current problem possible?
Conclusion
Reference List

Introduction

The sale of local handicrafts is a prominent feature in most countries who have a growing tourism industry which helps to support local artists as well as small to medium scale enterprises that specialize in the sale and distribution of such items.

Bahrain for instance receives 8 million visitors per year (as of data from 2008) with an annual tourism income of $7.75 billion (Economy Recovering, But Risks Loom Large 2012, pp 1-11). While most of this money comes directly from revenues derived from hotels, restaurants, and tour groups, a large percentage does go to local artists and crafters which acts as a major source of income for them (Country report: Bahrain 2011, pp 1-21).

This is a particularly important point to remember given the following sets of data examining the local economy of Bahrain. Currently, Bahrain is ranked as having the 12th freest economy in the world, is considered the fastest growing financial center as well as possesses vast oil and natural resource wealth (Miller & Epstein 2011, pp 1138-1147).

Its primary exports are centered around petroleum, aluminum, various metallic ores and food products. The inherent problem though with Bahrain’s local economy is that much of it is centered around the export of the aforementioned products with little attention being paid to the development of small to medium scale enterprises that focus on the production and sale of local handicrafts (Economy 2011, p. 6).

In fact, an examination of the local handicraft industry reveals that most of the sales of authentic native handicrafts are done through local handicraft centers or markets with little in the way of export depots existing which would help to sell such items in overseas markets.

Despite the fact that SMEs constitute 92 percent of local businesses within the country, they are still overshadowed by the country’s oil and natural resource industry which accounts for 60 to 80 percent of export earnings, 45 percent of the GDP and 80 percent of the government’s budget revenues.

This is in stark contrast to the situation found in countries such as the U.S., U.K., China and other industrialized countries where local SMEs makeup more than 70 percent of GDP, 60 to 70 percent of local government revenue and 75 percent of export earnings.

The inherent problem with this particular situation is that the lack of support for the local handicraft industry in Bahrain combined with the method utilized to produce handicrafts, which is a normally long and tedious process, leaves this particular industry vulnerable to differences in labor economics.

Background of the Issue

Traditional knowledge can be comparable to the inherited traditions and long standing practices inherent within a particular culture, society, or community.

Another way of looking at traditional knowledge is from the concept of “adaptively acquired knowledge” wherein the various processes and techniques inherent to a particular indigenous community were developed as a response to the unique environmental and topographical situation they found themselves in (Traditional knowledge and the international context for protection, 2005: 142).

This can be seen in the different weaves and means of producing traditional clothing that is unique to particular regions such as the “sarong” in the Philippines, the Kimono of Japan and the thickset clothing developed by the indigenous people of Tibet.

In a way, traditional knowledge can be defined as a form of claimed ancestral heritage wherein cultural traditions, societal norms and customs, methods of preparing food and clothing as well as aspects related to medicine, agriculture and fishing are all a result of hundreds if not thousands of years of shared oral and written traditions which are inextricably bound to the people that inherited them and can be considered their “property” so to speak since for them it is a form of cultural inheritance.

Yet over the years the process of globalization and cultural assimilation has increasingly placed a strain on the concept of “ownership” of traditional knowledge (Taylor 2003, pp. 409-418).

Aspects related to traditional symbols, designs, distinctive cultural crafts, artwork, songs, stories and even knowledge related to traditional medicine have been misappropriated by corporations, schools and opportunitistic individuals in order to market an aspect related to another society’s traditional knowledge with no regard to the concept of “intellectual ownership” of the “product” that they are distributing (Taylor 2003, pp. 409-418).

Such a case can be seen in the Kingdom of Bahrain at the present wherein the demand for local handicrafts by millions of visiting tourists has resulted in the establishment of a new source for such products that are far from what one can consider “traditional”.

This refers to various handicrafts such as pottery, metalwork, woodwork, fabric and basket weaves that are not made by local craftsmen but are in fact mass produced in factories or even imported from locations as far as India or China with the mark of the Bahrain culture but were not created with the assistance nor consent of local artists or craftsmen.

What is Outsourcing?

Outsourcing is a term used to describe the practice of contracting a particular business function whether in the form of manufacturing, accounting, customer service etc. to an outside provider for the express purpose of reducing operating costs.

For example, as indicated by Wee, Peng, & Wee (2010) the main costs of doing business within the U.S. are related to local taxes, employee salaries as well as federally required health benefits and insurance services (Wee, Peng, & Wee 2010, pp. 2081-2094). Such factors drive up the cost of doing business within the country due to the amount of money that goes into them (Holweg & Pil 2012, pp. 98-115).

On the other hand outsourcing aspects of the company’s functions to locations such as China, India and the Philippines reduces these particular costs due to lower tax rates, lower minimum wage requirements as well as different far lower costs of employee benefits.

In the case of China the low minimum wage combined with the low cost of doing business within the country resulted in more companies outsourcing their manufacturing services to the country between the periods of 1990 to the present (Whitaker, Mithas, & Krishnan 2010, pp. 11-42).

This particular situation is not unique to China but can similarly be seen in India and the Philippines where business process outsourcing has become a $100 billion a year industry.

What you have to understand is that in the case of the production of local handicrafts such as textiles, metalwork and various aspects related to the general look and appearance of an object, doing it the “traditional way” often involves tedious practices which are done by hand and take a long time to accomplish.

Not only that, when taking labor economics into consideration local artisans often charge large amounts for distinctive types of crafts given the relatively high living standards within Bahrain (Working on reform 2006, pp. 35).

Another factor that should also be taken into consideration is the fact that the production processes that go into authentic handicrafts, as mentioned earlier, take far longer as compared to conventional products that are made “en masse” from a factory.

When taking into consideration the number of visitors to the country per year (8 million) and the number of people that are natives of Bahrain (1.2 million) of which local artisans comprise a small population of (less than 1,000), simple labor economics would suggest that it would be virtually impossible for local producers to supply even a modicum of tourist demand for traditional artifacts.

It is due to this the merchants that specialize in the sale of such items needed to turn towards other means by which such items could be produced and, as a result, had to utilize external methods of production in the form of outsourced services (Working on reform 2006, pp. 35). The fact remains that hiring a supplier from China or India to make the same type of handicraft based on the design alone accomplishes several factors:

It is cheaper since workers from India or China have a lower minimum wage
It solves the supply issue given that items can be produced in wholesale quantities utilizing industrial techniques
It enables the sellers to gain higher profit percentages given that such products are far cheaper than those made by local artisans

The end result satisfies the demand side of the market; however, this comes as a direct result of a distinctly negative impact for the supply side in the case of local artisans.

Labor Economics at Work

The various processes that have been mentioned within this paper are actually not a recent development but were actually established during the early to mid-1990s as Bahrain’s tourism industry continued to pick up. What you have to understand is that the local handicraft industry during the 1990s did not keep pace with the relative increase in the amount of tourists (Foreign fruits 2005, pp. 37).

The main reason behind this is the fact that in order for something to be considered “traditional and authentic” it would need to be made in a manner that is line with local methods of creation and not be subject to industrial processes. Given that becoming a local artisan for a craft is an exceedingly difficult endeavor kept to a few select groups and families, it is not surprising that it produces relatively few professional artisans per year.

Not only that, due to the increasing level of Bahrain’s economic sophistication more and more individuals are choosing to enter into jobs with industrial companies rather than continue on with their traditional roots (Foreign fruits 2005, pp. 37).

As a result, the number of artisans has dwindled over the years with government programs even in place to ensure that the production processes that are unique to particular local handicrafts do not disappear.

It thus becomes rather strange that despite such difficulties many of the local markets and tourist shops in and around Bahrain continue to have vast stocks of “local” handicrafts despite the fact the dwindling nature of traditional artisans.

The most obvious answer to such a mystery is the fact that most of what is present in such shops are in fact complete fakes that merely imitate the style established by artists but were in fact made in locations such as India or China.

The government is well aware of this; however, given the labor shortage of artists and the high demand for local artifacts the end result is that the government turns a blind eye in favor of satisfying local demand. What the government does not understand in this particular case is that such practices actually further destabilize the local labor market for the creation of local artifacts (Foreign fruits 2005, pp. 37).

With local markets flooded with handicrafts made in other countries this actually limits the ability of local artisans to sell what they make. As mentioned earlier, not only are locally made artifacts more expensive but they take far longer to make as compared to the ones that are imported which can be made in bulk lots.

Such a situation leads to various merchants actually refusing to sell handicrafts made by traditional artisans since tourists who buy artifacts from them do not know any better whether what they are buying is original or authentic, what they usually care about is the overall price in correlation to how the item looks.

Since merchants are able to sell fake handicrafts at a far lower cost and make larger profits from them, they would in turn start to prefer such items over the originals. The end result of such actions is that authentic locally made cultural artifacts are increasingly becoming harder to come by within Bahrain given the proliferation of mass produced forgeries from international factories.

When examining such an issue, it must be questioned whether labor economics in Bahrain, regarding the supply and demand for local handicrafts with a gradually declining artisan labor force, actually gives factories in various international locations the right to produce such items given that the production of the cultural artifacts of Bahrain is part of their legacy of traditional knowledge which is firmly in their possession.

Understanding the Legal Implications

Intellectual property rights are broadly defined as “exclusive rights pertaining to distinct intangible creations of the mind which range from music, designs and various artistic works to broad categories such as inventions, literature and even phrases”.

The basis for intellectual property rights is to protect the creators of unique inventions, concepts or ideas from having their work arbitrarily utilized without their permission for the profit of other individuals/ companies. Companies apply IPR law as a method of protecting their patented and copyrighted products from being subsequently copied and sold by other companies.

It is through this method of business law implementation that various corporations have been able to maintain their positions in the global market place due to their protection and control of their patented processes, products and designs.

Yet, while the protection of IPRs of businesses is clearly defined and regulated by law, aspects related to the IPRs of indigenous people and local communities which takes the form of traditional knowledge (a form of inherited knowledge consisting of cultural processes, traditions, artistry, environmental knowledge etc. which has been passed from generation to generation for hundreds if not thousands of years) has as of late not received the same level of equanimity in regard to proper protection and regulation as seen in the case of business law applied to IPRs.

Under the commission of human rights it is expressly implied that all indigenous people or local communities have an inherent right to “possession” over the various pieces of cultural traditions, knowledge and development that are classified as originating from traditional knowledge.

What must be understood though is that despite the fact that such statements have been indicated by the commission on human rights, it is often times subverted by both countries and private corporations.

The fact is that it is getting increasingly harder to protect traditional knowledge given that individual countries have different rules regarding the protection of certain types of intellectual property rights with China usually being considered one of the largest violators of such rights.

It should also be noted that while the government of Bahrain has tried to “save” the local handicraft industry, it does so while at the same time turning a blind eye to the processes that are destroying it from within.

Labor Economics: Traditional versus Progressive

It should also be noted that there have been relatively few protests from the local labor force regarding the introduction of cheap imitation handicrafts into the local markets and, as a result, imitation products continue to flood the market.

Studies such as “Exorcising the ghosts in the labor market (2004)” have indicated that this is directly related to the increasingly small part that the handicraft labor force has been playing in the local market (Exorcising the ghosts in the labor market 2004, pp. 36-38). It is usually the case that various artisan techniques and methods of creation are kept within a single family with succeeding generations often reproducing the techniques of their forefathers.

Unfortunately, within the past 15 years a distinct shift in the local labor force was noted wherein white collared workers became increasingly more valued as a commodity with many individuals from various artisan families choosing to enter into the financial and industrial sectors of the local economy (Exorcising the ghosts in the labor market 2004, pp. 36-38).

The reason behind this is actually quite simple, the monetary rewards derived from white collar jobs in such industries are often fire higher than what they would have gotten as local artisans. It is due to the very simple aspect of labor economics (i.e. differences in wages) that has exacerbated the slow decline of the local handicraft industry.

Is a solution to this current problem possible?

Impossibility due to Labor Economics

When examining the present issue under the context of labor economics, it becomes clear that there is no viable solution given the orientation of the present day labor market within Bahrain.

What you have to understand is that the labor market within the country at the present focuses more on the development of white collar workers within the petroleum and natural resource industries as well as the development of Bahrain as one of the world’s best financial centers.

If the country had focused entirely on the development of an export oriented handicraft industry then a concentration of its labor force into the production of local cultural artifacts might have been plausible, however, given the information provided within this paper it can clearly be seen that this is not the case at all.

Combined with the fact that Chinese and Indian workers are willing to be paid far less to do the same level of work as well as the fact that the local labor force is unwilling to enter into the handicrafts industry due to more lucrative wages being found in the financial sector, it becomes clear that labor economics in the case of Bahrain when combined with the import oriented tactics of handicraft merchants regarding handicrafts will in effect kill off the traditional handicraft industry of the country within the coming decade

Impossibility due to Insufficient Protection for Traditional Knowledge

One of the other problems that was noted within this paper is the insufficient amount of protection given to the local artisans. While it may be true that they were initially unable to sufficiently supply the demand for local cultural artifacts by tourists, the fact remains that the design and techniques utilized in the conceptualization and creation of particular artifacts belong to the indigenous population that created them.

As such, there should be some level of protection that prevents labor from other countries from appropriating certain techniques and selling them.

Unfortunately, while there are some countries that have sufficiently adequate methods of protection in place to protect their local cultural traditions, such a case unfortunately does not exist in the case of Bahrain and, as such, is a contributing factor to the downfall of the artisan labor force of the country.

Conclusion

Overall, it can be seen that labor economics in the case of Bahrain is primarily responsible for the continued deterioration of its artisan workforce. The fact is that its artisan labor force simply cannot compete against the far lower wages of people from India and China and the fact that becoming a local craftsman does not seem like an ideal career path given the current state of Bahrain’s economy which is oriented more towards finance and natural resource extraction.

Taking all these factors into consideration, it can be expected that within the next few years local artisans of cultural artifacts will completely disappear with most of the local handicrafts within the country originating from external sources.

Reference List

‘Country report: Bahrain’ 2011, Bahrain Country Monitor, pp. 1-21

‘Economy Recovering, But Risks Loom Large’ 2012, Middle East Monitor: The Gulf, 12, 3, pp. 1-11

‘Economy’ 2011, Background Notes On Countries Of The World: Bahrain, p. 6

‘Exorcising the ghosts in the labor market’ 2004, MEED: Middle East Economic Digest, 48, 52, pp. 36-38

‘Foreign fruits’ 2005, MEED: Middle East Economic Digest, 49, 40, p. 37

Holweg, M, & Pil, F 2012, ‘Outsourcing Complex Business Processes: Lessons from an enterprise partnership’, California Management Review, 54, 3, pp. 98-115

Miller, M, & Epstein, S 2011, ‘The Challenges of Assessing the Output of Emergent Economies: The Case of Bahrain’, Chinese Business Review, 10, 12, pp. 1138-1147

Taylor, I 2003, ‘The United Nations Conference on Trade and Development’, New Political Economy, 8, 3, pp. 409-418

‘Traditional knowledge and the international context for protection’ 2005, Journal Of Intellectual Property Rights, 10, 2, p. 142

Wee, H, Peng, S, & Wee, P 2010, ‘Modelling of outsourcing decisions in global supply chains. An empirical study on supplier management performance with different outsourcing strategies’, International Journal Of Production Research, 48, 7, pp. 2081-2094

Whitaker, J, Mithas, S, & Krishnan, M 2010, ‘Organizational Learning and Capabilities for Onshore and Offshore Business Process Outsourcing’, Journal Of Management Information Systems, 27, 3, pp. 11-42

‘Working on reform’ 2006, MEED: Middle East Economic Digest, 50, 11, p. 35

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