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Business & Finance

Saudi Arabia plans to end the decade old ‘kafala’ system

  • The report added that the changes were to be unveiled earlier this year but were delayed due to the emergence of coronavirus pandemic.
29 Oct 2020

In a major policy shift, the Kingdom of Saudi Arabia (KSA) is planning to get rid of the kafala system, and replace it with a new form of contract between employers and employees

As per the Arabian financial newspaper Maaal, the government would unveil the new rules governing foreign labour as early as next week, which would become applicable from the first half of 2021, reported the newspaper, citing unidentified sources.

"The Ministry of Human Resources and Social Development intends next week to announce a new initiative that improves the contractual relationship between employers and expatriate workers," the report said.

The report added that the changes were to be unveiled earlier this year but were delayed due to the emergence of coronavirus pandemic.

It is pertinent to mention, that the “kafala” system, which is applied to foreign employees working in Gulf Arab countries, under which the workers are requires to be sponsored by a Saudi employer and be issued an exit/re-entry visa whenever they want to leave the country.

The system has been criticised by many as a form of indentured servitude, whereas, many economists are of the view that the system creates an imbalanced labour market, where private employers hire cheaper and more easily exploitable foreign workers even as Saudi unemployment rises.

The Kingdom currently resides over 10 million foreign workers with a majority from South Asian countries including Pakistan, India, and Bangladesh.