Moving Toward Open Society: Saudi Arabia Reform Expat Workers Sponsorship System

Saudi Arabia’s new employment law comes into effect on Sunday after which the sponsorship system also known as kafala will end.

The historic labor reforms will give more “freedom” to millions of migrant workers in the Kingdom –Saudi labor market is considered the fourth largest in the world.

“Saudi Arabia has announced that it will end its notorious sponsorship or kafala system on March 14. Migrante-Kingdom of Saudi Arabia, together with all overseas Filipino workers (OFW) in the country, is glad and jubilant and is celebrating over this historic action,” Migrante International (MI) said in a statement late on Saturday.

According to a Gulf business analyst, “this is an important step toward modernizing the growing labor market amid Saudization as per Vision 2030”. “The labor reform will also help boost foreign investment in Saudi as international investors vying to tap opportunities in the Gulf seek even playing field in the region”.

Speaking to DesPardes, an American professional who is working at one of the several foreign consultancy firms involved in the $500bln Neom City project, says “the much-awaited reform will lead to competitiveness, boost productivity, raise morale and well-being of the expats, and attract highly skilled human resources from overseas”.

According to a survey, there is intense competition between Yemeni, Pakistani, Egyptian and Indian expats in having the biggest part of the labor market. The survey stated that expats from around 9 different nationalities control around 70 percent of the employment in the private sector jobs.
These countries are” Pakistan, Yemen, Egypt, India, Bangladesh, Jordan, Palestine, Sudan and Syria.


The replacement of foreign worker’s sponsorship system –a form of contract between employers and employees, has been hailed by the expat community –about 10.5 million foreigners currently working in the kingdom will benefit from the new law. They make up about a third of the kingdom’s population.

The reform provides stipulation under which expatriate workers would enjoy job freedom to enter and exit the Kingdom without the need for an employer’s permission.

The new conditions will also allow migrant workers to transfer to other jobs upon the expiry of their work contract without the need for their former employer’s approval.

The new system will also address exceptional cases where workers were not provided with a work contract or who did not receive their salaries.

The kafala system previously tied foreign workers to their local sponsors. Foreign workers needed the sponsor’s permission to change jobs, open a bank account or leave the country on vacation. The new law would limit the relationship between employers and expat workers –most primarily work in construction and domestic sector.

SHAHID NAYEEM FROM RIYADH ADDS: The new employment system is three-pronged and has four major goals. This includes protecting the rights of employers and employees, creating a flexible environment in the labor market, making the labor market more attractive and emphasizing and strengthening the importance of employment contracts in the employer-employee relationship. The Saudi Ministry of Manpower is developing new rules and regulations in light of changes in the labor market.

Part of this is the protection of workers’ compensation, the ratification of employment contracts and the promotion of occupational health and safety.