Kafala System: Saudi Arabia formally ended the Kafala (sponsorship) system, under which migrant workers had no right to change jobs or leave the country without the permission of the employer, in a move expected to impact more than 10 million migrant workers, including over 2.5 million Indians, in the country.

The labour reform, which was announced in June 2025, as part of Saudi Arabia’s Vision 2030 programme, would usher in a new era in the lives of the migrant workers, as it will provide them the right to change their jobs without the consent of their employers after the completion of their contract or the notice period as per their contracts.

The Kafala system also made it necessary for workers to get exit and entry permits from their sponsors to travel abroad. Migrant workers will now be able to travel outside the country without getting exit and entry permits from their sponsors.

What is Kafala System?

The Kafala System defines a legal relationship between migrant workers and their sponsors, who are most commonly their employers. The sponsor has legal custody over the worker’s legal status, their visa, and the ability to enter or leave the country. The Kafala system was intended to provide labourers to support the quickly expanding economies of the Gulf. Proponents of the system have seen it as a way to sustain local businesses and economic development, but detractors have long noted the potential for abuse and exploitation of workers in this system. Migrant workers have experienced abuse, including low pay, confiscated passports, racial discrimination, and poor working conditions.

What was the Kafala System in Saudi Arabia?

The Kafala System in Saudi Arabia was one of the most restrictive in the Middle East. Workers were not allowed to change jobs, leave the country, or renew their visas without the permission of their employer. 

• The Kafala system left workers vulnerable to abuse and exploitation. Human rights groups and other organisations documented many instances where employers withheld salaries or passports from employees, with little to no legal redress available to workers.
• The system drew international scrutiny in the lead-up to the 2022 FIFA World Cup in Qatar, with media and human rights groups publishing reports about the conditions migrant workers there had to work in. Most of these workers came from countries like India, Bangladesh, and Nepal. 
• The Saudi government recognized that reforming the Kafala System was necessary for its international image and its human rights record. 
• The new labour reform means foreign workers can change jobs after the end of a contract or give the prescribed notice period, and also have the right to travel abroad without special permission from their sponsors.

Reasons behind Saudi Arabia Kafala System Abolishment 

Saudi Arabia’s recent abolishment of the Kafala System is a part of Crown Prince Mohammed bin Salman’s Vision 2030. The Vision 2030 plan was developed to diversify the Saudi economy by increasing foreign investment and reducing its dependency on oil. The Kafala System’s abolishment is to ensure that the country conforms to international labour standards set by the International Labour Organization (ILO). It will also help resolve the human rights issues that migrant workers in Saudi Arabia have been facing, providing a better environment for the millions of them.

The abolishment of the Kafala System is based on several factors. They include:

• Pressure from the international community, 
• Coronavirus pandemic, 
• Ongoing issues concerning working conditions for labourers working on massive infrastructure projects. 

It showed that the Saudi Arabian government was willing to adapt and make it better for people who were working in the country.

Kafala System in other Gulf countries

The Kafala System in the Middle East exists in many Gulf countries, though its implementation varies.

Countries with full Kafala System:

• Kuwait
• Qatar
• Oman

Countries with partial or abolished Kafala System:

• Bahrain abolished it in 2009.
• UAE partially reformed it in 2015, allowing workers with expired contracts to stay on a six-month job seeker visa.

The system has been widely criticized for worker exploitation, particularly affecting South Asian migrants, including Indians.

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Impact on Indian workers in Saudi Arabia?

The move will have significant advantages, particularly for Indian labourers, one of the biggest groups of expats in the Kingdom.

• Greater mobility to change jobs and pursue new opportunities.
• Decreased exploitation through enhanced legal safeguards. 
• Better working conditions and fairer pay. 

Saudi Arabia’s foreign workforce is about 1.34 crore, accounting for nearly 42 per cent of the Kingdom’s total population. Migrants are employed in building and infrastructure, farming and fishing, household services and other sectors. The phasing out of the Kafala System will allow them to participate in a more transparent and fairer labour market.

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