Context:

Saudi Arabia has recently abolished the 50-year-old “kafala” (sponsorship) system, marking a major turning point in the Kingdom’s labour and human-rights landscape. The reform, first announced in June 2025, is expected to benefit about 13 million migrant workers, including over 2.6 million Indians, working across sectors such as construction, domestic work and agriculture.

About Kafala System:

The kafala system (Arabic for “sponsorship”) tied each migrant worker’s legal and residency status to a local employer or “kafeel”.

Under this system:

·        A migrant worker could not change their employer or job without the kafeel’s approval.

·        Leaving the country often required the employer’s permission or an exit visa.

·        The employer held responsibility for the worker’s visa, residency permit and legal status, giving them extensive control over the worker’s life and employment conditions.

·        The system emerged in the 1950s when Gulf states built up rapid infrastructure and needed large inflows of foreign labour.

Why Was It Criticised?

Over the years, the kafala system drew strong criticism from human-rights organisations and labour groups:

• • • Many described it as a form of “modern-day slavery” because workers faced restricted mobility, had little recourse for abuse, and in some cases had their passports confiscated or were trapped in exploitative conditions.
    • Domestic workers, especially women from South and Southeast Asia, were among the worst‐affected, given their isolation and weaker legal protections.
    • The system also led to reputational risk for Gulf economies and became a target of international pressure ahead of major global events and investment drives.

Key Changes in the New Labour Framework:

Under the new reforms, Saudi Arabia is replacing the sponsor-based model with a contract-based employment system. Under the updated rules:

• • • Migrant workers can change jobs without needing approval from their current employer/sponsor.
    • Workers may leave the country without requiring a sponsor’s consent or an exit visa.
    • Expanded access to labour courts and complaint mechanisms enables workers to raise issues of abuse or non-payment more easily.
    • The reforms are part of the broader Vision 2030 agenda that seeks to modernise the labour market, diversify the economy and improve the Kingdom’s global image.

Significance:

• • • The abolition of the kafala system is expected to benefit millions of migrant workers, including Indian nationals working in Saudi Arabia. For India, which has one of the largest expatriate populations in the Kingdom, this reform strengthens labour welfare and bilateral ties.
    • Strategically, the move is aimed at making Saudi Arabia a more attractive destination for foreign labour and investment by aligning labour standards with international norms.

Conclusion:

By ending the kafala system, Saudi Arabia has taken a landmark step towards improving the rights and dignity of migrant workers. The reform offers greater autonomy, mobility and legal protection for millions of workers and signals a major shift in Gulf labour relations. If implemented effectively, it could reshape the lived experience of migrant labour in the region and set a new precedent for labour governance in the Gulf.