End Of The 50-Year Kafala System: Analyzing Its Impact On Indian Workers
Saudi Arabia has officially announced to abolition of its 50-year-old Kafala system, Arabic for sponsorship. The decision to abolish Kafala is part of Vision 2030, as Crown Prince Mohammed bin Salman plans to diversify the Saudi economy, invite foreign investment, and modernise the global image.
The Kafala system was a legal framework that governed the employment and residency of migrant workers across the Gulf Cooperation Council (GCC) states.
It emerged in the 1950s, when oil-rich economies required cheap labour to build cities and infrastructure without granting permanent residency or citizenship.
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Under Kafala, the legal status of a foreign worker was tied entirely to their employer or Kafel, who controlled their visa, right to live in the country, switching jobs, and even exit from the country. A worker could not do anything outside of the mentioned things without the permission of the sponsor.
The system was meant to reduce state bureaucracy and increase private sponsors; however, it created a power imbalance as the employers could confiscate passports, withhold wages, or threaten deportation, and workers were left powerless to challenge them.
The system was criticised, comparing it with ‘modern-day slavery’. Human rights groups and the International Labour Organization (ILO) accused Gulf governments of enabling forced labour and human trafficking under the guise of sponsorship.
Kafala End: Impact On Indian Workers
The number of Indian workers in Saudi Arabia has increased by 200,000 during 2023-24. The nearly 10% increase in number made 2.65 million Indians one of the largest expatriate groups in West Asia. Indian officials are expecting a similar trend in the current fiscal year as the Saudi government is focusing more professionals in sectors like manufacturing, tourism, and green energy.
Now, after the introduction of the new contract-based system, employees can switch jobs easily or leave the country. This will attract a larger number of workers to the safer and freer working environment.
The requirement of an exit visa has been removed in many cases, allowing workers to leave the country without the employer’s permission.
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The new system will mitigate abuses such as passport confiscation, delayed wage payments, and increase the autonomy of workers. Migrants can also now access labour courts and complaint mechanisms.
Also, the use of online digital employment contracts in countries improves transparency for both workers and employers.
However, concerns related to implementation gaps, vulnerability of domestic workers, recruitment-related abuses, and legal complexities remain, which need to be taken care of by the state.
