KARACHI: Saudi Arabia plans to cancel a foreign worker sponsorship system, known as kafala, and replace it with a new form of contract between employers and employees, a Reuters report said on Tuesday.

Quoting Maaal, the Arabic language online economic newspaper, the report said that the kafala system — that generally binds an expatriate worker to one employer — had been in place for seven decades in the kingdom.

Rights groups criticise the system and say it leaves workers vulnerable to exploitation. However, Saudi media had said the abrogation of the sponsorship law would lead to limiting the relationship between the employer and the expatriate worker to the employment contract that defines the rights and duties of both the parties.

A report says the end to the kafala system is also aimed at promoting economic growth and expanding commercial activities

In February, a Saudi Gazette report had said that the decision to end the sponsorship system was part of economic reforms that Riyadh is witnessing after the launch of Vision 2030 by Crown Prince Mohammed bin Salman, also known as MBS.

Under the plan, the abolition of the sponsorship system will give expatriate workers freedom to secure their exit and re-entry visas while also getting their final exit stamped on their own as well as taking up employment without any restriction or approval of the employer.

The expatriate workers will have complete freedom of movement according to what is stipulated in the employment contract.

The sponsorship system, which has been in force in Saudi Arabia for seven decades, governs the relationship between the expatriate worker and the employer. Under the system, the worker, upon his arrival in the kingdom, becomes obligated to work for his sponsor in accordance with the terms of the contract, and he is not entitled to work with others without transferring his sponsorship.

The sponsorship system went through several changes aimed at protecting human rights as well as behavioural and financial rights of both parties, the newspaper said, adding that a sizable number of employers misused many provisions of the system, which led to calls from international organisations to abolish the system.

The sponsorship system carries much negativity that adversely impacted on unemployment rates as well as on the image of the kingdom externally due to its misuse by some sponsors for individual gains at the expense of the country’s interest. One of the disadvantages of the sponsorship system is that it opened the way for flourishing black market for visa trade.

On the other hand, the abolition of the sponsorship system is expected to bring about many advantages to the Saudi labour market while supporting the competitiveness of citizens to that of expatriate workers. Another advantage would be to attract highly competent and specialised expatriates from different countries, besides improving working environment for talented workforce.

In 2019, Saudi Arabia had launched its first permanent residency programme — Premium Residency Card (PRC) — for certain expatriates, allowing them to reside in the country with their families without a Saudi sponsor. The idea was first announced in 2016 by MBS but approved by the Shura Council in May 2019.

The report said the end to the sponsorship system is also aimed at providing further push to the wheel of the robust economic growth and expanding commercial activities as the new residency system gives expatriates freedom of movement, rights for issuance of residence and visit visas for their relatives and thus attracting more capitals into the kingdom.

Published in Dawn, October 28th, 2020