In a historic move, Saudi Arabia has officially abolished its decades-old Kafala system, ending a controversial sponsorship framework that governed the lives of millions of migrant workers for more than seventy years.
Announced in June 2025, the reform represents one of the most significant shifts in the kingdom’s labour policy. It is expected to directly impact around 13 million foreign workers, most of whom come from South and Southeast Asia. The decision is being hailed internationally as a milestone for migrant welfare and human rights in the Gulf region.
What is the Kafala system?
The word Kafala, meaning “sponsorship” in Arabic, referred to a system that tied every migrant worker to a local employer, or Kafeel. Established in the 1950s, the arrangement was initially meant to regulate the influx of foreign labour that arrived during Saudi Arabia’s oil boom.
Over time, however, the framework came to symbolise an unequal and often abusive power dynamic between employers and employees. Sponsors had complete control over a worker’s employment, residency, and legal status. Many employers routinely confiscated passports, delayed or withheld wages, and restricted workers’ ability to travel or change jobs.
Without the sponsor’s approval, migrant employees could not leave the country, switch employers, or even approach the authorities. This created widespread dependency and left workers vulnerable to exploitation.
Human rights groups have long condemned the Kafala system as “modern-day slavery”, arguing that it deprived workers of even the most basic freedoms and protections. Domestic workers, particularly women, were among those most affected, often facing overwork, isolation, and physical or emotional abuse.
Saudi Arabia’s dependence on migrant labour
Saudi Arabia has one of the world’s largest migrant worker populations. According to official data, about 13.4 million foreign workers make up roughly 42 per cent of the kingdom’s total population. These workers are concentrated in construction, domestic work, agriculture, and other low-wage sectors.
Most come from India, Bangladesh, Nepal, and the Philippines. For decades, their earnings have sustained families and economies back home, while their remittances have contributed significantly to Saudi Arabia’s economic stability.
The Kafala system, however, had long been criticised by the International Labour Organization (ILO), global NGOs, and several governments. Many accused Gulf countries of enabling forced labour and human trafficking under the sponsorship model.
Saudi Arabia’s move follows growing regional momentum for labour reform, including Qatar’s landmark decision to overhaul its own Kafala structure ahead of the 2022 FIFA World Cup.
What changes for workers under the new system?
The abolition of the Kafala system is part of Crown Prince Mohammed bin Salman’s Vision 2030 agenda, a broad initiative aimed at transforming Saudi society, diversifying the economy, and improving the kingdom’s international image.
Under the new contract-based framework, migrant workers will now have the right to change jobs without their employer’s permission. They will also be able to leave the country freely, without requiring exit visas or sponsor consent. These changes are designed to end the long-standing cycle of entrapment that trapped millions in exploitative conditions.
The reforms will also give workers greater access to labour courts and formal complaint mechanisms, allowing them to report abuses and seek justice without fear of retaliation.
By dismantling the Kafala structure, Saudi Arabia hopes to align its labour laws with international standards, strengthen its reputation as a fair and modern employer, and attract a more skilled global workforce.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
