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The decision, announced in June 2025, marks a major change in the Kingdom’s labor market and is in line with Crown Prince Mohammed bin Salman. vision 2030 The goals of improving human rights and modernizing the economy.
What was the Kafala system?
Kafala, which translates to “sponsorship” in Arabic, is a term commonly associated with the power imbalance between migrant workers and their employers.
The kafala system, developed in the 1950s, linked migrant workers’ job status and legal residence to a local employer or sponsor (kafil). This system largely empowered employers to take decisions on workers’ freedom of movement, leaving the country or filing lawsuits.
As an institution, it became widely known for allowing workers to be subjected to abuse, oppression, and today’s slavery-like conditions. Various human rights organizations and critics have condemned the system as being overly restrictive and prone to abuse.
This system has been abolished for the first time in 50 years.
Why is Saudi Arabia ending the Kafala system now?
The ban on the Kafala system, announced in June 2025, is in line with Crown Prince Mohammed bin Salman’s broader strategy to not only improve Saudi Arabia’s image abroad, diversify the country’s economy, but also attract foreign investment. according to The Times of India,
Moreover, the move also coincides with the growing global demand for such a measure. Major Western governments, international rights organizations and even large companies have been pointing their fingers at Gulf regimes for these types of misconduct during events and collaborations of great public interest. For example, Qatar has made some changes ahead of the FIFA World Cup in 2022.
Major reforms under the new system
The centuries-old Kafala system has been abolished, and replaced by a new contractual employment system, which includes several significant changes:
- Job Mobility: Employees are allowed to change jobs without obtaining consent from their current employer.
- Freedom of movement: Workers can now travel without requiring an exit visa to leave the country.
- Legal protection: With better access to court, protection against exploitation and abuse has improved.
- Standardized contracts: Employment conditions regulated by standardized contracts make it less likely that employers will make irrational decisions.
Impact on migrant workers
Millions of migrant workers, mainly coming from South and Southeast Asia, are going to see their quality of life improve significantly due to the change. In the former system, many workers faced having their passports taken away, having their wages withheld, and being denied access to legal aid.
The new reforms give workers more power in their personal and professional lives, improving their living standards and working conditions. Additionally, the reforms provide improved access to labor courts and grievance procedures, giving workers the opportunity to report violations and seek justice without fear of reprisal.
Wider implications (social and economic)
By abolishing the Kafala system, Saudi Arabia intends to improve its image as an ethical and progressive employer and bring its labor policies in line with international standards. The move is just one element of Saudi Arabia’s larger plans to update its labor laws and make the country more attractive to foreign investors and skilled workers.
In addition to the positive impact on human rights protection, the abolition of the Kafala system is also a major economic shift for the region. On the social front, the reforms could boost Saudi Arabia’s image in the world with regard to the welfare and labor rights of expatriates, an area under global scrutiny due to the Gulf’s economic boom and infrastructure spending.
The real challenge will be whether Saudi Arabia will be able to effectively enforce these rights and whether other Gulf countries will follow suit. according to Human Rights WatchThe first step is to change the law. “It will take a lot longer to change things at the grassroots level.”