What is Saudi Arabia’s kafala labour system and how its abolition benefits 13 million migrant workers, including Indians

In a landmark reform, Saudi Arabia has officially scrapped its five-decade-old Kafala (sponsorship) labour system, ending years of employer control over foreign workers’ movement, employment and residency. The move is expected to benefit more than 13 million migrant workers – including nearly 2.5 million Indians, by granting them greater labour rights and freedom of mobility.

Introduced in the 1950s, the Kafala system was designed to regulate the flow of migrant labour into Saudi Arabia during its early economic expansion. The system required every foreign worker to be “sponsored” by a local employer, who held authority over their job, exit permissions and in many cases, even their personal documents.

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This framework, however, drew global criticism for enabling exploitation and limiting workers’ autonomy. Reports and rights groups documented numerous cases of abuse, including unpaid wages, confiscation of passports and restrictions on job changes or travel. Many migrant workers – especially those in construction, domestic work, and manufacturing – were left with little legal recourse against exploitative practices.

Vision 2030 reform drive behind the change

The decision to abolish Kafala is part of Crown Prince Mohammed bin Salman’s Vision 2030 plan – a sweeping strategy to diversify the economy, modernise labour laws, and improve Saudi Arabia’s international image ahead of major global events such as the 2029 Asian Winter Games.

An official statement noted that Vision 2030 aims to create a more vibrant economy by empowering citizens, attracting foreign investment, and ensuring better working conditions for all residents.

By dismantling the sponsorship system, the government hopes to enhance labour market transparency and mobility – key elements to building investor confidence and expanding private-sector participation.

Under the new framework, foreign workers will now be able to switch jobs, travel, and leave the country without requiring their employer’s consent. This represents one of the most significant overhauls of Saudi labour policy in recent history. Experts believe the reform will particularly benefit low-wage workers from India, Bangladesh, Pakistan, and the Philippines – many of whom contribute to the Kingdom’s construction, oil, and service sectors. The change is also seen as a positive step towards aligning Saudi labour laws with international human rights standards.

The International Labour Organisation (ILO), in a 2023 report, observed that sponsorship systems in parts of the Middle East severely restrict workers’ rights and increase risks of forced labour. The ILO welcomed reforms that enhance worker mobility and accountability.

Labour activists have also hailed Saudi Arabia’s decision as a “turning point” for the Gulf region, urging neighbouring countries to follow suit. They stressed that effective enforcement, monitoring, and awareness among employers will be key to ensuring that the new system delivers real change on the ground.