What is Kafala system? Saudi Arabia abolishes labour system that can affect 2.3 million Indian workers

In a significant development and major relief for millions of migrant workers, Saudi Arabia has officially announced to end of the Kafala System, providing more freedom and rights to work in the country. The plan to end the Kafala labour system was announced in June as part of Crown Prince Mohammed bin Salman's 'Vision 2030', a multi-trillion-dollar plan to clean the reputation of the country to attract foreign investors, including the 2029 Asian Winter Games, and reforms.

What is the kafala system?

The five-decade-old Kafala labour sponsorship system, which had been in place in Saudi Arabia and much of the Middle East, was an inhuman control over employees, which included the seizure of travel documents and the decision on when they could change their jobs or leave the country.

This system was introduced in the 1950s to regulate the flow of skilled and unskilled foreign workers from India and other Southeast Asian nations. To prevent the local economy from being overwhelmed by cheap labour, every incoming worker was 'tied' to a kafeel, a sponsor who could be either an individual or a company.

This kafeel held extensive authority over the workers’ lives, deciding their place of employment, controlling their wages, and even determining where they could live.

More disturbingly, workers were barred from filing abuse complaints without their sponsor’s approval — a clause that seemed both illogical and unjust. Although conditions were somewhat better for skilled or white-collar employees, the system drew widespread criticism from labour and human rights organisations.

How the kafala system will affect the Indian labourers

The end of this system is a landmark move in Gulf labour reforms, aligning with international human rights standards and responding to long-standing pressures from human rights organisations like the International Labour Organisation (ILO), but it has significantly affected around 2.3 to 2.6 million Indian migrant workers residing and working in the kingdom. In addition, it is expected to affect nearly 13 million foreign workers overall, with Indians being the largest expatriate worker group.

No matter how exploited they were, and now finally received relief, but due to this system, Indian workers were getting more jobs as compared to other nations, resulting in a record of receiving a high amount of remittance for India. Based on the last reported fiscal year (2023-24), Saudi Arabia accounted for approximately 6.7 per cent of India's total inward remittances.

Despite gaining more freedom and mobility, workers may still face challenges in securing new jobs, as individual sponsors might feel uncertain or hesitant about hiring foreign labourers easily without any terms and conditions.