Saudi Arabia abolishes the Kafala Sponsorship System, ending decades of restrictive labor laws for 13.4 million foreign workers. Here’s what changes.
Riyadh Ends the Kafala Sponsorship System After Seven Decades
In a landmark labor reform, Saudi Arabia has officially abolished the Kafala Sponsorship System, ending a seven-decade-old legal framework that governed the employment and residency of over 13.4 million foreign workers.
The reform, implemented by the Ministry of Human Resources and Social Development (MHRSD) through amendments to the Saudi Labor Law, replaces the employer-driven Kafala Sponsorship System with a contract-based employment model.
Under the new law, foreign employees no longer need employer consent to change jobs, exit the Kingdom, or renew their residency permits — effectively dismantling the most restrictive pillars of the former system.
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Major Reforms Under the Abolished Kafala Sponsorship System
| Policy Area | Previous Rule (Kafala System) | New Rule (Effective June 2025) |
| Job Transfer | Required employer (sponsor) approval | Allowed after 30–60 days’ notice |
| Exit & Re-entry | Exit visa mandatory | No exit visa required; free movement |
| Passport Control | Employers could hold passports | Passport confiscation banned; fine up to SAR 100,000 |
| Residency (Iqama) | Tied to sponsor | Tied to employment contract |
| Complaint Mechanism | Limited access; fear of retaliation | Digital reporting via Qiwa platform and labor courts |
Source: MHRSD Official Announcement, June 2025
The reform directly addresses human rights concerns long associated with the Kafala Sponsorship System, which critics said trapped workers in exploitative conditions.
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Who Was Affected by the Kafala Sponsorship System?
The Kafala Sponsorship System applied exclusively to foreign nationals working in Saudi Arabia. It did not cover:
- Saudi citizens
- GCC nationals (UAE, Qatar, Bahrain, Kuwait, Oman)
- Diplomats and international organization staff
- Investors under the Premium Residency Program
According to the General Authority for Statistics (GASTAT), as of 2025, foreign workers made up 42% of Saudi Arabia’s total population, or approximately 13.4 million people.
Top Nationalities of Migrant Workers in 2025
| Nationality | Estimated Number | Key Employment Sectors |
| India | 2.6 million | Construction, healthcare, domestic work |
| Bangladesh | 2.1 million | Construction, cleaning, agriculture |
| Pakistan | 1.8 million | Transport, construction |
| Egypt | 1.5 million | Education, healthcare, services |
| Philippines | 800,000 | Domestic work, nursing |
| Indonesia | 600,000 | Domestic work |
| Ethiopia | 500,000 | Cleaning, household work |
Source: MHRSD Labor Market Report, 2025
Economic Impact and Global Remittances
The abolition of the Kafala Sponsorship System is expected to reshape global remittance flows. In 2024, foreign workers in Saudi Arabia sent $40.2 billion back home.
- India: $11.1 billion (6.7% of total Indian inflows)
- Bangladesh: $7.8 billion (over 30% of total remittances)
- Pakistan: $6.5 billion
Source: World Bank Migration and Development Brief, 2025
Economists say greater worker mobility and fairer contracts could increase labor productivity and stabilize remittance inflows to key labor-sending countries.
How Saudi Arabia Will Enforce the Post-Kafala System
The MHRSD has introduced several enforcement tools to prevent a return to exploitative practices:
- Qiwa Platform: Mandatory digital registration of employment contracts and wage payments
- Labor Courts: Expanded jurisdiction to hear worker grievances
- Penalties: Up to SAR 100,000 in fines and potential business suspension
- Recruitment Fees: Still legal but must be disclosed; debt bondage under scrutiny
Source: MHRSD Regulatory Framework, 2025
International Reaction to the End of the Kafala Sponsorship System
The International Labour Organization (ILO) called the move “a transformative step toward international labor standards.”
“The abolition of the Kafala Sponsorship System brings Saudi Arabia closer to fair labor mobility norms. Effective enforcement will be crucial,” the ILO said in a June 2025 statement.
Human Rights Watch welcomed the reform but warned that “domestic workers and those in remote areas remain vulnerable without strong monitoring and redress mechanisms.”
Regional Comparison: Gulf Countries and the Kafala Sponsorship System
| Country | Kafala Status (2025) |
| Saudi Arabia | Fully abolished (June 2025) |
| Qatar | Partially reformed (2020) |
| UAE | Active; limited mobility reforms |
| Kuwait | Active; under review |
| Oman | Active; minimal changes |
Source: ILO Gulf Migration Governance Report, 2025
Saudi Arabia now becomes the first Gulf nation to completely abolish the Kafala Sponsorship System, setting a precedent for the region.
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Implementation Challenges Ahead
Despite the reform, experts highlight key challenges:
- Recruitment Debt: Workers often pay $1,000–$2,000 in pre-departure fees
- Domestic Worker Isolation: Around 4 million remain outside full labor protection
- Digital Access Gap: 28% of low-skilled workers lack smartphone literacy
- Contract Compliance: Risk of exploitation persists without consistent audits
Source: MHRSD–ILO Joint Assessment, September 2025
Conclusion: A Historic End to the Kafala Sponsorship System
The abolition of the Kafala Sponsorship System marks a watershed moment in Saudi Arabia’s Vision 2030 labor reforms. It directly affects millions of workers and indirectly impacts over 50 million dependents in their home countries.
However, experts agree that the real success of the reform will depend on its enforcement, digital accessibility, and bilateral coordination between Saudi Arabia and major labor-sending nations such as India, Bangladesh, and the Philippines.