ECONOMY | Saudi Ministry Clarifies After Report On Pending Decision To Abolish Kafala System

RIYADH | SAUDI ARABIA – – Saudi Arabia’s Ministry of Human Resources and Social Development said it is working on ‘many initiatives’ to develop the labor market and that decision will be announced when they are ready following a report that the Kingdom was working to abolish the Kafala system.

‘In reference to what has been circulated about changes in the framework of the labor contractual relationship in the Kingdom, the Ministry of Human Resources and Social Development clarifies that it is working on many initiatives to organize and develop the labor market, and it will be announced as soon as it is ready. The Ministry calls upon everyone to obtain information from its official sources’, the ministry said in a statement in its Twitter account early on Wednesday.

On Tuesday, Maaal newspaper reported using unnamed sources that Saudi Arabia is set to announce the replacement of the foreign worker sponsorship system, known as Kafala, and that is it will be replacing it with a form of contract between employers and employees.

Maaal newspaper on Tuesday cited unnamed sources that the Kingdom’s Ministry of Human Resources and Social Development was planning on announcing a decision sometimes next week, and that would come into effect during the first half of 2021, aimed at reforming contracts between workers and their employees.

‘It is expected that more than 10 million expatriates will benefit from the new system. This initiative is part of other initiatives targeting the quality of life for expatriates, including one for housing and another foe entertainment’, Maaal’s report read.

Maaal’s sources said the announcement of the reforms was supposed to have been made this week but had been postponed to next week amid final preparations regarding the changes, including the invitation of international media reporters to a planned press conference.

Reports of Saudi Arabia abolishing its sponsorship system were first raised earlier this year in February Saudi Gazette reported through unnamed sources.

The current Kafala System ties workers to their employers, or sponsors, who are responsible for the employees’ visa and legal status. The new law would limit the relationship between employers and expatriate workers under the system, who primarily work in construction and domestic work.

The move would be the latest in a series of economic reforms as the country turns away from dependence on oil revenues under the Kingdom’s Vision 2030. The abolition of the sponsorship system would give expatriate workers freedom to secure exit and entry visas, receive the final passport exit stamp without a sponsor, and gain employment without approval from a sponsor.

Kafala system emerged in the 1950s when countries in the Arabian Gulf began hiring migrant workers at a rapid pace to accelerate development following the discovery of oil.

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