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Saudi Arabia announces labour reforms for private-sector workers

But does not abolish the Kafala system

On November 5, 2020

Saudi Arabia’s Ministry of Human Resources and Social Development (MHRSD) announced a slew of reforms to labour laws, including greater labour mobility and removal of exit and entry visas for migrant workers in the private sector. The reforms will come into effect on 14 March 2021.

According to the MHRSD statement, migrant workers will be allowed to transfer sponsorship upon expiry of the work contract or during the work contract without the sponsor’s consent, provided that a notice period and “specific measures” are adhered to. The MHRSD is yet to provide details of these measures but confirmed to Okaz that migrant workers must complete one year of work to be allowed to transfer sponsorship.

Saudi Arabia is the only GCC state that still has an exit visa –a permit for migrants to exit the country, and a “re-entry visa” to return to the Kingdom, both of which require sponsor's permission The MHRSD announced that migrant workers will be able to leave the country without employer’s approval, however, workers must still submit a request to the Ministry for an exit permit and the ministry will, in turn, notify the employer electronically of their workers’ departure. 

According to the ministry, these new reforms complement other measures announced in recent years – such as the Wage Protection System for all workers, digitisation of work contracts and launch of "amicable settlement" for labour disputes – reforms that have not been successful due to lack of implementation and enforcement

The Minister of Human Resources and Social Development, Ahmed Al-Rajhi, said the new reforms would improve the labour market environment, and raise its competitiveness in line with the Kingdom’s Vision 2030. The MHRSD also announced that the measures are in part to attract “highly skilled talents”. 

Improving private sector conditions may also assist in tempting Saudi nationals into the private sector. According to Steffen Hertog, granting mobility to migrant workers could lead to an increase in private-sector wages and productivity and even assist in nationalisation policies – “Restrictions on mobility are the core aspect of the labour rights gap between foreigners and nationals, which is the second main factor incentivizing employers to shun national labour.”

Among these factors, the US Department of State Trafficking in Persons (TIP) Report might have also played a role in pressuring the Saudi government to implement these reforms, Saudi Arabia is the lowest-ranked GCC state in the latest TIP report. The report recommended Saudi Arabia to take “steps to reform the sponsorship system, including by removing employers’ control over exit permits for all labourers” as a priority measure. By reforming the sponsorship system, Saudi Arabia is looking to improve its status in the TIP report and enhance its image internationally, especially given Qatar’s recent progress in reforming the sponsorship system.

The Kingdom also assumed the presidency of the G20 in December 2019 and has faced some pressure to present itself as an ideal destination for ethical investments and business operation.

According to media reports, Saudi's 3.7 million migrant domestic workers are excluded from these reforms, but separate regulations for them are under review. Domestic workers in Saudi Arabia, whose numbers have increased by almost 20% since last year, are among the least protected segments of the workforce and are already excluded from other labour reforms such as the Wage Protection System. The MHRSD confirmed to Okaz that farmers, shepherds, guards, and private drivers– workers who are also not covered under the labour law - are excluded from the reforms as well. It remains unclear if workers in the fishing sector will also be excluded. 

It is important that these reforms are followed by clear guidelines and strict implementation to be effective.  Saudi Arabia’s existing regulations already allow migrant workers, including domestic workers, to change sponsors under several conditions, including if the employer fails to pay worker’s wages for three months or fails to renew work permits. However, this is rarely enforced, in part due to flawed complaints and justice mechanisms. Any reform to the labour system must ensure that these procedures are eased and obstacles to changing jobs and claiming rights are removed. 

Another concern is the sponsor’s power to file absconding cases, and hinder workers mobility and access to justice. In an interview with Bloomberg, Sattam Alharbi, a deputy minister at the MHRSD said that absconding reports will be abolished and employers will only be able to end the contract. 

Since the announcement, there has been a stream of media headlines describing the reform as “abolishment of Kafala.” SaudiProject, a media platform specialised in monitoring projects and development in the Kingdom with 1.2 million followers tweeted "Officially... Saudi Arabia abolishes the Kafala system".   

Currently, there are too few details to assess the reforms, including whether they will feature caveats similar to Qatar’s early reforms. Observers must be cautious with their praise until it is clear what the reforms will look like – and how they are implemented – in practice. As mentioned in our previous report, it is not uncommon for media outlets to celebrate every small reform as the abolishment of Kafala. These long due reforms remove some of the worst tenets of the Kafala system but do not address other key elements of the labour migration system that render workers vulnerable to exploitation.


Update 10 November 2020: 

The MHRSD has just published a guidebook on the recent labour reforms. Though few new details have been released, some items of note include: 

  • Among other conditions, migrant workers are required to pay fees to obtain an Exit-Re-entry visa, which currently costs SR200 (USD$53). They are also still required to submit paperwork that proves they do not have any outstanding fees or fines.
  • Migrants on a dependent (family) visa cannot apply for exit permits, only their sponsors can.  

It remains unclear how long migrant workers whose work permits have expired or been terminated can remain in the country while seeking new employment. In Bahrain, for example, workers with expired/terminated work permits have 30 days to regularize their stay before becoming irregular and face deportation or overstay fines.


This article was previously updated on 5 November 2020 reflect new information from the MHRSD.