Saudi Arabia to abolish sponsorship system; move to benefit over 1M

Riyadh: In a landmark move, Saudi Arabia is set to abolish the sponsorship system effective from the first half of the next year. The sponsorship system called kafala, ties the workers to their employers or sponsors who are responsible for the employee’s visa and legal status.

More than one million expatriates are expected to benefit from the move, according to local reports. Saudi Ministry of Human Resources and Social Development is likely to make an official announcement in this regard next week.

This is part of other initiatives that seek to improve the quality of life of expatriates, especially for housing and entertainment. The move would be the latest in a series of economic reforms being carried out in line with the Kingdom’s Vision 2030. The historic initiative is aimed at improving the contractual relationship between expatriate workers and their employers.

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The sponsorship system, which has been in force for around seven decades, will be replaced by a work contract that regulates the relationship between employers and foreign workers.

The abolition of the current sponsorship system would give expatriate workers freedom to secure exit and re-entry visas, receive the final passport exit stamp without a sponsor and gain employment without the approval from a sponsor. The foreign workers will also have freedom of movement according to what is stipulated in the work contract.

Notably, the abolition of the sponsorship system carries many advantages for the local labor market and supports the competitiveness of Saudi citizens against foreigners, and will halt the cases of runaway workers (huroob). This will also lead to attracting foreign manpower with extra competencies and specialties from various countries. The initiative contributes to improving expatriates’ working conditions by raising their satisfaction, protecting their rights, increasing their productivity in the labor market, as well as the Kingdom’s competitiveness in attracting global talent.

Saudi Arabia was supposed to announce the abolition of the sponsorship system during the first quarter of 2020, but it had been delayed due to the outbreak of the COVID-19 pandemic. The final abolition of the sponsorship system comes as the next step after the introduction of Special Privilege Residency Permit (Premium Iqama).

The Premium Iqama provides an opportunity to all those who have ties with the Kingdom, irrespective of their nationality, to obtain a permanent or temporary residency that would grant them many privileges as well as the chance to avail of several services for themselves and their families.

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