Saudi Arabia announced long-awaited reforms to its controversial kafala, or “sponsorship,” system on March 14, as part of a labor reform initiative (LRI) which aims to increase transparency in the labor market and attract foreign investors. Although the new reforms significantly improve the rights of immigrant workers, human rights organizations observe that they do not abolish the kafala system and fail to include the entire foreign labor force.

Reforms prepared by the Ministry of Human Resources and Social Development in Saudi-Arabia stipulate that foreign workers who fall under the jurisdiction of Saudi Arabia’s labor law can renew or terminate their residency and work status in the country. This allows migrant workers to transfer to other jobs upon the expiration of their work contract without the need for their former employer’s approval. It also grants them the freedom to enter and exit the Kingdom without the need for an employer’s permission.

For a long time, the kafala system has been seen as highly abusive. It emerged in the 1950s in order to provide the Arab Gulf countries with a supply of cheap, plentiful labor in an era of booming economic growth. In many cases it has permitted exploitation, due to the lack of regulations and protections for migrant workers’ rights, resulting in low wages, poor working conditions, and employee mistreatment. Saudi Arabia, in particular, has often been described as the country with one of the most abusive versions of the kafala system in the region.

Saudi Arabia has often been described as the country with one of the most abusive versions of the kafala system in the region.

More than 10 million foreign workers have lived and worked in Saudi Arabia under the kafala system, which until recently required them to be sponsored by a Saudi employer and be issued an exit/re-entry visa whenever they wanted to leave the country.

The timing of the reforms coincides with changing international attitudes towards Saudi Arabia; therefore the new legislation may be translated as an attempt to buy some goodwill in the West. It can further be viewed as an effort to silence the human rights activists, whose voices are likely to be given greater consideration under the new US Presidency of Joe Biden. But it is also true that the reforms have been years in the making, as part of the Kingdom’s Vision 2030 economic framework, even before Biden was elected.

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Ali Mohamed, a researcher at Migrant Rights, thinks that the announcement of the reforms is perhaps linked with enhancing the government’s image in the wake of the recent Qatar reforms, the Arab Regional Review of the Global Compact for Migration, and the US’ Trafficking in Persons (TIP report), which for years has cited reforming the sponsorship system as one of its prioritized recommendations.

The adopted reforms have been welcomed by many Saudi organizations and media outlets, which believe that they may lead to significant economic and social changes in the Gulf Cooperation Council (GCC) countries. Yet many human rights groups believe that the reforms are not sufficient, as they do not go far enough to dismantle the abusive kafala system. “Saudi Arabia’s kafala reforms are a positive step in the right direction, but don’t totally solve the problem: It is not an abolition [of the system and] could still leave workers open to exploitation and abuse,” Varsha Koduvayur, Senior Research Analyst at Foundation for Defense of Democracies, commented on the new changes.

“The main shortcomings related to the recent reform is the exclusion of millions of workers who are not covered by the labor law . . .”

“The main shortcomings related to the recent reform is the exclusion of millions of workers who are not covered by the labor law, the majority of whom are domestic workers and are among the least protected and most vulnerable to abuse,” Mohamed told Inside Arabia.

According to Migrant, “nearly 3.6 million domestic workers, farmers, shepherds, home guards, and private drivers who are already among the most vulnerable are excluded, as the reforms only apply to migrant workers who fall under the jurisdiction of the labor law (nearly 6.7 million workers).”

Furthermore, Mohamed believes that the reforms still maintain barriers, both financial and procedural, to changing jobs and exiting the country. For example, the reforms do not abolish the exit permit altogether, as workers must still submit a request to the government to exit Saudi Arabia. Permission to exit is still subject to fees and regulations, such as having valid residence permit or not having any traffic violations.

“We are also receiving several complaints from migrant workers in Saudi Arabia who are facing difficulties in transferring sponsors due to lack of work contract [or stipulations of work contract], ‘absconding’ charges filed by the original sponsor, and the inability of the new sponsor to issue work permits for various reasons,” Mohamed added.

Therefore, it is evident that the problematic elements of kafala remain. The changes, according to Mohamed, have not addressed controversial issues which persist in the new legislation, such as the requirement to have a sponsor (employer) in order to enter and reside in the country legally as well as giving employers the power to issue and renew migrants’ work permits and cancel them at any time. Workers are still obliged to work for an employer for a year before being allowed to change employment, and they still need permission from employers to exit the country (in the case of domestic workers) or permission from the state (in the case of regular workers).

The ability for employers to file absconding charges against migrant workers is highly concerning.

Finally, the ability for employers to file absconding charges against migrant workers – rendering them “illegal” and subject to arrest and deportation – is highly concerning. Some employers file false absconding cases to sidestep their legal obligations to pay wages or to provide food and accommodation, according to Human Rights Watch.

Nevertheless, some observers hope that greater labor mobility will force companies to raise their wages and improve working conditions in order to retain and compete for workers. Adopted reforms, could also stimulate Saudis to work in the private sector, as Saudi citizens may become more attractive to private employers who so far have preferred foreigners over whom they had greater control.

In Mohamed’s opinion, the adopted reforms are just too limited to have any substantial impact on increasing wages or improving working conditions in the private sector. He cites the example of Bahrain, which has also adopted similar migrant labor mobility regulations since 2011, yet there has not been any noticeable increase in wages or improvement in the working conditions in the private sector – which remains abysmal.

Mohamed explains that migrant workers are structurally in a weak bargaining position vis-a-vis their employer to ask for better wages or rights given that they are deportable, and their “legal” residency depends on the last employer under the sponsorship system. “If the Saudi government truly wants to improve the conditions of its private sector, it should start by implementing a living wage for all workers, allowing unionization, and abolishing kafala. But this means confronting entrenched power relations and capital interest,” he added.

Other Gulf states have tried to implement reforms of their kafala systems, which were even more significant than those recently adopted by Saudi authorities and achieved rather limited success, as they still fail to address the key issues that render workers vulnerable to exploitation. According to Ryszard Cholewinski, from the International Labor Organization, it is evident that the abolishment of kafala is a very “complex area and cannot be addressed in one piece of legislation overnight.”