Abolition of Kafala in Saudi Arabia: Impact on Indian Migrant Workers
Abolition
of Kafala in Saudi Arabia: Impact on the Indian Migrant Workers
By
Satyendra Singh
The
abolition of the Kafala System in Saudi Arabia in June 2025 has been an evolutionary
step in the direction of reforming the Labour Ecosystem prevailing in the
nation. The step marks an incredible advance towards pragmatic policymaking on
the issue of Labour Welfare. It is pertinent to note that all the series of
reforms undertaken are the result of massive protests by the employee community
due to excessively exploitative tendencies in organising and treating labour in
the workplace. International pressure due to non-alignment with ILO Conventions
and the Saudi Crown Prince Mohammad bin Salman’s VISION 2030 are the other
driving forces for the reform. The fact that Saudi Arabia and its association
with Kafala treads a long past is itself a fact to be looked at in-depth, as
the strategic evolution from Sponsor-based to Contract-based nature of
employment is the biggest ever change from the past practice. Digitalisation of
contractual agreements is the major aspect that has led to ease in doing
business and modernisation of the nature of economic transactions taking place.
The other pertinent fact being that the nation aspires to gradually evolve from
a traditionally Oil-based/Dependent Economy to more of a Green Energy and
Emerging Sectors oriented one, encapsulating within its archaic framework
sectors like Hospitality, Industry, Renewables, Automobiles etc.
The reform is definitely going to impact over 2.6 million Indian migrant workers in Saudi Arabia. The positive impact on the Indian Labour Segment in different sectors will include increased chances of job mobility and reduced incidents of exploitation for the employees due to skill-based hiring processes. Moreover, the Entry and Exit permits are well adjusted, easing the mobility of the labourers. The women labourers are the biggest beneficiaries as they can report the abuses, and the Digitalised records are a breakthrough. These reforms have ensured that the real grievances are adequately addressed and excessive exploitation, mostly of the domestic workers, especially the women, can be curbed. Earlier, without prior information, the contracts could not be substituted or changed without the owner’s consent. All this has come to an end as the employees are now at their will to enter and terminate their contracts without their owner’s consent. The Real Estate and Construction Sectors are also going to benefit, coupled with the manufacturing sector, as both the sectors require highly skilled and trained professionals. The Hospitality and Services Industry are the other big sectors which are poised to benefit the most. The labour reform will impact the India-Saudi Bilateral Matrix also. The remittances are also projected to increase manifold, and the governments are more assured of fair, accountable, and equitable treatment of their labourers mutually, and have brought new stability between the Geo-economic relations between the two countries. Workforce retention trends in compatibility with the G-20 Labour Matrix are key aspects that need to be addressed. However, countries like Qatar, Bahrain, UAE have abolished the Kafala practice to a greater extent; the other Gulf nations are under tremendous pressure to mitigate the labour costs and upgrade new forms of recruitment in compliance with ILO Standards.
It can be concluded that the latest Saudi labour reform aligns with Indian Prime Minister Narendra Modi’s Viksit Bharat 2047 dream, as labour-oriented reforms are a central theme to achieve Viksit Bharat Goals. Although the deeply rooted Kafala system makes it hard to embed new regularities in the mindset of society. The landmark reform indeed holds a promising future for the workers, but the implementation of new laws in the spirit in which they are framed remains a challenge.
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