Saudi Arabia abolishes Kafala System, grants freedom to 13 million migrant workers: All about it

In a historic move, the decades-old Kafala (sponsorship) system in Saudi Arabia has officially come to an end, giving about 13 million foreign workers more freedom and legal rights.

Announced in June 2025, the decision constitutes a major change in the Kingdom's labour market and is in line with the Crown Prince Mohammed bin Salman's

Vision 2030 goals of improving human rights and modernising the economy.

What was the Kafala System?

Kafala, which translates to "sponsorship" in Arabic, has been the term most commonly associated with the power imbalance between migrant workers and their employers.

The Kafala system, developed in the 1950s, associated the status of the job and the legal residency of migrant workers with the local employer or sponsor (kafeel). The system empowered employers to a large extent to decide on workers' freedom to move, get out of the country or file a lawsuit.

As an institution, it became widely known for allowing the mistreatment, oppression, and situations similar to today's slavery of the workers. Various human rights organisations and critics have been condemning that system for being too restrictive and prone to misuse.

The system has been abolished for the first time in 50 years.

Why is Saudi Arabia abolishing the Kafala System now?

The ban on the Kafala system, announced in June 2025, is in accordance with Crown Prince Mohammed bin Salman's detailed strategy to not only improve Saudi Arabia's image abroad, diversify the country's economy, but also attract foreign investments,

as per The Times of India.

Besides that, the move also corresponds to the increased global demand for such a measure. Leading Western governments, international rights organisations, and even big companies have been pointing their fingers at Gulf regimes for these sorts of malpractices in the run-up to events and collaborations of great public interest. For instance, Qatar made some changes before the FIFA World Cup in 2022.

Key reforms under the new system

The age-old Kafala system has been removed, and the new contractual employment system has been put in its place, which is accompanied by a number of substantial changes:

• Job Mobility: Employees are allowed to change jobs without the need to get consent from their current employer.


• Freedom of Movement: Workers can now travel without the need for an exit visa in order to leave the country.


• Legal Protections: With better access to the court, the protection against exploitation and abuse has been improved.


• Standardised Contracts: Employment terms regulated by standardised contracts make it less likely that employers will take irrational decisions.

Impact on migrant workers

Millions of migrant workers, primarily coming from South and Southeast Asia, are going to have their quality of life significantly improved because of the change. In the former system, many workers had to put up with their passports being taken away, their wages being withheld, and being denied access to legal aid.

The new reforms give more power to workers in their personal and professional lives, thus raising their living standards and working conditions. Moreover, the reforms provide better access to labour courts and complaint procedures, which thus grant employees the opportunity to report violations and seek justice without fear of reprisal.

Broader implications (social and economic)

By doing away with the Kafala system, Saudi Arabia intends to improve its image as a moral and progressive employer and also align its labour policies with international standards. The move is just one element of Saudi Arabia's larger plans to update its labour laws and make the country more attractive to foreign investors and skilled workers.

Apart from the positive impact on the protection of human rights, the elimination of the Kafala system is also a major economic shift for the region. On the social front, the reform may enhance Saudi Arabia's image in the world regarding the welfare of migrants and labour rights, which is an area under global scrutiny because of the Gulf's economic boom and infrastructure spending.

The real challenge will be whether Saudi Arabia will be able to enforce these rights effectively and whether other Gulf countries will follow suit. According to Human Rights Watch, the first step is to change the law. "It will take a lot longer to change things on the ground."