Kafala system explained: Saudi Arabia’s historic move to end a 70-year labour framework

In a landmark decision, Saudi Arabia has officially abolished its decades-old Kafala system, a controversial labour sponsorship framework that shaped the lives of millions of migrant workers for more than seven decades. Announced in June 2025, the reform marks one of the kingdom’s most significant social and economic shifts, directly benefiting nearly 13 million foreign workers, mostly from India, Bangladesh, Nepal, Pakistan, and the Philippines.

What is the Kafala system?

The term “Kafala”, which means “sponsorship” in Arabic, referred to a legal structure that tied every migrant worker’s residency and employment status to a local employer, known as the Kafeel. Established in the 1950s during Saudi Arabia’s oil boom, the system was initially designed to manage the influx of foreign labour essential for rapid economic expansion.

Under Kafala, however, the employer had almost total control over the worker. A migrant could not change jobs, travel abroad, or even leave their place of employment without the Kafeel’s approval. Employers often confiscated passports, withheld salaries, and restricted movement — practices that human rights organisations later described as a form of “modern-day slavery.”

Over the years, the system became synonymous with exploitation and abuse, particularly among low-wage and domestic workers. Many lived in isolation, working long hours with little legal recourse, and facing barriers in accessing justice due to their dependent visa status.

Migrant labourers in Saudi Arabia

Migrant labour has long been the backbone of Saudi Arabia’s economy. According to government data, foreign workers make up around 42% of the population, accounting for 13.4 million people. They are concentrated in construction, agriculture, domestic work, hospitality, and retail, performing much of the manual and service labour that fuels the country’s urban and industrial growth.

For many South and Southeast Asian countries, the Saudi labour market has been an economic lifeline. Workers’ remittances support millions of families back home and contribute significantly to the economies of their origin countries. Yet, for decades, the Kafala framework made them vulnerable to exploitation, and international observers — including the International Labour Organization (ILO) — consistently urged reform.

Why the abolition matters

Saudi Arabia’s decision to dismantle Kafala represents both a humanitarian and strategic milestone. It aligns with Crown Prince Mohammed bin Salman’s Vision 2030, a sweeping initiative aimed at transforming the kingdom into a diversified, modern economy less reliant on oil. The reform also follows regional momentum — Qatar abolished its Kafala system ahead of the 2022 FIFA World Cup, setting a precedent for labour rights in the Gulf.

Under the new contract-based employment model, migrant workers will now:

Change jobs freely without needing their employer’s approval.

Leave or re-enter Saudi Arabia without obtaining exit or re-entry visas.

Access labour courts and grievance mechanisms more easily to report violations.

Retain control over their passports and legal documents, ensuring autonomy and mobility.

These reforms are expected to end the cycle of entrapment that left millions of workers vulnerable. They also aim to improve Saudi Arabia’s global image by aligning its labour policies with international human rights and employment standards.

Labour market dynamics

The abolition of Kafala is likely to reshape the labour market dynamics across the Gulf. It could inspire similar policy reforms in neighbouring countries where the system, though softened, still exists in various forms. For global investors and foreign governments, the move signals a stronger commitment to transparency, the rule of law, and fair employment practices.

However, experts caution that implementation will be key. Legal reform on paper must be matched with strict enforcement, accessible complaint systems, and awareness among workers of their new rights.