Syllabus:
GS-2: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.
Context:
Saudi Arabia has in a landmark labour reform abolished its 50-year long worker sponsorship programme known as the Kafala system.
More on the news
- Under the new labour reform initiative:
- foreign workers can change jobs without the current employer’s approval after completing their contract or giving due notice.
- foreign workers can Travel abroad without requiring an exit or re-entry permit from their sponsor.
- creation of a contract-based employment system.
- legal recourse for foreign workers via labour courts and complaint mechanisms.
Kafala System
- The Kafala system, introduced in the 1950s, was a sponsorship-based labour model.
- It gave employers complete control over a worker’s legal status, residency, job mobility, and ability to leave the country or seek legal help.
- Each migrant worker was directly tied to an individual sponsor or kafeel, creating a highly restrictive employment structure.
Key Issues with Kafala System
- Employers Control: The system granted employers authority over workers’ legal and residential status.
- Mobility Restrictions: Workers needed employer consent to change jobs or leave the country.
- Workers Exploitation: Many workers experienced wage denial, passport confiscation, and restricted movement.
- Human Right Concerns: International organizations identified the system as a form of modern-day slavery, with women domestic workers being the most vulnerable.
Significance
- Labour Market Reform: The abolition is set to liberalize the labour market, allowing migrant workers greater freedom and better working conditions.
- It will improve the rights and lives of around 1.34 crore migrant workers — majority from Southeast Asia and South Asia, including Indians.
- Better job opportunities: Easier movement between companies may lead to more competitive pay and remunerations.
- Empowerment of Women Workers: Women, especially domestic workers, will benefit from stronger protections and access to legal remedies.
- Alignment with Vision 2030: The reform supports Saudi Arabia’s Vision 2030 agenda to diversify its economy and create an investor-friendly environment.
- Global Integration: By upgrading labour standards and aligning with International Labour Organization’s norms, Saudi Arabia enhances its global competitiveness and appeal to skilled professionals and investors.
Key Implications for India
- Over 2.5 million Indian expatriates are employed in construction, domestic services, and healthcare sectors in Saudi Arabia.
- The reform will help curb labour exploitation, improve working conditions, and facilitate mobility for skilled professionals from India.
- It is expected to reinforce India–Saudi Arabia labour cooperation, benefiting both economies.