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Clarification on Cancellation of Sponsorship System by the Ministry

Saudi Arabia is set to abolish the sponsorship (Kafala) system effective from the first half of the next year. The landmark move would be the latest in a series of economic reforms being carried out in line with the Saudi Vision 2030. Saudi Arabia was supposed to introduce this abolition during the first quarter of 2020, but it was delayed due to the outbreak of the coronavirus pandemic. However, According to a report in different sources, more than one million expatriates are expected to benefit from the move. To know more, read the article below.

News Regarding the Change in the Kafala System

It is to be noted that between Tuesday and Wednesday night, a local news website from its sources that the Ministry was going to make some changes in the system of manpower support. The news went viral on social media as soon as it was released and was widely shared by foreigners, including citizens, while several foreign news outlets have also released it. A spokesman for the Ministry of Manpower said

Such information should be obtained from official sources only.

What did the Ministry say about the Abolition of the Sponsorship System?

While explaining the news of the abolition of the sponsorship system, the Saudi Ministry of Human Resources said it was considering several formulas. Ministry spokesman Nasir al-Hazani said on his official Twitter account that,

The Ministry is working on various formulas to regulate the labor market. However, no option has been finalized yet.



When will the Ministry make an Official Announcement?

Saudi Ministry of Human Resources and Social Development will make the official announcement in this regard in the coming week. The historic initiative is aimed at improving the contractual relationship between expatriate workers and their employers. The Ministry spokesman said,

As soon as a formula is approved in this regard, it will be announced.

Why was the Announcement Postponed?

The major features of this initiative were expected to be announced on 28th October (Wednesday). These features were to improve the relationship between the expatriate workers and their employers with the abolition of the sponsorship system, but it was postponed for the coming week, as preparations are being made for this, including inviting international media persons to attend a press conference in this regard.



What Restrictions were there in the Sponsorship System?
The sponsorship system has been in place in Saudi Arabia for decades. It ties workers to their employers, or sponsors, who are responsible for the employees’ visa and legal status. Under the system, a worker is obligated to work for his sponsor, and they cannot work for another employer unless the sponsorship is transferred through formal channels.

How would this Abolition help the Expatriate Workers?

The abolition of the sponsorship system would give expatriate workers freedom to secure exit and re-entry visas, receive the final passport exit stamp without a sponsor, and gain employment without approval from a sponsor. The foreign workers will also have freedom of movement according to what is stipulated in the work contract.



What will Replace the Sponsorship System?
The current kafala system has been in force for around seven decades. This sponsorship system will be replaced by a work contract that regulates the relationship between employers and foreign workers. This is part of other initiatives that seek to improve the quality of life of expatriates, especially for housing and entertainment.

What is Premium Iqama?
The final abolition of the sponsorship system comes as the next step after the introduction of Special Privilege Residency Permit (Premium Iqama). The Saudi Cabinet took the historic decision in this regard on May 14, 2019.

What are the benefits of Premium Iqama?

The Premium Iqama provides an opportunity to all those who have ties with the Kingdom, irrespective of their nationality, to obtain a permanent or temporary residency that would grant them many privileges as well as the chance to avail of several services for themselves and their families.



What Privileges can the Iqama Holders Avail?
The new law allows expatriates, who are holders of this Iqama, to enjoy several privileges hitherto extended only to citizens. These included owning real estate, renting out properties, educational and health services, and other utilities specified in the Executive Regulations.

What are the aims of this Initiative?
The initiative contributes to improving expatriates’ working conditions by raising their satisfaction, protecting their rights, increasing their productivity in the labor market, as well as the Kingdom’s competitiveness in attracting global talent.

Elimination of Hurdles Affecting the Attractiveness of the Labor Market

It seeks to eliminate and solve some challenges, including the failure on the part of limited groups of business owners to abide by the rights of expatriate workers, which negatively affects the attractiveness of the labor market.



Prevention of Negative Activities

The initiative also aims to prevent some negative activities such as the black market for runaway workers and Iqama violators in addition to violations that are internationally classified as falling under the clause of human trafficking. This will also lead to attracting foreign manpower with extra competencies and specialties from various countries.

Opportunity for Saudi Citizens to accept Work from Foreigners
This initiative will help in improving the work environment to attract talents, whether local or foreign, providing an opportunity for Saudi citizens to accept work and fair competition in front of foreigners. Under the sponsorship system, some employers used to hire foreigners for low wages and poor working conditions at the expense of Saudi youth.

The Saudi government has taken this great step of the abolishment of the sponsorship system as this will provide better opportunities for the locals and the foreigners residing in the Kingdom. For more information, visit our website. Stay safe. Stay tuned.

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