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.

Sources:
Live Mint
India Today In
Hindustan Times