Saudi Arabia Implements Expat Labor Reforms -- With Caveats

Saudi Arabia added conditions to a new package of labor reforms for foreign workers that could curtail the greater freedom of movement the changes had promised.

The reforms, announced in November and applied on Sunday, are meant to help level the playing field for overseas workers and citizens in a bid to reduce domestic unemployment while continuing to draw foreign talent. It’s a major shift away from the kingdom’s controversial “kafala” or sponsorship system, criticized by human rights groups as allowing employers to trap and exploit foreign workers.

And indeed, technically, non-Saudis no longer need their employers permission to change jobs, travel abroad or leave the country permanently.

But a guide published by the Ministry of Human Resource and Social Development suggests that expatriates won’t be free to breeze in and out of the country. Vacationers will still need to pay for single-use government permits and then wait 10 days for approval, according to the guide, summarized in the Okaz newspaper on Monday. Multiple-use permits must be requested through employers.

The ministry did not reply to a request for comment about the caveats late on Monday.

The new policies could have a dramatic impact on the kingdom’s labor market and the lives of the foreign workers who make up a third of the kingdom’s population. Economists say foreign workers’ increased mobility should ultimately raise their salaries because they’re no longer tied to jobs. That, in turn, could make Saudi hires more attractive to employers, who sometimes say it’s harder to retain citizens than foreigners.

Still, it’s unclear how the reforms will play out.

The travel restrictions in particular could deter some of the high-skilled expatriates who flock to destinations like Dubai and Singapore, whom officials are keen to attract as part of Crown Prince Mohammed bin Salman’s economic diversification plan.

Under the new rules, workers who want to change employers without their sponsor’s approval must complete 12 months on the job and give the notice period designated in their contract, the guide clarified. Workers who apply to leave the country permanently without finishing their contract will be allowed to do so, but will be banned from working in the kingdom again, a key disincentive.

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