Face-to-face: private sponsorship in KSA

Essam Kalthoum, Al Shamiyah Urban Development Company CEO
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Bahrain is to move to a system of sponsorship for migrant workers through recruitment agencies and Saudi Arabia has signaled its intention to follow suit. Our industry experts discuss the implications.

What is your opinion on the current system of private sponsorship?

Essam Kalthoum, Al Shamiyah Urban Development Company CEO, says many aspects of the current system are not fit for the stage of development that the country is in. It causes great injustice to imported labour, and it gives a deceiving element of competition to many businesses and industries. Also, it stands in the way of reforming the local labour market and transforming it to global standards. It is an obstacle in the face of true Saudisation.

Dr Abdulqader Amir, VP, strategic planning, Jeddah Development Company, says the current Saudi Arabian sponsorship system is to some extent an outdated and bureaucratic process.  It ties down the employee and restricts his movements, and also causes unnecessary work for the employee in coping with issues from arranging visas to approving a driving license. The process is particularly problematic for unskilled workers who find they have little in the way of rights without the employer’s input and decision.

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How would the proposed shift to sponsorship via recruitment agencies affect Saudi Arabian businesses?

Kalthoum says initially, it will increase the cost of labour. But once the local economy adjusts  to that, the effects will be positive. The labour market will enjoy the benefit of a standard covering the quality and reliability of supply. The cost of labour in general will be normalised reflecting levels that will allow fair competition. Finally, it will help the country to eliminate a great source of injustice and unfairness.

Dr Amirsays overall the benefit would be positive. However, for many of the large, world renowned western companies with trained HR staff who routinely handle employees at all levels in a considered and professional manner, this could be a negative move. It could effectively take much of the HR decision-making out of their hands and give it to a less experienced agency who do not understand the particular needs and processes of the company.

How would the proposed shift affect the Saudi Arabian labour market?

Kalthoum says it would enhance the moral standard governing relationships between employers and employees, offering the worker more rights. At the same time, it would offer employers a higher level of quality and selectivity of the work force. Additionally, such a shift would bring a missing balance to the labour market. The current cost of labour is cheap. This is the main obstacle facing the true and effective Saudisation of many work force layers.

Dr Amir says overall, the shift to sponsorship by recruitment agencies would benefit the Saudi Arabian labour market in terms of it being seen as more transparent and overtly responsive to the needs of the employee. This is particularly true with respect to the lower-skilled employees and those working for individuals who are often at the mercy of an employer who may not consider, or even be aware, of individual infraction of the law.

Why have some Gulf countries refused to consider implementing the same policy?

Kalthoum says gulf States in general are slow to adopt changes. Plus, this issue has a substantial social impact, as it touches an area where many nationals are benefiting, either directly through positions such as drivers, or indirectly through the thousands of small to medium business establishments that use the private sponsorship system to maintain their labour supplies. It should not be long before all GCC states consider such a shift.

Dr Amir says due to the current economic climate, some countries appear to be more concerned with finding ways to ensure employment for nationals, and to ensure the movement of Arab nationals who are seeking work from one state to another. Plus they appear to be trying to keep existing, but unemployed, expatriate workers in the country. Modification of the sponsorship system is perhaps seen as a subsequent issue to be discussed.