fDi Markets Newswire:

Home / Locations / Middle East & Africa / Saudi Arabia / Saudi Arabia opens domestic work agencies to FDI

Saudi Arabia has authorised foreign investment in domestic workers’ recruitment agencies, though some say the system needs further reform. Sebastian Shehadi reports.

Saudi Arabia has authorised foreign investment in domestic workers recruitment agencies, and says contracts will be issued in the near future. 

The Saudi General Investment Authority (SAGIA) and the ministry of labour and social development said the move would ensure the development of the sector through the transfer of international expertise. This would enhance competitiveness, offer options that fit customer needs and improve the services provided to consumers.

Like many countries in the Arab world, Saudi Arabia relies heavily on foreign labour, especially within households. During the past three years, 3.18 million visas were issued for domestic workers, 35% of them for Filipinos and Indians, Arab News reported in August 2017. The sector is thus extremely lucrative and significant, especially since Saudi Arabia has a population of about 32 million.

However, many Saudis of middle and low income are finding that domestic help is no longer affordable due to high recruitment costs and difficult visa conditions. SAGIA’s new policy is intended bring down the price of employing domestic workers, which has risen in recent years. The move is also part of a wider reform effort that has seen many sectors welcome FDI in order to diversify the oil-dependent economy.

However, human rights abuses against foreign domestic workers in Saudi Arabia and the Arab world have been documented by various sources. “Domestic workers’ visas are tied to their employers under the kafala (visa-sponsorship) system, and workers cannot leave or transfer employers without their employer’s permission,” according to Human Rights Watch. “If they do, they can be charged with ‘absconding’ and face fines, imprisonment, and deportation. They are also excluded from labour laws or accorded little legal protection, and many leave without justice or redress.”

Jon Truby, director of the Centre for Law and Development at Qatar University, said: “No changes to the kafala system appear to have been announced pursuant to this policy change. However, visas for domestic workers will not be issued to households unable to prove they can afford to pay the salaries. This is a step in the right direction but is still open to abuse, a far cry from the vast reforms of the kafala system required.”

Nevertheless, the arrival of foreign operators could mean improved practices on the part of international firms. “Since such firms would be wary of receiving complaints that could jeopardise their operating licence and ultimately their investment, they will be motivated to operate more ethical practices,” said Mr Truby, adding that “agencies registered in countries with higher regulations and ethical requirements would be particularly careful not to engage in recruitment practices which have led to severe human rights violations” in Saudi Arabia.

This article is sourced from fDi Magazine
fDi Magazine

The fDi Report 2018: Free Download

The fDi Report 2018 promobox

Crossborder investment monitor

fDi Markets - Cross border investment monitor

fDi Markets is the only online database tracking crossborder greenfield investment covering all sectors and countries worldwide. It provides real-time monitoring of investment projects, capital investment and job creation with powerful tools to track and profile companies investing overseas.

Click here to find out more about fDi Markets

Corporate location benchmarking tool

fDi Benchmark is the only online tool to benchmark the competitiveness of countries and cities in over 50 sectors. Its comprehensive location data series covers the main cost and quality competitiveness indicators for over 300 locations around the world.

Click here to find out more about fDi Benchmark

Research report

fDi Intelligence provides customised reports and data research which deliver vital business intelligence to corporations, investment promotion agencies, economic development organisations, consulting firms and research institutions.

Find out more.