Saudi in first move away from sponsor system

Saudi Arabia's deputy labour minister said on Tuesday the Middle East's largest economy will start licensing expatriate labour companies within a month in a first move away from the sponsorship system for foreign workers.

"These labour companies will have licences within a month and they will organise the process of bringing expatriates to the kingdom," said the OPEC member's Deputy Labour Minister Mufarrej al-Haqbani at a conference in Riyadh.

The new labour companies will replace an existing system in which companies sponsor the work visas of foreign employees, and which has been criticised for the control it allows them to hold over expatriate employees.

Companies frequently hold employees' passports.

Officials have previously said the new system will help regulate the movement of expatriates between jobs in Saudi Arabia.

Haqbani also said the kingdom was seeking to replace part of its foreign workforce with Saudi citizens.

"In the short term, the focus is on increasing jobs for nationals... by substituting a part of 8m expatriate jobs in the kingdom," he told the financial conference.

Foreign workers account for nine out of 10 jobs in the world's top oil exporter and the government is introducing a range of initiatives to regulate the labour market with a goal of getting more Saudis into work.

Although the official unemployment rate is about 10.5 percent, economists say the labour force participation rate, the number of working-age people in jobs or seeking work, is lower than 40 percent.