JEDDAH, Jul 10 (Arab News): The Labor Ministry has issued guidelines for establishing new labor recruitment companies as part of its efforts to regulate the hiring of foreign workers.

A recruitment company can be set up after the merger of a minimum of five existing recruitment agencies. There will be two types of companies depending on the capital and nature of services. If the company intends to recruit domestic workers only, it should have a minimum paid up capital of SR50 million.

If the company intends to offer recruitment services to the public and private sectors apart from recruitment for domestic workers, its capital should be SR100 million.

The Labor Ministry should receive applications for licenses within six months from the date of the implementation of the new regulations. If recruitment agencies fail to launch at least five companies over the six-month period, other investors can also apply for a license.

A new company will have to start operations within a year after it wins the license, although the ministry has the authority to extend this deadline by six months at its discretion.

The license is valid for 10 years before it has to be renewed.

The ministry statement said recruitment agencies that merged to set up a company can transfer their existing visa allocation to the new company without having to pay any fee. A company will receive up to 1,000 visas from each agency that participated in its formation.

Yahya Hassan Al-Maqbul, chairman of labor recruitment at the Jeddah Chamber of Commerce and Industry, said the new companies would bear the cost of transportation, board and lodging for the workers.

The new companies will also be permitted to lend workers for monthly or short-term contracts.

According to sources in human rights organizations, the move will help reduce violations involving expatriate workers’ rights and provide a better working environment for them in the Kingdom.

It is not clear whether the new system will go some way toward fulfilling the recommendations made by the National Human Rights Commission to replace the sponsorship system with a commission for foreign workers under the Ministry of Labor.

The demand to get rid of the sponsorship system has been on the rise in recent years because the system is abused and human rights violations occur, Salah Al-Shalhoob wrote in Arab News in February.