May 2016

IZA DP No. 9941: Asymmetric Information under the Kafala Sponsorship System: Impacts on Foreign Domestic Workers' Income and Employment Status in the GCC Countries

Froilan T. Malit Jr., George S Naufal

published in: International Migration, 2016, 54(5), 76-90

This paper examines the legal and policy implications of information asymmetry on foreign domestic workers employed under the Kafala sponsorship system in the Gulf Cooperation Council (GCC) countries. Drawing from ethnographic and field-based observations in large GCC migrant destinations – including Kuwait, Qatar, and the United Arab Emirates (UAE) – we investigate the information flows and market uncertainties between five key stakeholders: labor-receiving governments, labor-sending governments, recruitment agencies (subagents), sponsors (employers), and social networks. Several factors contribute to asymmetric information: the lack of bilateral labor agreements and government policy coordination, programs between and among government entities, the absence of labor law for domestic workers, and the laissez faire approach of the labor-receiving government. These sources of asymmetric information create serious market vulnerabilities for the domestic worker population, often resulting in loss of employment and early deportation. The concluding section further outlines policy implications and areas of methodological research on GCC migration.