Gulf, Canadian and Australian sponsorship schemes and their applicability in the European Union

Introduction

Sponsorship is the legal process of importing foreign workers, subject to specific rules and restrictions. The Gulf countries have been the main adopters of this for more than fifty years. Similar legal instruments are used by other countries, such as Canada and Australia. The functioning of sponsorship schemes in different countries and their experiences provide important lessons for the EU in addressing migration challenges. The scheme essentially takes a demand-driven approach, where employer needs determine the direction and volume of migration, as opposed to traditional supply-driven point systems, where migrants arrive on the basis of their qualifications without a specific job offer. Experience shows that sponsorship schemes are more effective in matching skills and jobs and better serve real labour market needs. In this analysis, we first examine the parallels and differences between the sponsorship schemes in Australia, Canada and the Gulf countries. We will then explore the opportunities and constraints of introducing such a scheme in the European Union.

Sponsorship (kafala) scheme in the Gulf countries

Under the sponsorship scheme in the six GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates), foreign employees are not treated as foreign workers, but as temporary contract workers linked to a host employer (person or company). In addition to covering travel costs, the sponsor also provides accommodation, often in dormitory-style accommodation or, in the case of household workers, in the sponsor’s home. To select workers and organise their travel, sponsors mainly use private recruitment companies in their countries of origin.[1] The administration, implementation and regulation of the process is the responsibility of the Ministries of Interior, not Labour. Thanks to the sponsorship scheme, employers have full control over temporary foreign workers. Ministries of the Interior grant or refuse residence permits on the basis of employers’ assessments. Only sponsored workers can obtain entry visas to all GCC countries. The sponsorship scheme restricts the freedom of movement of contract workers by requiring them to hand over or return their passports to the sponsor, unless they need them for administrative purposes.[2]

One of the key elements of the sponsorship scheme in all six GCC countries is the transfer of sponsorship. Generally speaking, a foreign worker who enters the country under sponsorship of an employer cannot change sponsor and work for another company without the consent of the original sponsor for the duration of the contract. GCC countries have also introduced a re-entry ban, which requires foreigners to stay abroad for a certain period after the original employment contract that gave them the right of residence has ended, to regulate the number of foreign nationals staying in the country and protect the interests of employers. [3]

In all GCC sponsorship schemes, employers are responsible for the costs of repatriating their foreign workers. Some employers transfer employees, i.e. temporarily “lend” the services of an employee to another company while the original employer remains the sponsor. Family reunification for foreign nationals living in Gulf countries is subject to very strict laws and regulations. Only highly qualified employees are allowed to bring their families with them.[4] It should be noted that most foreign workers choose not to bring their families with them in order to maximise their earnings and provide for their families in their home country, given that the cost of living for families in the Gulf countries is very high.

The kafala system affects tens of millions of migrant workers in the Middle East, with critics calling for reform because of racism, gender discrimination and human rights abuses. Unskilled workers, mainly from South and Southeast Asia and Egypt, are working in cheap, underpaid jobs in poor working conditions and are vulnerable to employer abuse and exploitation. Both violence against women and racial discrimination are common. This scheme is still in place, despite some minor changes ahead of the 2022 World Cup in Qatar. [5]

Sponsorship in Australia

Sponsorship in Australia operates through the “457” visa scheme, also known as the Temporary Business Long Stay – Standard Business Sponsorship visa (subclass 457), which allows licensed companies to sponsor skilled foreign workers for up to four years (with the possibility of further extensions). The programme was launched in 1996 to address the skills shortage. This is an example of a “demand-driven” or “employer-driven” programme, in which businesses decide on the entry and status of immigrants. The scheme covers primary visa holders, who have received employer sponsorship, and their families who are secondary visa holders and are also eligible for paid work, but their stay in Australia is dependent on the employment of the primary visa holder. If primary visa holders lose their job, they have 28 days to leave Australia unless they find a new sponsoring employer. Under this plan, there is no cap on the number of employees. Although initially targeted at company managers and IT professionals, the list of approved jobs quickly expanded to include skilled and semi-skilled workers. [6]

Employers who see sponsorship as a way to solve the shortage of skilled workers and as a means to hire people with specific “behavioural characteristics” have found it successful. Sponsoring employers thought that skilled temporary visa holders have a better attitude, stronger work ethic, are more committed and hard-working compared to other groups of workers. However, these ratings, defined as “behavioural characteristics”, are rooted in the filtering mechanism of the visa programme.[7] However, workers face a number of problems arising from their insecure migrant status, their vulnerability and the interplay of employer practices in loosely regulated industries, most notably inadequate employer compliance with regulations designed to protect temporary foreign workers.[8] The conditions of temporary foreign workers are often similar to those of illegal workers. Critics have therefore argued that Australia’s sponsorship system is in effect a guest worker system that restricts migrants’ rights, limits their ability to claim decent working conditions and prevents them from taking advantage of the opportunities available to citizens and permanent residents. [9]

As in the Gulf countries, Australian companies can choose to take over existing sponsorship from another employer or sponsor a skilled worker themselves. Businesses must prove that they cannot find a local candidate in Australia to fill the position. The list of qualified jobs covers the posts required in most industrial, service and agricultural sectors. However, employers can still negotiate a labour agreement even if their positions are not on the list of qualified jobs eligible for benefits. [10]

Sponsorship in Canada

The Canadian immigration system uses two complementary approaches: a supply-driven points system and a demand-driven sponsorship system. Under the points system, immigrants apply on their own initiative and are awarded points based on objective criteria such as qualifications, language skills or age, without having to have a prior offer from an employer, a system based on the principle that qualified applicants with high scores will find a job later that matches their qualifications. In contrast, a sponsorship scheme (TFWP) is based on specific employer needs, where the employer selects the employee for a specific position, so the job and its requirements are clear at the entry point, leading to a more efficient labour market fit. The combination of the two systems ensures that Canada can meet both long-term skills needs and acute labour market needs.

The Temporary Foreign Worker Programme (TFWP), a system of employer-sponsored visa programmes in Canada, was first introduced in 1973 and initially targeted highly specialised skilled workers. The TFWP has resulted in a significant increase in arrivals, particularly since 2002, when the criteria were relaxed to allow for the admission of domestic carers, seasonal agricultural workers and skilled and unskilled migrants. The programme aims to meet labour market needs and improve labour market flexibility. The TFWP has met employer demand, especially in smaller provinces where it is more difficult to attract and retain workers who are usually attracted to large cities. It has also improved the labour market situation of workers in more skilled occupations. When comparing workers coming through the supply-driven points system and the demand-driven sponsorship system, they found that a higher proportion of those coming through the sponsorship system work in jobs that match their skills. [11]

This programme currently uses the following six classifications: Global Talent Stream, high-wage positions, low-wage positions, agricultural sector, seasonal agricultural worker programme and home health care workers, this is particularly important in the French-speaking region of Quebec. Employers are responsible for the category they choose for their employees. They also need a positive Labour Market Impact Assessment (LMIA) from the Canadian government and an impact assessment from the Quebec government on the positive impact of job opportunity on the labour market. In some circumstances, an employer may even choose to do without these steps, and for some highly specialised occupations the process is even easier. In Canada, employers have the option of hiring temporary workers from abroad or replacing temporary workers already living in Canada with non-residents. [12]

At the end of 2021, more than 775,000 foreign nationals held temporary work permits; a 92% increase compared to 2015, and a 600% increase compared to 2000. Most jobs were provided by restaurants and agriculture. While this sponsorship scheme is effective for employers, as they get the skills they need in both high and low paid jobs, there are concerns about the long-term economic impact and exploitation. Critics argue that the sponsorship scheme could encourage businesses to hire cheap labour rather than invest in processes that increase productivity. They are also more likely to keep wages low and rely more on workers with limited rights and mobility. [13]

In Canada, 4,000 businesses take advantage of the sponsorship scheme. The majority of the temporary immigrant workforce is now low-skilled workers placed in urban areas, despite what most believe is a programme designed to fill jobs in resource-rich rural areas of Western Canada. One consequence of the sponsorship programme is that it erodes Canadian wages and jobs. The original aim of the TFW programme was to hire foreign workers only after all other options to address labour shortages had been exhausted. Instead, employers are increasingly choosing it as their first option because it is simpler and cheaper. As employers have easy access to foreign labour, they do not invest in training and upskilling of domestic workers. In the long term, this could lead to a decline in the skill level of the domestic workforce. Canadian workers find themselves in a paradoxical situation: while foreign workers are filling local jobs, they are forced to move to other regions in search of work, causing problems not only on a personal level but also on a social level. Despite growing criticism, the programme enjoys the support of Canada’s Liberal and Conservative parties and businesses depend on it, even if some restrictions have been introduced in recent months. [14]

Applicability in the EU

Sweden has been promoting sponsorship as a demand-driven labour migration policy since 2008. It allows unlimited recruitment of workers from outside the European Economic Area (EEA) in all professions, including lower-skilled jobs. As a result of this political system, Sweden currently has the most liberal immigration law in the EU. Under its laws, there is no minimum qualification requirement, no occupational restriction, no limit on the number of employees, and no need to prove that the company has made a genuine effort to fill the job locally. This system has received positive ratings for its responsiveness to employer needs. However, like Canada, Sweden and the Gulf countries, there have been serious criticisms of this temporary work permit system. The protection of migrant workers’ rights is based on the idea that employers fulfil their legal obligations and trade unions are able to enforce collective agreements. This is unrealistic, as sectors with a high concentration of migrant workers lack trade unions and eligibility criteria, which has led to abuses and exploitation. [15]

Other EU countries use the same system, in particular Italy, France and Spain. In total, the European Union issued 191,840 seasonal work permits to foreign nationals in 2023, an increase of 22.6% from 2022. Five EU countries issued more than 80% of temporary work permits for foreign workers in 2023. Italy tops the list with 73,536 permits, or 41.5% of the total number of permits issued. France is second in the ranking with 37,354 work permits (19.5%), followed by Spain (12,554, 6.5%), Croatia (17,869, 9.3%) and Finland (7,842 permits, 4.1%). In addition to these countries, Germany, Portugal and Luxembourg also actively use the sponsorship system for seasonal work. In 2023, 58,547 Moroccans were granted temporary work visas in the EU, representing 30.5% of the total number of foreign nationals authorised to work in the EU. Bangladeshis came second with 29,249 seasonal work permits (15.2% of all seasonal workers), followed by Indians (22,498), Ukrainians (8,693) and Serbs (6,841).[16]

In most cases, these sponsorship agreements are legally and economically effective. For example, thousands of Moroccan women travel to southern Spain every spring to work in strawberry fields in the Andalusian region of Spain (the total number of temporary Moroccan women workers reached 14,500 in 2024).[17] Most of these women leave their families behind, and there are cases of employers abusing their vulnerable position.[18]

The sponsorship scheme itself is not the problem, as employers and workers agree to a temporary workload in exchange for a fixed salary and the worker’s return home. The majority of EU countries use this system. The source of the tension in the system is two ethical, not legal, shortcomings:

1. Some temporary workers try to bribe their employers to obtain a permanent residence permit or look for another company that will offer them a permanent contract in exchange for money.
2. Some employers exploit the vulnerability of temporary workers to demand extra work, reduce wages or commit sexual abuse.

There are few checks and balances to prevent abuse of the system. The EU’s criticism of Qatar’s sponsorship scheme in the run-up to the 2022 World Cup was not directed at the sponsorship scheme itself, but at the mistreatment of workers by employers, which also occurs within the EU. [19]

The sponsorship system in the EU—opportunities and constraints

The sponsorship scheme is a well-regulated, employer-driven recruitment tool that currently provides mainly temporary work opportunities for non-EU nationals. The importance of the scheme is growing: In 2023, nearly 192,000 temporary work permits were issued in the EU, an increase of 22.6% compared to the previous year. The main strength of the system is that it provides a transparent legal framework and responds directly to labour market needs. Its flexibility allows it to attract workers with different skill levels and to address regional labour market disparities. It can also play a role in reducing illegal migration by providing a legal channel to work.

Application in the EU is made difficult by the principle of free movement and the different labour market needs of Member States. Experience shows that the scheme works effectively mainly in certain sectors (agriculture, hospitality) and regions. An example of this is the Spanish-Moroccan cooperation on seasonal workers.

The sponsorship scheme has a number of features that are in line with a critical stance on migration and can be an effective response to concerns about immigration. The system operates within a strictly regulated and controlled framework, where all arrivals are documented and tracked, while the duration and purpose of the stay is predetermined. The emphasis on temporary, compulsory return and restrictions on family reunification prevent chain migration and permanent settlement. The economic benefits are ensured, as workers arrive only when there is a real demand on the labour market, under strictly regulated employment conditions, without placing a burden on the social welfare system. Social impacts are well controlled, as workers typically work in isolated, specific environments, so there is no need for large-scale integration programmes.

The system includes a number of safeguards for returning home, including employer liability and the opportunity of sanctions. It is particularly important that the state has full control over the process, the conditions can be changed at any time and the programme can be easily stopped in a crisis. Furthermore, from a cost-benefit perspective, it is a self-sustaining system where the costs are borne primarily by employers. From a security policy point of view, it should be stressed that entrants can be pre-screened and their stay can be monitored at all times. The system is also politically communicable, as its “guest worker” nature can be emphasised, it can be separated from asylum issues, and the economic benefits can be highlighted alongside the strict controls. Overall, it offers a solution that provides the necessary workforce, maintains control over migration flows, minimises social tensions and is compatible with strict immigration policy objectives.

A sponsorship scheme can be a useful tool as part of an overall strategy. However, it needs to be adapted to preserve its advantages (regulatory and labour market responsiveness) while addressing its current shortcomings. The examples from Canada and Australia show that it is possible to design systems that provide a gradual transition from temporary work to permanent settlement, while maintaining the ability to respond quickly to employer needs.  The system can be adapted to also provide longer-term settlement opportunities (Canadian example), for example by linking it to point-based immigration systems to provide a gradual, controlled transition from temporary status to permanent residence.

Conclusion

The most extreme form seen in the Gulf States raises significant legal protection issues, while the Canadian and Australian systems show more sophisticated solutions with more guarantees. For the EU, a hybrid solution that combines the advantages of a sponsorship system (tight control, economic efficiency, flexibility) with long-term integration objectives may be appropriate. This requires a reform of the system to ensure interoperability between temporary and permanent forms of settlement, to include strong worker rights protection and to be integrated into a broader migration strategy. The system can be particularly attractive to a migration-critical approach, as it provides tight control over processes while meeting economic needs and minimising social tensions. Finding the right balance between employers’ needs, workers’ rights and social concerns is key to successful implementation, and effective monitoring mechanisms are also essential.