Nepal´s foreign labor exports rise as global demand surges
Surya B. Prasai
May 15, 2008
Last year in a major workshop on Labor Migration Poverty Alleviation and Foreign Employment held in Kathmandu in August, 2007, one of Nepal´s most well known intellectual think tanks, Professor Sridhar Kumar Khatri, stated that Nepal´s economy had good prospects through the export of systematically tailored labor exports since foreign migrant remittances were already contributing to Nepal´s GDP growth rate and assisting the national economy during hard hit times. In support, Minister of Finance Dr. Ram Sharan Mahat who chaired the meeting stated that in the past Nepal ´didn't have a very favorable immigration policy since we had a restricted passport system, which made mobility to countries other than India difficult. The liberal passport and immigration policy and migration to countries other than India was basically a phenomenon after the democracy of 1990´. But Dr Mahat promised the Nepal Government would do all that was required to fill in with quality service and extend all necessary infrastructure required to promote foreign employment and assist Nepali migrant workers abroad.
The export of foreign labor definitely has been a boon to Nepal with nearly 32 major destinations in Asia and the Middle East, of which only a dozen are formal labor contracts. In 2006 it was estimated by the World Bank´s Global Economic Prospect report that the flow of migrant remittances to the developing countries of Asia was nearly US$ 46 billion. While India topped globally, Pakistan received $ 4 billion, Bangladesh $ 3.3 billion and Nepal around $ 1.5 billion, though another 40% could be added to the latter´s remittance inflow through various Hundi operations(informal money repatriation system used by other Asian countries). By far, India remained the largest in terms of remittance growth with a GDP contribution of $ 12.7 billion. South Asia has the world´s three largest remittance receiving countries, namely India, the world´s first; Pakistan, the world´s fifth, and Bangladesh the world´s seventh. Nepal´s share of the foreign remittance pie is not so significant in comparison, estimated between US$ 2 to 2.5 billion, but it is significantly increasing.
How can Nepal better integrate the foreign labor flows to maximize migrant remittance and make more efficient use of the current deposits ? The answer appears multi pronged. One, Nepal needs to continue formalizing its labor contracts as there is an increasing demand for Nepali foreign labor particularly in the unskilled dirty, dangerous job category. Recent estimates show the total number of Nepali workers abroad had nearly quadrupled in the past decade, and in the past two years after Jan Andolan-2 the figure could have increased by nearly 40%. Two, Nepali workers, both male and female, in both skilled and unskilled labor sectors now serve globally, but with poor skills, often departing Nepal through land routes circumventing the official immigration count which mostly tallies air travel. It is important the government keep official records of all departures, which the Department of Labor and Immigration must update periodically. Moreover, it is only recently that South Korea, Japan and Malaysia started showing interest in skilled Nepali workers in the formal labor sector, though the trend of Nepali workers reaching distant foreign shores by other means on previous occasions cannot be discounted. Three, despite the fact that an estimated 230,000 Nepalis went abroad in the past year, only a handful of complaints, less than 500 were officially registered. Does this mean Nepali Foreign Employment Agencies are now observing government policies and assisting in the formalization of labor contracts which allows the foreign job seeker to remain above the surface and take advantage of host country labor laws and entitlements through a formal recruitment channel? Certainly not, it could mean contrarily that many workers are being sent abroad illegally without the knowledge of government, and their complaints are not being heard or registered. And four, despite Nepal included among those countries having a high spurt in labor exports within SAARC, it still ranks low by way of GDP contribution accountable to migrant remittances. Why? Probably, because the Nepal Government is not able to fully absorb the migrant remittances through attractive schemes such as Hydro Power or Citizen bonds that could be linked to the national investment or the industrial development sector. However, to achieve this the government has to first prove itself capable of operating in a liberal and globalized manner, otherwise migrant remittances will stay outside the country like in earlier periods.
The fact that Nepali workers are ready to contribute their labor in extreme hardship conditions to escape the poverty back home, channel back their remittance earnings to their families, and able to assist the national economy during times of national emergency, are all positive sign of Nepal´s democratic opening. But sustaining the labor flow requires stronger commitment from Nepali Embassies and labor attaches abroad to assist in handling migrant worker related complaints. Nepal already subscribes to the majority of ILO Statutes and Regulations governing Migrant Workers and their Rights, but one hears often Nepali workers abroad are facing cruel treatment at the hands of unauthorized employers in many destination countries. This often means the Nepal Government has to intervene through diplomatic channels using expensive communication means and hiring local lawyers which costs money. It would therefore be suggestible that a certain mandatory contribution be set aside in the form of a Migrant Worker Welfare Fund to be coordinated between Nepal´s Foreign and Labor Ministries that would help address these problems. India, Pakistan, Philippines and Bangladesh have set up very constructive official mechanisms in the past to assist their migrant workers abroad during emergency periods, particularly during the Gulf War.
Nepal seems to be heading towards a stable democratic order after the CA Poll held on April 10, but this must be further proven through verifiable democratic indicators. The future Nepal Government must try to enhance foreign labor exports as part of Nepal´s overall economic planning exercise, since it is already a vibrant part of Nepali national growth. For instance, Professor Khatri notes in his authoritative compilation, that the past remittance inflow from foreign labor served as a survival tool for many Nepali rural families caught in the civil conflict between 1996-2006, without which, there would have been acute poverty and mass unemployment. Other Nepali scholars assert that migrant remittances have helped contribute nearly 11 % to Nepal´s poverty reduction strategy in the past decade. Many of the Nepali migrant workers´ families, particularly those headed by females, have also managed to plow their remittance savings into agricultural and small scale industrial production which includes the promotion of local handicrafts and cottage industries, otherwise a dying phenomenon in Nepal.
Considering these challenges and the new opportunities available to Nepali migrant workers abroad, it is important in the days ahead that the Nepal Government come up with appropriate policies that allow remittance repatriation on attractive and legal terms at the same time contributing to national economic development.
The export of foreign labor definitely has been a boon to Nepal with nearly 32 major destinations in Asia and the Middle East, of which only a dozen are formal labor contracts. In 2006 it was estimated by the World Bank´s Global Economic Prospect report that the flow of migrant remittances to the developing countries of Asia was nearly US$ 46 billion. While India topped globally, Pakistan received $ 4 billion, Bangladesh $ 3.3 billion and Nepal around $ 1.5 billion, though another 40% could be added to the latter´s remittance inflow through various Hundi operations(informal money repatriation system used by other Asian countries). By far, India remained the largest in terms of remittance growth with a GDP contribution of $ 12.7 billion. South Asia has the world´s three largest remittance receiving countries, namely India, the world´s first; Pakistan, the world´s fifth, and Bangladesh the world´s seventh. Nepal´s share of the foreign remittance pie is not so significant in comparison, estimated between US$ 2 to 2.5 billion, but it is significantly increasing.
How can Nepal better integrate the foreign labor flows to maximize migrant remittance and make more efficient use of the current deposits ? The answer appears multi pronged. One, Nepal needs to continue formalizing its labor contracts as there is an increasing demand for Nepali foreign labor particularly in the unskilled dirty, dangerous job category. Recent estimates show the total number of Nepali workers abroad had nearly quadrupled in the past decade, and in the past two years after Jan Andolan-2 the figure could have increased by nearly 40%. Two, Nepali workers, both male and female, in both skilled and unskilled labor sectors now serve globally, but with poor skills, often departing Nepal through land routes circumventing the official immigration count which mostly tallies air travel. It is important the government keep official records of all departures, which the Department of Labor and Immigration must update periodically. Moreover, it is only recently that South Korea, Japan and Malaysia started showing interest in skilled Nepali workers in the formal labor sector, though the trend of Nepali workers reaching distant foreign shores by other means on previous occasions cannot be discounted. Three, despite the fact that an estimated 230,000 Nepalis went abroad in the past year, only a handful of complaints, less than 500 were officially registered. Does this mean Nepali Foreign Employment Agencies are now observing government policies and assisting in the formalization of labor contracts which allows the foreign job seeker to remain above the surface and take advantage of host country labor laws and entitlements through a formal recruitment channel? Certainly not, it could mean contrarily that many workers are being sent abroad illegally without the knowledge of government, and their complaints are not being heard or registered. And four, despite Nepal included among those countries having a high spurt in labor exports within SAARC, it still ranks low by way of GDP contribution accountable to migrant remittances. Why? Probably, because the Nepal Government is not able to fully absorb the migrant remittances through attractive schemes such as Hydro Power or Citizen bonds that could be linked to the national investment or the industrial development sector. However, to achieve this the government has to first prove itself capable of operating in a liberal and globalized manner, otherwise migrant remittances will stay outside the country like in earlier periods.
The fact that Nepali workers are ready to contribute their labor in extreme hardship conditions to escape the poverty back home, channel back their remittance earnings to their families, and able to assist the national economy during times of national emergency, are all positive sign of Nepal´s democratic opening. But sustaining the labor flow requires stronger commitment from Nepali Embassies and labor attaches abroad to assist in handling migrant worker related complaints. Nepal already subscribes to the majority of ILO Statutes and Regulations governing Migrant Workers and their Rights, but one hears often Nepali workers abroad are facing cruel treatment at the hands of unauthorized employers in many destination countries. This often means the Nepal Government has to intervene through diplomatic channels using expensive communication means and hiring local lawyers which costs money. It would therefore be suggestible that a certain mandatory contribution be set aside in the form of a Migrant Worker Welfare Fund to be coordinated between Nepal´s Foreign and Labor Ministries that would help address these problems. India, Pakistan, Philippines and Bangladesh have set up very constructive official mechanisms in the past to assist their migrant workers abroad during emergency periods, particularly during the Gulf War.
Nepal seems to be heading towards a stable democratic order after the CA Poll held on April 10, but this must be further proven through verifiable democratic indicators. The future Nepal Government must try to enhance foreign labor exports as part of Nepal´s overall economic planning exercise, since it is already a vibrant part of Nepali national growth. For instance, Professor Khatri notes in his authoritative compilation, that the past remittance inflow from foreign labor served as a survival tool for many Nepali rural families caught in the civil conflict between 1996-2006, without which, there would have been acute poverty and mass unemployment. Other Nepali scholars assert that migrant remittances have helped contribute nearly 11 % to Nepal´s poverty reduction strategy in the past decade. Many of the Nepali migrant workers´ families, particularly those headed by females, have also managed to plow their remittance savings into agricultural and small scale industrial production which includes the promotion of local handicrafts and cottage industries, otherwise a dying phenomenon in Nepal.
Considering these challenges and the new opportunities available to Nepali migrant workers abroad, it is important in the days ahead that the Nepal Government come up with appropriate policies that allow remittance repatriation on attractive and legal terms at the same time contributing to national economic development.
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