Looming crisis in Gulf dims prospects for Nepali economy

Published On: September 28, 2016 12:00 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Sept 27: Looming economic crisis in the Gulf countries dims the prospects for the Nepali economy as migrant workers there are facing unprecedented problems and demand for workers from the countries has also declined over the past few months.

Over 360,000 Nepalis leave the country on an average each year for employment, according to the figures maintained by the Department of Foreign Employment (DoFE). A total of 3.61 million people migrated abroad in a decade, i.e., between 2006/07 to 2015/16 through formal channel, DoFE data reveals.

But the picture is changing in the recent times as the workers demands from Gulf states and Malaysia, another major labour destination in Southeast Asia, have declined. 

The pressure was once again highlighted by a recently released report of Nepal Rastra Bank which revealed that the country received only Rs 51.94 billion in remittances in the first month of current fiscal year, down from Rs 53.72 billion in the corresponding period last fiscal year. Decline in remittances, backbone of the Nepali economy at present, is something that the government should worry about, said economist Dr Posh Raj Pandey. 

 “Decrease in worker demand from the Gulf countries will have a direct and visible impact on our economy as they are the top migrant recipient countries,” Pandey said. 

Given the problems faced by workers in the Gulf countries as a result of the oil price crash, it is certain that the outflow of Nepali workers to the countries will declilne in the coming months, said Raghu Raj Kaphle, executive director at Foreign Employment Promotion Board (FEPB). 

Considering the looming crisis in the foreign employment sector, recruiting agencies have started search for new labor destination countries, said Rama Bhattarai, director at the Department of Foreign Employment (DoFE). Representatives from manpower recruiting agencies including Progressive Foreign Employment Entrepreneurs Forum Nepal had visited various European and other countries having good economic status some two months ago to explore the possibility of sending workers there, Bhattarai told Republica. 

The department has already sought approval from the Ministry of Labor and Employment to open Lithuania, a country in northeast Europe, as a new destination for Nepali migrant workers. Similarly, the ministry is also working to fix the service charge for Nigeria and Saipan. 

Economist Pandey, however, sees the government's policy of encouraging abroad migration than creating decent jobs in the country a major problem. The government can explore new countries as alternative of Gulf States and Malaysia as a short-term solution, he said. “But for a sustainable solution to the problem, the government should create more jobs in the manufacturing sector in the country.”

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