Nepal-Malaysia labor pact could be used as a model for other countries

November 13, 2018 07:15 AM Roshan Sedhai


KATHMANDU, Nov 13: The new labor agreement between Nepal and Malaysia still falls short of meeting the standards set by the international labor laws, but many of its provisions could be used as a model for similar pacts that Nepal signs with other labor destinations in the future, say experts. 

On October 29 this year, Nepal and Malaysia signed a Memorandum of Understanding (MoU), almost a decade after the two countries had exchanged the first draft to this effect.

The MoU, which came in the backdrop of Nepal’s unilateral ban on its citizens from going to work in Malaysia, was the first-ever formal accord signed between the two countries despite the fact that Malaysia has long remained one of the major recipients of Nepali workers.

The agreement has been seen as a major diplomatic feat for Nepal although its effectiveness would depend on the sincerity Nepal and Malaysia demonstrate in implementation of the accord.

The agreement is significant not only because Malaysia remains one of the favorite work destinations, but also because it seeks to address the whole gamut of problems facing the workers; both present and future migrants.

The agreement with Malaysia may not be much different from similar pacts signed with Qatar, Bahrain and Oman in the past, but it stands out from the previous accords primarily due to five provisions that could greatly benefit the workers.

Firstly, it’s the first labor agreement to abide by the low-cost recruitment scheme, commonly known as the free-visa-free-ticket system introduced by Nepal government in 2015. Once the agreement comes into effect, the employers would have to cover the expenses for recruitment service, visa processing, security and medical screening of workers, besides providing air tickets. 

It comes as a great relief for the workers who usually spend Rs 100,000 to go to work in Malaysia. In fact, Nepal stopped issuing work permits for Malaysia after the latter made 20 fold increase in visa processing fee in less than five years. The visa processing fee has now reached to Rs 18,000 from Rs 700 in 2013, thanks to the three layers of security and health screening introduced by Malaysian government in acquiring visa and appointment of multiple private companies to provide these services.

Secondly, the standard tenure of workers has been reduced to two years from previous three years. Like in the Gulf countries, the workers will be given a two-year contract and will be free to return home after expiry of the contract.

Thirdly, Nepali workers will enjoy the same perks and privileges enjoyed by Malaysian citizens. They would be entitled to additional pays for overtime without tax cuts. The employers would have to deposit salaries in the workers’ bank account by the first week of every month.

Fourthly, workers could go to labor court in case they face any exploitation, abuse or mistreatment from the employers, and could seek refuge in Malaysia until the settlement of the case.

Fifthly, Nepali workers would be entitled to the same workplace insurance and health insurance enjoyed by their Malaysian counterparts. They would get a 14-day leave in case of death of immediate family members.

Besides benefiting prospective migrants and those currently working in Malaysia, the MoU with Malaysia could be used as a model for labor pacts that Nepal signs with other countries, according to a foreign employment expert.

“It should be used as a model for pacts we sign with countries like Saudi Arabia, the UAE, Kuwait and other destination countries. We should stop sending workers to countries that are not ready to do so,” said foreign employment expert Ganesh Gurung, who is also a member of the Policy Research Academy.

Keshav Bashyal, a foreign employment expert, said the MoU was an important step ahead in strengthening labor relations between the two countries.

“I see a big challenge in the implementation of the agreement. We must understand that its implementation depends largely on the multinational companies because these third-country companies are stationed in Malaysia mainly because they get tax cuts and cheap labor in the country,” said Bashyal.

Malaysia’s acceptance of low-cost recruitment scheme has also paved way to convince other labor destinations to accept Nepal’s free-visa-free-ticket scheme, Minister for Labor, Employment and Social Security (MoLESS) Gokarna Bista told Republica.

Nepal has not yet signed labor pact with Saudi Arabia, the United Arab Emirates and Kuwait, which together with Malaysia and Qatar absorb over nearly 80 percent of around 3 million Nepali migrants.

Negotiations are underway to finalize the draft agreement with Kuwait, while fresh efforts are being made to sign pacts with Saudi Arabia and the UAE, according to MoLESS officials.

The MoU still lags behind on many regards, especially on the issues relating to rights of domestic workers and right to union. Despite the fact that more than 3,500 Nepali workers have died since 2003, Malaysia still appears reluctant to ensure 24 hours insurance coverage to the workers. 

The new pact has also divided stakeholders regarding its potential benefits for the workers. The government claims that the new agreement would resolve most of the anomalies prevalent in the foreign employment sector, while manpower agencies remain skeptical. The agencies claim that the agreement is likely to further discourage employers from hiring workers from Nepal.

“Malaysians have turned their attention to Bangladeshi and other South Asian workers. This will further drop labor demand for Nepali workers,” said Tanka Raut, a former office bearer of Nepal Association of Foreign Employment Agencies.

However, foreign employment expert Bashyal expressed a differing view saying that it won’t have significant effect in the demand for the workers.

“There is a big attraction for Nepali workers in Malaysia. I don’t think Bangladeshi or any other workers will replace them in the near future,” said Bashyal.


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