Few would be proud of their country if laborer was its biggest export item. Such, however, is the situation of Nepal. Labor migration has a deep-seated economic and socio-cultural impact. Overseas recruitment firms, or manpower agencies, have largely neglected reform and structuring activities. Thus it is a welcome relief that Ministry of Labor and Employment (MoLE) has finally taken stringent steps in imposing policies to improve architecture of this industry, more so, for Malaysia, Saudi Arabia, Qatar, Bahrain, Kuwait and United Arab Emirates.As a recruitment entrepreneur, I wish to discuss ground realities of this labor trade, the new Government policy and its broader impact. Overseas employment over the years has exponentially contributed to our national income. On an average, 51,000 Nepali citizens fly out of the country every month in pursuit of foreign employment. These migrant workers send remittances, equivalent to 29 percent (more than US $4 billion) of the country's Gross Domestic Product (GDP). This is the largest foreign currency inflow to the country. Even revenues from the tourism industry account for just eight percent of GDP.
These migrant workers are employed in various sectors like construction, transportation, hospitality, security, facility management, administration, sales and management which empower them with widespread experience. This experience will be invaluable in improving country's business and economic environment.
Many Nepalis dream of owning a land, a house and a small business. Given that Nepal's current unemployment rate is above 40 percent, with over 550,000 youth entering the job market every year, such dreams remain unfulfilled in the absence of foreign employment. Employment abroad widens the exposure of Nepali youths, helping them develop leadership qualities. In some villages, if a young male hasn't gone out of Nepal for employment purposes, he finds it hard to get a bride.
More than 80 percent of workers, upon completion of two years of their employment contracts (three years in case of Malaysia) and their return to Nepal, leave again in search of jobs due to unavailability of jobs here. On average, each worker spends at least seven years abroad, trying to save enough money to set up agriculture-based work, small maintenance contractor work, or hospitality sector jobs in Nepal. In many cases, workers return and become sub-agents, drawing commissions by steering other workers to recruitment agencies and assisting recruitment cycle.
MoLE has implemented a free visa and air ticket policy for all workers. Thus, recruiting clients need to bear the major expenses, which were traditionally borne by the job aspirants. Nepal Association of Foreign Employment Agencies (NAFEA)'s strike last month was targeted at government's lack of preparation and hasty enforcement of the new policy without having an MOU with each of these six countries. The strike called for a more progressive policy as in the absence of an MOU, coverage of the aforementioned expenses may not be ensured under the labor laws of the concerned countries. The new policy is also expected to have the following effects: Closure of at least 60 percent of the manpower agencies, rendering more than 2,000 employees jobless; closure of hundreds of travel agencies which relied on ticketing related to foreign employment; putting countless lodges, hotels in Kathmandu out of business which accommodated job seekers before deployment out of work and hampering domestic transport companies.
Companies incur direct operating costs in providing air tickets and visas for the manpower they hire. Bearing this expense, when recruiting from Nepal, will discourage clients and recruiters and hence they will look to alternative countries, such as Bangladesh and Myanmar. Companies which squeeze out this additional air ticket and visa cost, are likely to reduce costs elsewhere resulting in poorer accommodation and other inadequate facilities. It will discourage job aspirants looking for skilled and better paying jobs, such as in hospitality sector, which is usually managed through a local recruitment agency in each country. For example, Hyatt Dubai has an agreement with a UAE based agency to recruit from various countries including Nepal. Job aspirants from Nepal pay them service charge to get these good paying jobs.
This new policy will result in a reduced demand for Nepali workforce and an increased supply of job seekers in the country. Limited job opportunities in Nepal will result in workers willing to pay more than the maximum service charge of Rs 10,000 (maximum amount needed to be paid by a job seeker to recruitment agency under the new policy) set by the government. Hence it will lead to a vicious illegal cycle of recruitment.
The government should have signed MOU with each of the six countries, stating that the companies based in those countries will have to incur the air ticket and visa costs. That way it would be applicable to all six countries willing to recruit workers from Nepal. In absence of MOU, it will create a chaotic recruitment environment where clients will look for every possible loophole to avoid this expense.
Sub-agents or grass root agents, who bring them to the recruitment agencies in Kathmandu, absorb most of the money paid by potential job seekers. For example, the service charge for applying as labor for postings in Qatar is Rs 20,000. However, laborers often end up paying Rs 80,000. The grass root agents consume Rs 60,000. It is not that the laborers want to pay less and directly approach the recruitment agencies in Kathmandu. Most don't mind paying extra and going through their village sub-agents because they believe that 'incase I don't get the promised job, I can come back and catch this guy.' The recruitment agencies, as a result, are often accused of charging Rs 80,000 but they do not get all the money. Government should intervene here.
Job seekers should be allowed to pay for air tickets and their recruiting clients should be encouraged to reimburse ticket money in two to three months. This way the client gets to spread this operational cost. Ticketing agencies in Nepal do not lose out on business and the amount reimbursed by the clients to the workers will return to Nepal as remittance or foreign exchange reserves. A ticket to Qatar or any Gulf Cooperation Council (GCC) country costs roughly US $300. As more than 600,000 workers fly out of Nepal on an annual basis, it would result in remittances of over US $80 million.
Smaller, problematic international clients (accused of inhuman treatment to the workers) work with similar, small recruitment agencies in Nepal. The government should increase security deposit to be maintained by recruitment agencies. The MoLE should discourage these smaller agencies from operating. This may have a domino effect and close a number of such companies infamous for labor abuse and human rights violations.
Fiscal budget of this year pledges employment for additional 50,000 workers. Annually, 550,000 people join Nepal's workforce. The government should offer some incentive or take an initiative to retain most of the remaining 500,000 workers.
The government decision to implement a free ticket and visa policy is commendable. However, it should be implemented gradually. Haphazard implementation will be detrimental to job market, domestically as well as internationally. Proper implementation of the free ticket and visa policy may just change the tide in Nepal's favor.
The author is the chief executive officer of Code International Services Pvt Ltd
Related story
Hard Rock Café celebrates its first anniversary
