Nepal labor migration trends and outlook

Labor migration has been an integral part of the livelihood of Nepalis since the sixth century, when artisans and traders from the Kathmandu valley used to travel to Tibet and India for work. Even today, foreign employment provides a huge volume of Nepali youths with employment opportunities, which has aided in the reduction of poverty. As per the National Living Standard Survey 2011, 56% of Nepali households have at least one member of their family working and living abroad. The remittances sent by these members have helped improve the standard of living of Nepali households. In 2020, the remittances sent by migrant workers amounted to 23.5% of the Nepal’s GDP. Therefore, international labor migration plays a huge role in keeping Nepal’s economy afloat.

Labor Migration Trends

As per the preliminary report of the 2021 census, 2.1 million Nepalis are abroad. While the Department of Foreign Employment (DoFE) has so far approved 110 countries as labor migration destinations for Nepalis, it is estimated that Nepalis work in as many as 172 countries. Nevertheless, Nepal’s foreign employment is concentrated in only a handful of countries: India, Qatar, Malaysia, United Arab Emirates (UAE), Saudi Arabia and Kuwait. Driven by the oil boom in the Gulf Cooperation Council (GCC) countries and shortages of labor in South East and East Asian countries like Malaysia, South Korea and Japan, migration of Nepali workers shot up in the past two decades. Looking at the trend of labor permit issuance by the DoFE, Nepal had been experiencing a steady rise in outbound migration since the 2000s. The number of labor permits issued peaked at 2013/14, reaching a high of 519,638, before continuously falling in the following years. Furthermore, due to the COVID-19 pandemic and subsequent restrictions imposed on the movement of people, only 72,081 labor permits were issued in 2020/21.

Figure 1. Labor Permits issued by DoFE

Source: Department of Foreign Employment

One of the main reasons for the decrease in issuance of labor permits after 2013/14 was the “Free Visa Free Ticket” policy introduced in June 2015, which made the employer in the destination countries liable to pay all the recruitment expenses, airfares, visa fees and medical examination fees of migrant workers. This policy especially hit the migration to Malaysia the hardest, as Malaysian employers were reluctant to bear the expenses of Nepali workers. The steep fall in labor demand from Malaysia resulted in a surge in Nepali labor supply in the GCC countries, which decreased the bargaining power of Nepali workers going to these countries. Similarly, the restrictions imposed time and again on women going abroad as domestic help heavily affected the mobility of women migrant various countries. Moreover, the existing Foreign Employment Act and Regulations has failed to incorporate the latest developments in foreign employment. The bureaucracy requiring foreign employment agencies to submit original labor demand letters, get the demands attested from the Nepali embassies in destination countries, and present numerous other documents, has made formal foreign employment procedures a hassle.

Impact of COVID-19 on the Outflow of Nepali Migrants

The outflow of migrant workers further dampened in the face of the COVID-19 pandemic. With the lockdown enforced in March 2020, the Government of Nepal completely suspended the issuance of labor permits until July 2020. This brought recruitment of migrant workers to a complete halt. Despite an increase in demand for labor from countries like Malaysia, UAE, Saudi Arabia, Romania, Jordon and Hong Kong, workers could not be deployed due to the suspension of labor permit issuance and grounding of international flights. Nevertheless, as COVID-19 restrictions were loosened and international flights resumed, labor migration got back to pre-COVID-19 levels.

Labor Migration Outlook for Nepal

While the outflow of workers from Nepal had been slowly dwindling post the 2013/14 peak, the demand for migrant workers in major destinations like the GCC countries, Malaysia, Japan and South Korea is not likely to go down in the near future. The economic outlook of these countries looks positive as their post COVID-19 recovery plans to boost economic activities seems promising along with plans for mega infrastructure projects lined up. While the rise in oil prices has aided the economic recovery of GCC countries, the non-oil sectors such as tourism, transportation, manufacturing, retail and entertainment sectors have also grown immensely in these countries. For example, in Qatar, where a huge number of Nepali migrants work, it was speculated that demand for migrants would slightly decrease after the end of the 2022 Qatar World Cup. However, Qatar still has quite a lot of projects such as the Qatar Vision 2030 and the Asian Games in 2030, that will need new infrastructure in terms of stadiums, metro and train services. Therefore, it would still require migrant labor to accomplish such projects. Similarly, the GCC countries are now aiming to reduce their dependence on oil, and are moving towards developing new sectors like tourism, manufacturing and technology. Thus, the demand for skilled migrant workers can be expected to go up. Likewise, as the workforce of Japan and South Korea ages rapidly, they would be heavily dependent on migrant labor in sectors like agriculture, manufacturing and construction, which is why opportunities for Nepali workers might increase in the future.

However, nationalist policies such as “Malaysianization”, “Kuwaitization” and “Saudization” being adopted by destination countries to reduce its need for foreign labor and help provide opportunities for locals first might slow the already dampening migration of Nepali workers in the future. Nevertheless, the amount of investment the mentioned countries are pouring into infrastructure development and other economic activities would require a large number of migrant workers, so there might still be foreign employment opportunities for Nepalis in these countries. Therefore, the demand for Nepali workers in these destinations would likely be steady in the near future.

Way forward

Although the demand for Nepali labor abroad may be steady, the lack of adequate policies to facilitate migrant workers, the existing bureaucratic bottlenecks and political deadlocks within Nepal remains a challenge. Nepal should also work on expediting Government-to-Government (G2G) labor agreements with new destination countries in order to ensure fair treatment of migrant workers along with adequate remuneration and benefits. Nepal currently only has labor agreements under the G2G model with Israel and South Korea. Likewise, the Government of Nepal also should focus on making sure that Nepali migrant workers receive the required skills and knowledge before going for foreign employment, to ensure higher paying jobs that match the skills.