A scenario that experts had long warned about is likely to soon come to pass. And it is going to overwhelm the Nepali state.
Foreign employment has played an instrumental role in keeping the Nepali economy afloat, but it was never a sustainable option. Now that the global economy is in the throes of a recession due to the Covid-19 pandemic, hundreds of thousands of Nepalis abroad are likely to lose their jobs and return home.
“The government now has the responsibility of managing the livelihoods of around 10 million people, even if we go by the estimate that one migrant worker supports a family of three,” said Govinda Nepal, an economist.
The government does not have exact data of how many Nepalis are currently employed abroad, but they estimated to number in the millions.
According to the Migration in Nepal report, there are an estimated 500,000 Nepali migrants in Malaysia, the most popular labour destination, followed by Qatar with over 400,000, Saudi Arabia 334,451, the United Arab of Emirates 224,905 and Kuwait 70,000. These five countries alone accommodate over 1.5 million Nepalis.
Although unofficial estimates also vary widely, the Nepali population in India is said to number between 3 to 4 million. A majority of Nepalis who work abroad are employed in India. But since Nepal and India share an open border, there are no official figures.
With lockdowns in place and businesses shuttered, most of these Nepalis are currently out of jobs and even when the lockdowns are relaxed, they are not likely to be employed, given the beating most economies are currently taking.
Nepal is already facing pressure to bring home at least 70,000 Nepali migrant workers from the Gulf nations, according to a report in Kantipur, the Post’s sister paper.
It’s time the government started making plans to accommodate the migrants who are likely to return home in droves, say experts, but there is little evidence that the current administration has understood the severity of the crisis that looms. Instead, it has repeatedly said that there are no immediate plans to repatriate Nepali workers from the Persian Gulf and Malaysia.
“Nepalis go abroad to work because there are no jobs in the country and we have not been able to create job opportunities,” said Yubraj Nepal, director at the Centre for Migration and International Relations, an organisation that works in labour migration policy and workers’ welfare. “We don’t know what will happen if workers return home in droves.”
A number of Gulf countries have already asked governments to take their migrant workers back, as their economies are facing contraction amid the Covid-19 pandemic.
The United Arab Emirates has even threatened countries who don’t take their citizens home with “consequences”, including blacklisting and scrapping labour relations.
Another Gulf country, Kuwait, which had swiftly offered general amnesty to all undocumented workers in a bid to encourage them to return home, also came up with a similar warning of reconsidering labour relations with countries that refuse to withdraw their citizens.
“Sooner or later, these countries are likely to send Nepali workers home,” said Nepal of the Centre for Migration and International Relations . “The prospect of Nepali workers being rehired depends on how long the impact of this crisis lingers and how they respond.”
If Nepali workers start to return home, Nepal will struggle to accommodate all of these working-age men and women. But their return will also mean that the Nepali economy will lose out on its most significant source of income.
In the last fiscal year, Nepal received Rs879 billion in remittance, which was equivalent to 26 percent of the country’s gross domestic product, according to Nepal Rastra Bank.
“Remittance inflow will certainly decrease due to lockdowns and a loss of jobs in major migrant destinations,” said Gunakar Bhatta, chief of the research division at the central bank.
The government will need to explore all channels to ensure that migrants are first taken care of and then accommodated when they return, say economists.
“The first strategy will be to make diplomatic efforts to save their existing jobs and retain as many as possible,” said Nepal. “Second, the government should create an environment for self-employment in commercial agriculture and the restaurant sector. They can also be employed in infrastructure projects and under the Prime Minister’s Employment Programme.”
The government last week formed a task force headed by National Planning Commission member Ram Kumar Phuyal to study the impact of Covid-19 on remittance and foreign employment.
“The task force will calculate the potential number of returnees and recommend measures to create alternative employment for them,” said Puspa Raj Kadel, vice-chairman of the National Planning Commission.
The task force would also begin discussions with various ministries and stakeholders to recommend measures regarding alternative employment, he said.
Bhatta of the central bank said that initial discussions on employing the returnees in agriculture and large-scale infrastructure projects have been held but the modalities have yet to be finalised.
“As the central bank, we can help returnees obtain loans at cheaper rates if they engage in entrepreneurial activities such as commercial farming,” said Bhatta. “But we have yet to hold detailed discussions with different government agencies on how to employ them in various other sectors.”
Despite agriculture being a mainstay of the country, the majority of farmers are engaged in subsistence farming and successive governments, despite promising to encourage commercial agriculture, have failed to do anything tangible.
Nonetheless, the agriculture sector continues to be the major contributor to the country’s economy—at 27 percent of the gross domestic product.
Experts have long called on governments to focus on the agriculture sector.
“With many labour migrants returning to the country due to the downturn in the global economy, there is an opportunity for Nepal,” Rameshore Khanal, a former finance secretary, told the Post last week. “The government should introduce targeted schemes for them to turn the coronavirus crisis into an opportunity to make the country self-sufficient in food production.”
Apart from absorbing returnees into the agriculture sector, the Ministry of Industry, Commerce and Supplies has formed a separate task force to prepare a special plan to develop entrepreneurship skills at the local level.
The task force, headed by Joint Secretary Pushpa Raj Shahi of the Ministry of Industry, will include representation from the ministries of federal affairs, agriculture, labour and finance as well as the Federation of Nepalese Chambers of Commerce and Industry, Confederation of Nepalese Industries and Nepal Chamber of Commerce.
Industry Secretary Chandra Ghimire said that the task force will submit its plan within the next 15 days.
“The task force will suggest what changes are required in existing entrepreneurship development projects such as Rural Enterprises and Remittance Project (Samriddhi) and Micro Enterprise Development for Poverty Alleviation and what new programmes to implement for the entrepreneurship development of returning migrant workers,” said Ghimire.
Finance Ministry officials said that necessary measures for migrant workers who return home will be taken based on the recommendations of the National Planning Commission and other agencies.
“The measures will likely be announced through the budget for the next fiscal year, to be presented next month,” said Yamlal Bhusal, joint secretary at the ministry who is overseeing economic packages for sectors affected by the Covid-19 pandemic. Earlier, the government had announced that it would employ aspiring migrant workers who were unable to go abroad under the Prime Minister’s Employment Programme, which guarantees 100 days’ employment in a year.
Hari Roka, an analyst on political and economic issues, had told the Post in a recent interview that Nepal will face difficulty in not just employing migrants who return but also in accommodating their changing lifestyles amid decreased incomes.
According to Roka, every family now owns multiple mobile phones.
“If you put Rs1,000 as monthly expenditure per mobile, expenses for phones alone will be too high for a family with decreased income,” said Roka. “While employed abroad, they have enrolled their children in expensive boarding schools, and their family members have developed the habit of spending on food, clothes and entertainment. It will be very difficult for migrant workers to sustain such lifestyles after returning home.”