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Remittance Induced Economic Growth and Development in Nepal: Is it sustainable?
Jagannath Adhikari
Nepal receives a significant amount of remittances, which has also been propping the country’s
economy. But the question generally asked is whether the economy so maintained is sustainable.
This question has become more relevant today- after the recent meltdown of economies of the
developed world (or the migrant labor receiving countries) leading to retrenchment in job
opportunities for both local and migrant laborers. This paper analyses the role of remittances in
economic development of Nepal and the possibilities to make the remittances supply sustainable.
It argues that enhancing skills of migrants, expanding the training opportunities to more number
of young people, diversifying the destinations and skills, providing the opportunities to use the
remittances in productive sectors and protecting the human rights violations of migrant workers
could lead to the sustainability of remittance-based economy of Nepal.
1.
The country’s situation and fundamental problems it faces:
Nepal has changed from an agrarian economy to service sector and remittance-dominated
economy. The agrarian or agricultural sector has remained stagnant and per capita output in this
sector has been declining. Industrial sector has also not been growing. It is rightly argued by
various studies1 that there is lack of capitalist development in both industrial and agricultural
sectors. The result of this ‘underdevelopment’ has been seen in growing unemployment and
underemployment. Apart from few new service industries like tourism, industrial development
has not taken place in real sense. The existing labor market is just incapable of absorbing around
300,000 young people that enter the market every year. This problem is said to have brought
many social and political crises including a decade long armed conflict.
Lack of employment and income in agricultural sector is also linked to globalization. The free
entry of cheap agricultural products from other countries, particularly from India, is having a
negative impact on farmers. These goods have become cheap because of large subsidy in their
countries. This is partly responsible for the slow growth in agricultural sector, particularly in
Terai region. The hill agriculture has declined rapidly because of lack of opportunities to use
comparative advantage for the products which are specific to that region. Horticulture, Nontimber forest products (NTFPs), and animal husbandry could potentially be the enterprises which
could be developed here. Again the lack of market information and the quality standard that are
required in the international market is hampering their full marketing. Whatever is being
marketed, especially the NTFPs in the form of medicinal plants, has received a relatively a small
share in the market value chain. As a result, the hill people collecting these NTFPs are not
getting significant portion of the value of these products.
The service industry includes mainly the tourism, which is growing, but is confined to certain
locations. It has also not been able to bring significant income to the poor. Until now, it has not
much pro-poor impacts and has less multiplier effects.
1
Blaikie, Piers, David Seddon and John Cameroon. 1980. Nepali in Crisis. Growth and Stagnation at the
Periphery. New Delhi: Oxford University Press. See also his revised edition in 2004 with a postscript.
The cumulative effect of all the factors mentioned above is growing unemployment and underemployment. Rural youths do not get much social value as well as income from primary
enterprises like farming and animal husbandry. On the other hand, the real cultivators do not have
access to land. As a result, they migrate either to urban areas within the country or to overseas
countries for employment.
Even though overseas employment has not been a new phenomenon in Nepal, it has taken a new
dimension nowadays. More than 200,000 Nepali move to other countries (other than India) for
employment. This has been possible due to many factors. These factors are external as well as
internal economic and political factors. But they all helped in integrating Nepal to the global
economic system and in increasing foreign labor migration and remittance for the country. The
political change that came in 1990 opened up the economy and abolished various barriers for
investment and for exploring opportunities for labor migration. People at the individual level
searched for the network to go out and maximize their income. Government’s liberal attitude
towards giving passports to its citizens helped this process greatly. Prior to 1990, it was difficult
to get the passport also, which restricted people’s movement.
Another development associated with relatively more political freedom in Nepal is the opening of
the job opportunities in overseas countries, especially in the Gulf region and Malaysia. This led to
the growth of remittances entering the country. Similarly, the development of service industry
within the country, especially the one associated with rapid urbanization, is also a new
phenomenon of these one and half decades. Because of all these changes, the structure of the
economy of the country has also changed, which is reflected in the composition of GDP. A
country considered as agrarian country just about two decades ago, now receives only about a
third of its GDP from the agriculture and allied sectors (i.e., livestock and forestry). This change
is also reflected in the household economy, which now receives more income from non-farm
sources than the farm sector. This decline in the relative contribution of agriculture in GDP has
not come about from rapid development of non-farm sector, even though there has been some
increase in the contribution of transport and communication and real estate. But this has come
about by some growth in non-farm sector, and stagnation, or in some cases decline, in the growth
in the agriculture sector. Agriculture accounted for 60 per cent of the economy in 1985 since
when Nepal took a policy of economic liberalization and deregulation of agricultural sector. It did
not benefit significantly from this policy and continues to suffer from low productivity, and low
investment. Transport and communication’s share on GDP has increased by half in a period from
2001-2006, from 8 to 12 per cent (Table 1). Finance and real estate and community and social
services have also increased, but by smaller proportions. But the rate of economic growth
declined since 2000 due mainly to political instability and conflict (Fig 1), which is also reflected
in growing unemployment within the country. As of the year 2007, the size of total labor force
(16-45 years) is about 13 million (or 55 % of the population as of 2001), which is growing by 2.6
% per year; thus some 300 thousand people enter into labor force annually. Even though the
interim three year plan (2008-2011) aims to accelerate the employment growth rates from 3.0
percent to 3.5 percent annually, there is no concrete action program to support the objectives. The
Human Development Report shows some improvement in HDI from 0.513 to 0.527; nevertheless,
Nepal has the least HDI in South Asia and 138th rank in the world.
Table 1: Sector output as percentage of GDP
Agriculture
Non-agriculture
Industry and mines
Electricity,
Gas,
Water
Construction
Business,
hotels,
restaurants
Transport,
Communications
Finance and real
estate
Community
Services
Social
2001/02
2002/03
2003/04
2004/05 2005/06 2006/07
37
37
36
35
34
33
63
64
64
65
66
67
9
9
9
8
8
8
2
2
2
2
2
2
7
7
6
7
7
6
16
16
17
16
16
15
8
8
9
9
10
12
11
11
10
12
12
12
10
11
11
11
11
12
(Source: Central Bureau of Statistics)
Fig. 1: Economic growth rate in Nepal.
Year
Source: Economic Surveys. GoN.
06
05
Growth Rate
20
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
19
Percentage Change in
Growth
Growth Rate Percentage Change
9
8
7
6
5
4
3
2
1
0
-1
1.1.
The situation regarding the foreign labor migration and remittance economy:
The decline in agricultural production (i.e., output per capita) has so far been compensated by the
growth in remittance earning. As is shown later on, a large proportion of households, especially in
the hills and mountain, now depend on external sources of income to meet food security and for
savings for investment, especially in urban area. The proportion of households depending on
remittance has grown immensely in the last decade, which coincides with opening of new
destinations for Nepali foreign labour migrants. Even the volume of migration to India for work
has increased in recent times, even though it is difficult to quantify this. The conflict, regular
drought in mid and far west Nepal and decline in farm production have all contributed as push
factors for out-migration. Nepal now receives about 16 % of its GDP from remittances, and this
contribution has been growing since the 1990s. According to NLSS survey 23.4 % households
had received remittances in 1995-06, but it increased to 31.9 % in 2003/04. This also includes
domestic remittances, which contribute about 35 % of household level remittances in Nepal.
The other form of migration is within the country migration, i.e., mainly the migration from rural
areas to urban areas and to places where development projects are being executed. Accordingly,
domestic remittance has also been significant now. For example, NLSS survey of 2003-04 has
revealed that about 23 % of all remittance is domestic remittances. Therefore, internal migration
is also of importance (Table 2).
Remittance is also one of the forms of income which directly reaches households. As a result, its
contribution at the household level is clearly seen.
Table 2: Remittance flow in Nepal in 1995/96 and 2003/04
Description
1995/96
2003/07
% households receiving remittances
23.4
31.9
Average amount of remittance per recipient household (nominal Rs)
15,160
34,698
Share of remittances (%age)
from Nepal
44.7
23.5
From India
32.9
23.2
From other countries
22.4
53.3
Share of remittance on the income of recipient households
26.6
35.4
Per capita remittance amount for all Nepal (nominal Rs)
625
2,100
Total remittances received in Nepal (nominal Rs)
12.9
billion
46.3
billion
Source: CBS, 2006. Resilience amidst Conflict. Kathmandu.
The Nepalese government has listed 107 countries where Nepalese migrant workers can
apply for official permission for jobs. Government statistics shows that every year about
0.2 million people migrate to overseas countries except India. The common destination for
the Nepalese migrant workers is Malaysia (41.8 percent) followed by Qatar (30.8
percent), Saudi Arabia (15 percent) and United Arab Emirates (10.2 percent).
Government data do not include migrants going overseas informally. Therefore, the
number of people working in foreign countries would be certainly higher than the
government data would indicate. Another study conducted for UNIFEM Nepal, shows
that 0.7 million Nepalese were in various countries in 2006. The number of people
working in India was estimated as 1.5 million. This gives that about 2.2 million2 Nepali
are working in overseas countries. This is certainly a high number. Considering that
Nepal’s population is 26 million in 2007 and 45.2 % of population belong to youth group
(15-45 years), 18.7 % of the youth population is working in foreign countries. Regarding
women, about 10 % of migrants are women. Many of the migrants (70 %) are from hills
and mountains and 75 % labour migrants are unskilled and 25 % are semi-skilled. A large
majority (80 %) of them are from 20-30 years age bracket, and 75 % are high school
drop-out.
Figure 2: Migration Trend in the Past Years (except India)
Total number of people going for Foreign Employment from
Nepal
1000000
183929
104739
105055
193803
91540
55025
27796
35543
7745
10000
3605
3259
2161
2132
100
1
1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06
Fiscal Year
Census 2001 has described ‘absentee population’ as those living in foreign countries for the past six
months. This is also considered as foreign labour migrants. According to this census, there are 0.76 million
Nepali working in foreign countries (of this 77 % work in India). The other important are Saudi Arabia,
where 67.5 thousands (8.9 % of the total) Nepali emigrants were living. The next important country was
Qatar where 244,000 Nepali were living. Of the total 82,712 women absentee population in 2001 census,
68,550 were reported to have stayed in India. The other important countries for women migrants were
Hong Kong (3,850 women), UK (1,274). Gulf States and Japan are other important countries in terms of
number of women migrants living there. Women’s concentration in Hong Kong and UK is also linked with
the British government’s recruitment of Nepali people in their armies. The ID system established in Hong
Kong for the Nepali born there when their parents were working in British armies and the system of
permitting armies to take wives there is responsible for this pattern of migration.
2
Figure 3: Workers Going for Foreign Employment by Country in 2006 (except India)
19
71
5
59
77
6
29
15
8
80
92
6
1000000
11
7
22
6
20
1
70
8
75
9
78
7
25
0
100
3
2
3
20
15
44
Number of people
10
93
10000
M
al
ay
sia
Q
a
ta
Sa
ud r
iA
ra
b
U
.A
.E
K
uw
a
S. it
K
or
Ba ea
ha
ra
in
Is
re
al
M
H aka
on
o
g
K
on
g
Ru
ss
ia
O
m
an
U
.S
A
.A
fg
.
an
ist
ha
n
M
al
di
ve
s
Sy
p
N
ew rus
ze
ala
nd
Si
se
ls
a
1
Name s of countrie s
Source: Department of Labour and Employment Promotion
Fig 4: %age of Nepali workers who got final approval from government to go overseas for
employment by region.
Source: Adhikari and Suwal, 2007. Foreign Labour Migration in Nepal. Institutional Perspectives
(draft report).
On the question of how much remittances would enter Nepal, there are different estimates which
give slightly different pictures. The estimates range from Rs 65.54 billion to Rs 129 billion in a
year.
As per the government estimates, the contribution of remittances in GDP of the country is
increasing consistently. It was estimated that 11.67 % of GDP came from remittances in
1999-2000, which increased to 15.34 % in 2004-05. In terms of volume, it increased from
nearly Rs. 36.81 billion in 1999-2000 to Rs. 65.54 billion in 2004-05 (Table 3). Similarly,
Nepal received slightly more than Rs 129.2 billion in 2005-06 (NRB source). These
estimates also include remittances from India, even though it is hard to estimate that.
As per NLSS (2004), percentage of the households receiving remittances has increased
from 23 percent in 1995/96 to 32 percent in 2003/04. Average amount received (only
those of remitting receiving households) also doubled in nominal terms in the same
period (from Rs.15,160 to Rs. 34,698). It is also interesting that about 35 percent of all
households' (of only those receiving remittances) income comes from remittance earnings
within Nepal, and the rest 65 % comes from foreign remittances.
Using NLSS data, World Bank, DFID and ADB team further made analysis on impact of
remittance on poverty. From the analysis they have come to conclusion that the poverty
level of Nepal3 has reduced from 41.76 to 30.85 percent from 1995-96 to 2003-04. But
the question is how much is contributed by the remittance? The study concluded that
poverty would have declined by 4.8 percent instead of the observed 10.9 percentage point
if the amount of remittances had remained unchanged between 1995-96 and 2003-04.
Table 3: Government Estimates of Remittance (Rs. billion)
Items
1999-00
2000-01
Remittance
36.81
47.22
Pensions
5.94
6.31
Total
42.76
53.52
GDP
366.25
394.05
Remittance
11.67
13.60
as % of GDP
Source: GoN-Economic Survey 2005-06.
2001-02
47.54
8.27
55.81
406.14
13.74
2002-03
54.20
7.32
61.52
437.54
14.06
2003-04
58.59
7.90
65.49
474.91
13.78
2004-05
65.54
12.50
78.04
508.65
15.34
Gender dimension of migration:
Among the migrants, a large majority is male. But in recent times, the number of women migrant
workers is also increasing. But again it is difficult to exactly quantify this increase. This becomes
particularly complicated when we compare official and non-official information. For example,
the Department of Labour recorded that only 161 women had been abroad for work in a period
between 1985 to 2001. But various research studies suggested that about 12,000 Nepali women
are working as domestic labour in foreign countries except India. In recent times, 10 % of the
3
Average per capita annual income of Rs. 7696 is taken as the national poverty line
labor migrants (except India) are female. This does not include the women who have been
trafficked to India and other countries. This type of migration is not considered as labor migration
here. But it also happen that labor migration and trafficking overlap to a certain degree. There is a
growing concern that migration through informal channel and due to various violations of human
rights in the point of destination, migrant women also force these women into trafficking. There
is also controversy as to the number of trafficked women. The estimates range from as low as
25,000 to 250,000.
Analysis of absentee population as recorded in the census of 2001 by gender shows some
interesting features. Overall 10.8 % of the absentee population were women. But a large number
of women seem to go to India. About 83 % of the women absentee population stayed in India,
and only 17 % of them went to other countries. This means that about 14,000 women have gone
to the countries other than India. Various estimates claim that at least 8,000-10,000 women are
working in Gulf countries alone. But the census report reveals that only about 2,000 women are
working in Gulf. Most of the women migrants (other than in India) are shown in Hong Kong,
USA-Canada and UK. Therefore, there seems to be some inconsistency in data from various
sources.
A study conducted by NIDS4 in 2002 revealed that, in total, 696,965 Nepali citizens were found
to work in different countries (excluding India). Of these, 4.95 % were women, and 95.05 % were
males. This shows that proportion of women migrants is small in comparison to that of males. In
total about 34,500 Nepali women were found to work as foreign migrant workers.
There seems to be a marked difference in the major destination countries for males and women.
While a majority of women seems to have gone mainly to high paying countries like Hong Kong
(43.5 %), UK (11.6 %), USA (8.7 %), Japan (8.7 %) and Australia (5.8 %), overwhelming
proportion of males seems to have gone to Gulf countries. About 43.9 % males have gone to
Saudi Arabia, 12.8 % to Malaysia, 12 % to Qatar, 9.0 % to UAE, 6.8 % to Hong Kong and 3.2 %
to UK. About 70 % of male migrants have gone to Gulf countries. But as the number of male
migrants is extremely large as compared to female migrants, the absolute number of male
migrants is higher in all the countries.
Another significant change regarding women's migration is that their flow to USA, UK and
Australia have increased in recent times, whereas it was said by the experienced persons in Japan
that number of women migrants there has remained more or less constant over the last decade.
From the household survey conducted, it was revealed that a woman could save about Rs 26
thousand in a month while on the job in foreign countries. As women have gone to high paying
countries in large proportions (mainly to Hong Kong), their monthly remittances naturally tend to
be high. In total it was estimated that they had brought Rs 10.8 billion as remittances to Nepal in
2002. Of the total estimated 1.5 million in Nepali in India, 11.6% (174,000 women) are female.
Remittance from them was estimated at Rs 2 billion in 2002.
1.2. Labor migration, livelihood diversification and security: the role of remittances:
The decline in production at the household level and domestic income opportunities crating
exchange entitlements to food has been declining. This was also one of the reasons for increased
participation in out-migration to foreign countries to generate income to buy foods and other non4
UNIFEM and NIDS (Nepal Institute of Development Studies). 2006. Women Migration in Nepal.
Kathmandu: UNIFEM and NIDS.
food necessities that are not produced locally. It has been seen from various research that one of
main reasons to migrate is to meet food deficits at household level, i.e., to complement the
number of months that the local farm economy would meet the food requirements. This is
particularly so in case of seasonal and temporary migration to India that takes place as a regular
phenomenon in far and mid west Nepal. Almost 70 to 90 % households take part in this type of
migration. The migration as a ‘saving strategy’ is more common in the west central Nepal from
where migration to countries like Gulf countries, Japan, Hong Kong, Malaysia and other western
countries takes place. But there is also a large proportion of population from this region which
also migrates to augment food security at the household level.
Because of poverty and low income, on average, about 60 per cent of the incomes are spent on
basic foods like rice, maize and wheat. Therefore incidence of poverty is highly sensitive to the
changes in economic availability of these foodgrains. With the recent rice in food prices, the
incidence of poverty is estimated to reach about 50 %. There has been a rise in price of basic food
stuffs by about 25 % in the four months period from January to April 2008 without any
perceptible change in wage rates and decline in job opportunities. As the poorer households spend
more than 75 % of their income on food, they must have dropped below the poverty line5.
At present, it is estimated that a farm household spends on land less than 3 per cent of its income.
This investment pattern is unlikely to increase the production and productivity of land. Therefore,
food self-sufficiency at the household level or even at community, district or national levels is a
far cry unless government comes up with a policy that helps households to invest on land.
Therefore, the shortfall in domestic production/productivity was the major cause of food
insufficiency. The current growth rate in agricultural productivity is estimated to be a meager 0.4
per cent. This means that household should look for alternative source of income for food
security. Foreign labour migration and remittance is now providing this alternative and
increasingly households are resorting to this strategy. In this strategy, it is necessary that there is
availability of food in the market – formal or informal.
Despite people’s own initiative to meet food security by emphasizing the income from
remittances, the situation of food security is far from adequate. There is still a high percentage of
children who are malnourished. This is mainly so in the hills and mountain regions. There are
also malnutrition problems within Terai also, which is related to discriminations and lack of
resources to a certain section of society (see Table 4).
Table 4: Poverty, Stunting, and underweight problems by geographical and development regions
of Nepal.
Poverty Having
Stunting by age
Underweight by Stunting by height
rate
less than Children less than age children less Children less than
(%)
minimum 5 year (%)
than 5 year (%)
5 year (%)
Region
calorie
intake
%
2001/02 2006/07 2001/02 2006/07 2001/02 2006/07
Nepal
30.8
39.9
50.4
49.3
45.2
38.6
9.6
12.6
Geographical
Mountain
32.6
45.2
61.4
62.3
45.1
42.4
5.3
9.4
Hill
34.5
41.8
52.4
50.3
41.4
33.2
5.9
8.4
5
Adhikari, J. 2008. Food Crisis: How the Country Feeds its Poor. The Himalayan Times. May 1, 2008. P.
4.
Terai
27.6
37.4
47.3
46.3
48.4
42.3
13.3
16.6
Development
Eastern
29.3
37.6
47.6
40.3
43.4
32.9
9.1
10.1
Central
27.1
39.9
50.0
50.0
44.7
38.2
10.8
13.8
Western
27.1
37.2
50.1
50.4
43.4
38.5
8.9
10.9
Mid-western 44.8
44.3
53.9
57.9
49.0
43.4
8.8
11.6
Far-western
41.0
44.9
54.0
52.5
48.9
43.7
8.8
16.7
Source: CBS, WFP, WB. 2006. Small Area Estimates of Poverty, Calorie Intake and
Malnutrition in Nepal. Kathmandu: USAID, New Era, MoHP, 2007. Nepal Demographic and
Health Survey, 2006. Kathmandu
To understand the role of remittances or non-farm income and its impact on livelihood
diversification for different groups of people, study was conducted as a continuation of an earlier
study conducted in 1990 by the author in two neighbouring villages in central Nepal (Lachok-Riban
villages of Kaski District). The major findings of studies conducted by the author in other villages to
examine the livelihood strategies are also presented here to illustrate the changing livelihood securing
mechanisms of the people6.
The earlier study of 1990 revealed that off-farm income contributed about 37 % to the household
income and provided about 30 % of the total employment days undertaken by the households.
Therefore, in general, off-farm employment was more remunerative than farm employment
within the village. But there was a wide variation in the contribution of this source of income and
its remuneration across different ethnic groups7, which also roughly correlated with the wealth
class. The members of the 'dalit' group derived only 9.1 % of their income from off-farm income,
even though they spent 32 % of their employment days. This had happened mainly because they
did not remunerative job in non-farm sector. Their wage employment within village was more
remunerative than their employment in non-farm sector away from home. Gurung households
derived as much as 60 % of their income from off-farm sector. About 75 % of the cash income of
the villages came from off-farm sector, mainly remittances.
A study8 was carried out in the same study area in 1999 (Table 5) to examine the access of
different groups of households to non-farm jobs. The households of the village were first ranked
on the basis of wealth ranking exercise using local key informants. Then their access to non-farm
jobs was examined. The study reveals that the distribution of off-farm and non-farm employment
is very much skewed in favour of the wealthier classes. It is clear from the study that
proportionately more households from wealthier classes were involved in foreign jobs (see Table
5). As for employment within Nepal, the same trend as with employment in foreign countries was
observed. In fact, domestic jobs seemed even more unequally distributed in favour of richer
classes than the foreign jobs.
6
See also, Adhikari, J. 1996. The Beginnings of Agrarian Change. A Case Study in Central Nepal. Kathmandu: TM
Publications.
7 The study area consisted four main ethnic/caste groups – Brahmins, Chettris, Gurungs and members of the
Occupational Caste. Nepali society is a caste-based (Hindu) society, under which belong Brahmins, Chettris and
members of the Occupational Caste or 'dalits' who occupy the lowest position in caste hierarchy. The wealth position of
various caste groups also roughly correlates with caste status. But it is also important to recognize the fact that there are
also poorer households in the higher caste groups. There are also various ethnic groups (eg. Gurung), which do not
belong to caste hierarchy.
8 See, Seddon David, Jagannath Adhikari and Ganesh Gurung. 2001. The New Lahures. Foreign Employment and
Remittance Economy of Nepal. Kathmandu: NIDS.
Table 5: Class and employment in foreign lands and within the country (number of households,
number of people) in Lachok VDC (as of January, 1999).
Class
Class
A
(poorest)
Class B
Class C
Class D
Class E
Class F
Class G
Class H
Class I
Class
J
(wealthiest)
Total
Household
population
Total
Households
People
1 (.4)
1 (0.3)
4 (2.5)
9 (5.5)
9 (5.5)
6 (3.7)
14 (8.6)
26 (16.0)
26 (16.0)
23 (14.2)
40 (24.7)
8 (2.8)
12 (4.3)
23 (8.2)
23 (8.2)
32 (11.4)
46 (16.4)
42 (14.9)
39 (13.9)
55 (19.6)
9 (2.9)
14 (4.0)
24 (6.9)
25 (7.2)
42 (12.0)
53 (15.2)
50 (14.4)
54 (15.5)
76 (21.8)
162 (100.0)
281 (100.0)
348 (100.0)
63 (10.0)
Employ. in
Households
-
Foreignlands
People
-
Employ. in
Households
1 (0.8)
Own country
People
1 (0.6)
63 (10.0)
63 (10.0)
63 (10.0)
63 (10.0)
63 (10.0)
63 (10.0)
63 (10.0)
63 (10.0)
63 (10.0)
4 (2.7)
5 (3.3)
14 (9.3)
17 (11.3)
22 (14.7)
23 (15.3)
18 (12.0)
22 (14.7)
25 (16.7)
5 (2.7)
5 (2.7)
14 (7.5)
19 (10.2)
28 (15.1)
27 (14.5)
21 (11.3)
31 (16.7)
36 (19.4)
4 (3.1)
6 (4.6)
9 (6.9)
6 (4.6)
10 (7.6)
23 (17.5)
24 (18.3)
17 (13.0)
30 (22.9)
630 (100.0)
150 (100.0)
186 (100.0)
131 (100.0)
Source: Household survey, 1999. Figures in brackets are percentages.
Study conducted in remote villages of Kaski district (Siding and Karuwa-Kapuche) in 1997 revealed
that survival strategies are even more diversified to supplement the income from their farming which
was of marginal type (Tables 6 and 7)9. Food sufficiency of households in these remote villages is
significantly lower. The remittances and labour migration in these villages as well as in other villages
have played a catalytic role in diversifying the livelihood strategies of the households. Various
strategies followed by households in these two marginal villages are illustrated in Tables 6 and 7.
Wage labour within the villages and in other villages, particularly those villages having high access
to labour migration, is the main strategy in both villages. These strategies included using forest
resource for making products required in the town or in other low-lying villages. Using the
comparative advantage of availability of firewood in making alcohol from grain received from lowlying villages, and then selling the product there is yet another strategy of living. Another important
strategy was raising the animals, mainly buffaloes, and selling it in low-lying villages, which sell
milk and milk products to Pokhara town.
Table 6: Livelihood Strategies of households (to fulfil food deficit) and resources required in Siding
village, 1996. Sample size 28 households.
Strategies (in sequence) (Location)
 wage labour (R – U)
 animal husbandry (R-U)
 service (abroad) (U)
 selling bamboo products (R-U)
 weaving nettle fibre clothes (R)
 service Nepal (U)
 selling potato (R-U)
 Selling forest vegetables (U)
 loan (R-U)
 business (R)
9
Rank 1
10
5
2
2
2
1
1
1
Rank 2
1
10
1
1
1
2
1
-
Rank 3
1
-
Resources required
family labour
forest, land and labour
labour
forest, labour
labour, forest
labour
labour
labour, forest
household asset
labour, capital
Adhikari, Jagannath and Hans-Georg Bohle. 1999. Food Crisis in Nepal. How Mountain Farmers Cope.
New Delhi: Adroit Publishers.
1
labour
 carpentry (R)
1
labour
 barter-exchange (R)
(preference ranking and multiple choice possible, Source: household survey, 1996).
Table 7: Livelihood Strategies of households (to fulfil food deficit) and resources required in
Karuwa-Kapuche village, 1996. (sample size 17 households)
Strategies (in sequence) (Location)
Rank 1
Rank 2 Rank 3 Resources needed
11
3
1
family labour
 wage employment (U)
2
2
2
skill,
firewood,
 business (alcohol production and
labour
selling) (R)
1
6
forest
 selling bamboo products (R-U)
2
2
labour, forest, land
 animal husbandry (R-U)
2
labour
 temporary migration (U)
2
forest, labour
 Selling forest vegetables
1
skill
 carpentry (R)
1
forest
 selling timber (U)
(preference ranking and multiple choice possible, Source: household survey, 1996).
2.
Problems associated with labor migration and their causes:
Now that labor migration and remittances have become part of the social and economic life of the
country as well as its citizens. But this sector is not without problems and there are several causes
for that. These problems can be categorized as follows.
i). Cheatings in recruitments:
Every day the cases of cheatings are reported in newspapers. But again it is difficult to know how
many people are cheated and how much money is involved. According to official information, in
the year 2006, the number of individual fraud complaints had reached 812, and the amount for the
individual complaint alone was Nepalese Rupees 359,079,610. But many of the cases are not
reported. This is linked to access to information and people’s inability to find the right or legal
recruitment agencies. The potential migrants’ unawareness about the procedure is also a cause for
this. There are gangs of informal recruitment agencies which take advantage of the innocence of
these people.
ii). Problems with regard to low wages and unpaid work:
Usually the laborers do not get the wages stipulated in the contract papers. Many cases of this
condition have been reported in Nepal. Wage rates of the migrant workers are usually low, and,
on the top of that, the laborers are not paid with the pre-contracted wage rates. The illegal
workers are the most exploited lot. Their various rights are curtailed by taking advantage of their
illegal and vulnerable position. They are paid the least amount of wage rates possible. Migrants
returning from Japan reveal that they get at the most 25 % of the wages given to a Japanese
citizen for the same kind of work. This cheapness in the wage rates encourages the owners to
employ illegal migrant workers. The usual complaint of the laborers is that they are not paid for
some initial periods, which range from 2 months to 6 months.
Nepalese are reported to get low wages as compared to their counterparts from other countries in
South Asia. This is linked to skills and education. About 75 % of the migrants from Nepal are
unskilled, and the rest are semi-skilled. There is also a growing trend of migration of skilled
persons from Nepal, but its volume is insignificant as compared to that of unskilled migrants.
iii). Violations of human rights of the foreign labor workers:
Nepali migrant workers suffer from various human rights violations. Among these, some of the
common are:









Long working hours
There are no holidays
Protests cannot be organized
Returning the labor without compensating for the remaining time period of work
No protection regarding the work-related accidents10
Poor working and living conditions11
No insurance and rescue during accidents and deaths12
Victimization of laborers without legal recourse13
Sexual exploitation and harassment14
10
There are often no protections for the laborers in case industrial accidents occur. These victims are just then returned to Nepal.
Only in cases where employers are kind enough, the victims get medical treatment. Several Nepali migrant workers returned from
Japan, Korea, Gulf countries and India have lost different parts of the body due to occupational hazard. A group of Nepali migrant
workers returned from Korea, physically handicap due to occupational hazard, have registered the case in Korean court. But obtaining
compensation from the employers is almost rare. The migrant laborers are often prone to these accidents because of psychological
stress arising from staying away from the family and friends, new working environment with new technology, and fatigue arising from
the long working hours and worse working environment. This is especially for the illegal workers, who are often afraid to come out
and mix up with the society.
11
Migrant workers are often made to work in poor working environment. They have to work in unhygienic and risky environments
for a long time. The peculiar symbolism expressed in 3D (dirty, degrading and dangerous) to describe the work and working
conditions of migrant labor sheds light on this aspect. Similarly migrants labor often end up living in dirty and difficult environment.
Because of high cost of living, and low wage rates, they cannot afford a proper accommodation. They often live in places which are
not suitable for decent human living. Their accommodation often does not heating and cooling system, and do not have proper
ventilation and aeration system. They often a single room with a large number of friends.
12
How many die in foreign land, it is uncertain. In 2007, it is about 750 people. In 2006, it was 550. In 2005, it was 424. In 2007,
about 300 died in Saudi Arabia, 251 in Malaysia, 153 in Qatar, and 49 in UAE. Poor working condition (like working in hot climate
and sleeping in cold room, fatigue, wrong food habit, inability to cope with new and modern life and unfamiliarity with new gadgets
etc are the causes of death. The employer also makes a case that death in work place is a suicide.
13
Migrant laborers are victimized often if any illegal or crime related events occur in the society. Recently, then there was a brawl
between workers from Africa, a large number of Nepali laborers were also returned. 62 Nepali workers were sent back to Nepal
without any probing and consultation. Illegal migrant workers are the most vulnerable in this regard. These migrants have also put
behind the bars without legal recourse. Spotlight Magazine (7-13 June, 2002) reports that about 1,000 Nepalese are serving jail terms
in different parts of the world. The employers generally keep the passports and other documents with them. This is done to keep the
workers tied to their companies. Even in cases where workers want to go home, they cannot do so because they lack passports. In such
case, they were to leave the company, police would treat them as the person without valid documents.
14
Women usually face problems of sexual harassment in the work. Usually women go abroad as domestic helpers, but they are not
trained in the modern house-keeping and are not familiar with modern kitchen and household equipment. This creates them a problem.
At work, their general problems are that they face verbal abuse, beating and impounding of passports, long and irregular working
hours, threat and mental harassment from employers, lack of support and supporting agencies at the destination.
Even though most women migrant worker s take up domestic work in the Gulf and south and south east Asia, there is no bilateral
agreements between governments. As a result these migrant women are not protected in terms of insurance, access to health facilities,
provident fund and weekend leaves. This is also very much applicable in all the Gulf countries as well. Nepal has signed nine


Employing in a different than the pre-agreed work
Lack of respect to religious and cultural practices of migrant labor
iv). Difficulties in reintegration in the society:
This is especially the case with women migrants returning from India and Gulf countries. But
women returning from developed countries have some respect in the society.
v). Income is used for consumption only - needing regular migration:
Even there are no detailed studies on the investment pattern of remittances. The knowledge
generated so far reveals that a larger part of remittances, especially earned by those from lower
middle and middle class is spent on daily consumption needs, i.e., buying food, non-food
essentials like clothes and household utensils, and for education and health services. These are the
livelihood necessities, and are also considered as productive investment. A healthy and educated
citizen that comes out of this investment is also good for the society. But the question comes as to
if the all remittance money is spent in these areas, then what will happen if the remittance stops.
Usually there is also a problem in this regard because it calls for a continuous migration.
Therefore, remittances can lead to sustained development or improvement of livelihoods if there
are ways that remittance once earned is invested in things that can also generate income in future.
Usually many remittance earners in Nepal (mainly those who spend 3-4 years in Gulf states) do
not generate ‘enough savings’ to be used in future. Migration for them is a ‘survival strategy’.
This has resulted in either their returning to the original condition in the village or returning to the
same or other destination for work.
Those migrants who have gone out with the ‘saving strategy’, especially those who go to Europe,
North America, Australia, or Southeast Asia including Japan, do generate a large savings. Their
number is very small and usually only wealthy people are able to do that. As this migration
requires a large sum of money, only wealthy persons have been able to do that. These migrants
have a tendency to invest in ‘real estate’, ‘land speculation’, and in service industry like hotel and
restaurants. Their investment has also been in the rapid urbanization and in generating some
employment opportunities for others. But during the conflict and even now, a large part of this
income has been going to other countries, especially India and UK. There is a huge capital flight
to India. Last year about Rs 5 billion went back to UK because of permanent migration of people
who worked in British army to UK.
Usually migrants complain that they do not have investment opportunities in Nepal. As a result,
they tend to invest in land and housing. This has resulted in the rapid increase in the price of land
in urban areas and smaller market towns.
vii). High cost of migration:
international conventions so far which protects domestic workers from different vulnerabilities. But these conventions are not
effectively implemented.
Moreover, in the Gulf countries, domestic workers are vulnerable to HIV due to rape and in India they are vulnerable to it because
mostly wives are left in the native homes and there is easy assess to Commercial Sex Workers (CSW). No studies have been
conducted so far to know the HIV rates among those who return from Gulf countries. JICA team found fifty percent of the migrant
workers were HIV positive in far west Nepal (Dr. Zimba et all 2001). Sexual exploitation and harassment are common problems
especially for women (discussed above). But increasingly, it has also become clear that male workers are also sexually exploited.
Harassment is also a result of lack of communication and understanding of different cultural norms and patterns.
The cost of migration is high. It can be reduced through efficient and transparent bureaucratic
process, efficient financial service like low interest rate.
viii). High cost of remitting money:
Lack of banking opportunities and difficulties in accessing the formal channels is also a problem.
Now opportunities to send money through formal channels are growing but the cost of remitting
money through these channels are high. On the other hand, the traditional system (Hundi) is risky
even though it could be slightly cheaper. The flow of money through the formal channel has been
growing and there are networks even in rural areas. But it needs to be expanded and cheaper.
ix). Negative consequences of migration:
Apart from the problems that migrants face, which have been described above, there are also
negative consequences of migration, which adversely affect the society as well the migrants’
families and migrants themselves. These problems include:



Shortage of labor in villages and decline in farming and village enterprises.
Disintegration of family life.
Risks from HIV/AIDS, TB and other diseases
Agricultural sector, especially in the hills, has been adversely affected by migration of male. This
has increased the wage rates, to some extent, especially for the male laborer, but the general
tendency is to give up farming. This has also led to conversion of farm into plantations. In many
places, land has not been managed effectively leading to erosion and landslides. The burden of
work is largely carried out my women and elderly people. The increased responsibility to manage
the household affairs and farm in the absence of adult male members could be taken as an
opportunity for women’s empowerment, but women face more problems.
A tendency in disintegration of families of the migrants is seen. The elderly people are left behind
in villages. There is growing tension between husband and wife. Even though, remittances help
children to go to private schools, their education seems to suffer because of someone to look after
them. Until now, the social network is responsible to look after the children if husband and wife
work outside the home, but problems are seen nowadays especially when women migrate.
The increased risks because of introduction of new diseases are causing havoc. This takes place
because of lack of awareness about the diseases. Particularly, people in mid west and far west
Nepal suffer from the risks of HIV/AIDS and other diseases.
Causes of the problems:
Of the various causes the following are the important causes for the above problems:
1. State’s relative lack of interest:
Foreign labor migration has generally been not emphasized by the state. State generally ignored
its responsibilities to promote the interest of its citizens who wanted to go out for work. This was
more so in the past, especially before 1990. But when government realized that a large amount of
money has been coming as remittance income, government started to show some interest in this
area. But it has not yet acted up to the expected level. For example, it had a policy of appointing a
labor attaché in countries where more than 5,000 Nepali work. But this was not implemented. The
diplomatic missions in foreign countries are not geared towards protecting the interest of Nepali
migrants. Until the recent past, migrant laborers were not proper attention even in the embassies.
Diplomatic corps stationed there had no interest in finding the labor market for the Nepali
citizens. A lot could have been done through these state apparatus for the promotion of market for
laborers from Nepal. For example, having proper MOUs or agreements at the state level between
labor receiving and labor sending countries help greatly in safeguarding the interest of Nepali
workers, and finding the new areas for the employment of Nepali laborers.
2. Governance (including enforcement of rules and law) problem:
In the recent past (say in the last 7-8 years) government has shown concerns for the protection of
the interest of Nepali migrants and has also devised policies for increasing the benefits through
more skill training. But the problem is that these rules and policies are not enforced. There is a
high level of corruption in this sector. Foreign Employment section has become what is known as
another ‘bhansar’ or the ‘income-tax’ office, which is traditionally considered as a highly corrupt
place and a place for making money for the officials.
A large number of Nepali suffers from the cheating from the Recruitment Agencies (RAs). At
present there are more than 800 such RAs, and until now licenses of 117 RAs have been
cancelled from the government. But there is a big problem as to how to make these RAs
accountable and responsible. Many of the problems of migrants stated above come from the
cheatings from these RAs, which knowingly or through ignorance put migrants at risk.
Government is not able to enforce the rule, monitor these RAs regularly and bring them to book if
they default. The New Foreign Labor Employment Act 2007 has positive points in terms of
protecting the laborers, but the question is its lack of enforcement.
Involvement of informal RAs is mainly responsible for whatever problems we have seen in this
sector, especially in the protection of their rights. It is the illegal (which are now better called
irregular migrants) migrants who suffer from violations of various human and labor rights. There
is no mechanism or seriousness on the part of government to bring them to formal channels. Once
they are brought into formal channel, they become accountable for their wrongful action.
Government lack of enforcement is also seen in other areas like providing adequate training
opportunities and quality control. The trainings provided are not adequate. A laborer has to
undergo ‘orientation’ training before departing. This is meant to increase his/her awareness about
the job and the possible problems. But the certificates are just distributed without classes. The
owners of the private training institutes have links with government officials. The later overlooks
the wrong doing of the former if bribes are provided.
3. Lack of consultative process in the formulation of policies and regulations:
There is often opposition to government’s regulations from related stakeholders. For example,
Recruitment Agencies have been opposing the new regulation. This situation should not have
arisen if the migrant workers, civil society and RAs have sit together and discuss about an
agreeable solution. Government is not generally geared towards this. As a result, there is always a
tendency to bypass the regulation.
4. Investment for awareness of safe migration opportunities and enhancement of skills is
low:
It is true that government cannot stop or put barriers for those who want to go out for work. But it
has a responsibility to provide full information about the opportunities and possible problems.
This is especially true in case of women migrants, whose exploitation often raise hue and cry in
the media. This has also been taken as excuse for stopping them from migration. Similarly, many
others, including male workers, have been languishing in jails and have ruined their lives through
cheatings and other problems. Given this problem, government is needed to work vigorously for
creating awareness among the people about the problems and opportunities. Similarly, it needs to
invest more in promoting the skills of its workers, so that they get more pay and facilities.
5. Nepal’s inability to sign UN Convention on the Rights of Migrant Labourers and their
Families.
6. Government inability to act in diversifying the destination countries and in creating
opportunities for Nepali migrants in a business-like manner.
7. Lack of counseling centers to give advice to migrants regarding the reintegration and
investment opportunities.
8. Lack of incentives to invest remittances in productive sectors.
9. Lack of opportunities to promote public-private partnership in migration.
3.
What can be done to solve the problems:
As discussed above, there are both positive and negative impacts of migration. At present,
country cannot develop just by looking inwards, and it needs to take the opportunities brought
about by the globalization process. Therefore, so far as possible all the opportunities for economic
growth needs to be tapped, and migration is certainly one. Government has realized this because
it has seen that poverty reduction has been possible because of remittances. It has also brought
out a new foreign labor migration Act, which is primarily aimed at protecting the labor migrants
and in decentralizing the migration process, which is a positive step.
A major thing is to make this sector of economy sustainable. This also calls for making the
domestic economy strong through investment of remittances in the productive sector of the
economy. It is commonly said that if the contribution of remittances is more than 25 % of the
GDP, the country will have difficult time in absorbing the socks of decline in migration.
Therefore, building the domestic economy as well as diversifying the destinations and enhancing
the skills of migrants could help in making this sector sustainable. At present, Nepal’s domestic
economy is very weak and there are growing concerns as to what will happen if all Nepali
working abroad return home because of global recession. But until now, a major adverse impact
is not seen, but it is a worrying matter. Moreover, increasing the training opportunities would help
to fulfill the domestic shortage of skilled laborers (like nurses) which are demanded in foreign
countries. Similarly reducing the cost of migration, and increasing the awareness about the
causes and prevention measures of HIV/AIDS and other diseases is also important.
Some of the specific tasks that different stakeholders need to follow in order to solve the
problems discussed above are outlined as below. Some of the tasks are of crucial nature than
others and government has more role as compared to others. Protection of laborers should be the
prime role of the government, and its new act (2007) is in this direction. It needs to implement it
seriously, which will also help in reducing the frauds and cheating of potential migrants.
1. For Government:
Social protection at the place of work:








Government should develop a database of the labor migrants with their contact address.
Government should also develop a contact place in case of emergency
Labor attaché or other representatives to work on behalf of government (which can at least
inform the emergency cases to government) should be appointed as soon as possible. Even
some established and known persons in these countries can be given the responsibility to
pass emergency messages to government.
Government may help to develop a 'fund' (insurance) for the security of the foreign labor
migrants involving recruitment agencies, migrants and civil society (this has been done in
recent Act, but needs to be implemented effectively).
Government through diplomatic means encourage labor importing countries to implement
international labor laws safeguarding migrant labor's rights and security.
Migrant laborers should not be given hassles at the airport and immigration when they
embark for work or return home.
Diplomatic Missions should also show concerns towards migrant workers and keep their
data and attend to their complaints.
Should help in the ratification of covenants related to labor by Nepal as well as major
destination countries for Nepali migrants.
ILO Convention on the Protection of the Rights of All Migrant Workers and Members of
Their Families (1990) needs to be ratified. Ratification and compliance of which will do
away with much discrimination migrant workers face.
Demand management:



Government through diplomatic channels should ask for opportunities for employment for
Nepali workers. From past experiences it is seen that a small step taken by the government
would help in creating more opportunities for Nepali citizens.
Government should take pro-active role in finding employment opportunities abroad. It
should explore opportunities in new countries so that foreign labor migration can be
diversified which is in the country's interest. Single market can suffer, but diversified market
can be more sustainable.
Opportunities created through government efforts can also be selectively channeled towards
the poor and socially excluded women or to those women suffering from 'people's war'.
Increasing the capacity of migrants:


Government should help in increasing the capacity of potential migrants by providing
trainings, education, orientation and the like. These programs should be tailored according to
the needs in the labor importing countries. These needs should be identified and then
accordingly the training programs should be organized. Improvement in skills would
increase the salary of workers up to 3-4 times.
Migrant laborers should be made aware of their rights and responsibilities.
Making Banking friendly to migrant laborers for obtaining loans and for safe, easy and low cost
transfer of money:




Develop a system of obtaining cheap loans by poorer migrant laborers.
Develop safe and cheaper remitting system.
Formulate schemes for investment of remittances so that they are used productively.
Dissemination about bank's facilities on loan, investments and productive use of money.
Providing a channel for information and for local recruitment of laborers:
 Local political bodies like DDC and VDC should also be given responsibility in
providing information about foreign labor migration.
 Opening of recruitment agencies and their branches at the local level (recent Act has
allowed opening branches of recruitment agencies outside Kathmandu).
Regulating Recruitment Agencies (RA):




Help in developing a 'code of conduct' for RAs about the fee, time requirement, refund,
responsibility and the like. Monitor the code of conduct with the help of Recruiting Agencies
Associations.
Develop links between RAs, training organizations and skill required in the destination
(labor demanding) countries.
Make RAs aware of the international labor standards, rules and agreements.
RAs should also be provided with incentives to increase quotas for socially excluded groups.
2. For NGO and Civil society:






Help to advocate equity in participation in foreign labor migration by encouraging and
providing support to the poor and marginalized people to take up foreign labor employment.
Monitor the trends in foreign employment opportunities and monitor the Nepali workers'
status and problems.
Create awareness about the problems and benefits of foreign labor migration and the best
practices to cope with or solve the problems.
Conducting action-oriented research and maintaining data bank on migrant workers.
Net-working with NGOs/civil societies in the destination countries. These networkings can
prove useful for the protection of migrant labor also.
NGOs can also help in effective reintegration of migrants into the society through
awareness raising activities.
3. For Trade Unions:




Develop networking with trade unions established in labor demanding countries. These trade
unions can be requested to force for labor rights in their country even for the foreign migrant
workers.
Involve in the formulation of foreign employment policies.
Develop network of the returned migrant workers and arrange to meet them regularly.
Ensure that labor rights are respected even in their own country and in host countries.

Exchange information between the trade unions of different countries about labor standards,
rights and abuses.
Create awareness among those laborers aspiring to go out.
Provide information to foreign migrant workers about the contacts with trade unions in the
country of destination.


4. ILO/UN Agencies:




Advocacy for positive discrimination of women on job and other opportunities.
Help develop networking of related agencies across national borders for social
protection of labor.
Lobby for ratification of international instruments related to migrant labor so that their
rights are protected.
Lobby for bilateral contract on labor migration.