Weight of migration

  • Saudi decision to restrict foreign employment workers could hit our economy, migrants hard

Feb 2, 2018-

Remittance constitutes a whopping one-third of Nepal’s GDP, and the dependency of our economy on this money from foreign migrant workers cannot be overstressed. However, recent developments in the Gulf indicate that the pool of employment opportunities could be shrinking, presenting a huge setback for Nepal’s national economy and countless individual lives that rely on remittances. 

Over the past seven years, Malaysia and the Gulf Cooperation Council (GCC) countries have been the most preferred destinations for Nepalis seeking gainful employment abroad. These countries received 85 percent of the 2,723,587 labour migrants from fiscal years 2008/09 to 2014/15. But it seems that there could be a departure from this trend given a recent slew of events. 

The Nepali labour market suffered its first setback in June 2017, when Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt blocked access to Qatar by air, land and sea. The diplomatic standoff has continued for eight months, with no end in sight. The number of aspiring Nepali migrants seeking work in Qatar plummeted sharply and there is no indication of a reversal of this trend. And now, in a move that adds fuel to the fire, Saudi Arabia has declared that it will restrict employment of foreign workers in certain sectors such as in the selling of cars and motorcycles, and ready-made garments, among others. Twelve activities and occupations will be off-limits to foreign workers. These restrictions will come into effect in September this year. This decision has been taken because Saudi Arabia aims to create more job opportunities for its own citizens. 

Labour outmigration in Nepal has dropped for three consecutive years, and with one more country closed off, the number of outbound workers will no doubt fall even further. According to a report prepared by Overseas Development Institute (ODI), a US-based think tank, and Nepal-based South Asia Watch on Trade, Economics and Environment (Sawtee), if outmigration comes to a halt and economic and labour productivity growth rates remain at today’s level, then Nepal’s transformation into a middle-income economy by 2030 will be a pipedream.  

Many international studies and reports have warned remittance-reliant countries for a number of years that their overdependence on foreign employment could prove catastrophic in case of slumps in the Gulf economies and that creating employment at home was going to be the only lasting solution. 

Migrants can be attracted to the prospect of “rebuilding Nepal” through leveraging increased access to finance. A new industrial policy could also be proposed to promote manufacturing and export sectors, attract domestic and foreign investments, and boost the GDP. Once the GDP starts growing, demand for workers may also grow, boosting aggregate wages and bolstering the flagging economy. The prime minister-in-waiting KP Oli and senior leaders from the new government have gone on record saying that seeking big investment on infrastructure development will be their top priority. This has to be immediately backed up by new policy initiatives. If such initiatives are taken, then our people will no longer have to be over reliant on the state of affairs in other countries.

Published: 02-02-2018 07:37

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