Sunday, September 01, 2024

How Development Failures Fuel Labour Exodus in Nepal



Vidhu Prakash Kayastha
September 2nd, 2024
LSE


As outward labour migration increases steadily in Nepal, Vidhu Prakash Kayashta looks at the various factors that have led to this exodus, and discusses why and how this trend will continue unless there are radical changes in the entire system — from political will to education and skills development programmes.

Nepal faces a severe unemployment crisis, leading many young workers to migrate abroad for better opportunities. The economy, heavily reliant on low-productivity agriculture, struggles with limited growth and failed diversification in manufacturing and services. The crisis is exacerbated by a mismatch between graduate skills and the needs of the labour market alongside an outdated education system. As a result, the youth are confronted with high unemployment and underemployment.

Many migrate to countries like Qatar, Saudi Arabia and South Korea for higher wages and better work conditions. While remittances from migrant workers supports Nepal’s economy, they also highlight domestic job market deficiencies, and bring social and psychological challenges in its wake. Comprehensive reforms are needed, including modernising education, improving infrastructure, creating jobs and fostering entrepreneurship to build a more resilient economy and address these systemic issues.

Shadows of Migration

In the quiet, almost eerie calm of Nepal’s Terai region, abandoned villages paint a poignant picture of a larger issue. These once-bustling communities now lie empty, a stark reminder of the growing trend of absenteeism in the country. ‘Absent population’ refers to those counted in the Census but not present in Nepal at the time of data collection. This absence is a powerful indicator of the economic hardships pushing many Nepalis to seek better prospects beyond their homeland.

The economic struggle is particularly evident among the youth. In recent years, the youth unemployment rate — reflecting the percentage of individuals aged 15–24 who are jobless but actively seeking employment — has been a critical metric of the country’s economic challenges (Table 1). For instance, in 2022, the youth unemployment rate stood at 20.52 per cent, showing a slight improvement from the previous year’s rate of 22.75 per cent; however, this was an incremental drop from 2020, which saw a rate of 23.80 per cent. The trend of increasing youth unemployment rates was evident even earlier, with 2019 recording a rate of 19.88 per cent, only marginally higher than in 2018.





Table 1: Unemployment in Nepal 2018–22 based on data from Macrotrends; © Author.



Impact of Absenteeism

The 2021 Census Report, the 12th since Nepal’s first Census in 1911, provides essential demographic data for planning and policy by the government. As of 2021, Nepal’s population is 29,192,480, reflecting a 10.18 per cent increase since 2011. However, the annual growth rate has slowed to 0.93 per cent, the lowest in 80 years, due to declining fertility rates, rising migration and urbanisation.

Migration has surged, with 2,169,478 Nepalis living abroad, significantly contributing to remittances, which constitute about 30 per cent of the Gross Domestic product (GDP). Between 2011–21, the number of Nepalis living abroad increased by 269,098, or 14.01 per cent. Female migration has risen from 12.36 per cent to 17.83 per cent of the overseas population, while the percentage of males has decreased from 87.64 per cent to 82.17 per cent. The number of males living abroad increased by 6.01 per cent, while females increased by 7.98 per cent.

The high rate of absenteeism of Nepalese workers serves as a stark indicator of the dire conditions prompting their departure. Everyone who leaves in search of better prospects reflects the economic shortcomings at home. This exodus not only reveals the depth of Nepal’s economic struggles but also underscores the urgent need for comprehensive reforms to address the underlying issues.

Simultaneously, Nepal’s net migration rate, which tracks the number of people moving in and out of the country per 1,000 population, reflects a similar story of economic desperation. In 2024, the net migration rate dropped to 4.144 per 1,000, a significant 18.26 per cent decrease from the previous year. This followed a 16.47 per cent increase in 2023, when the rate had been 5.070 per 1,000. The migration rate has been climbing steadily since 2021, which saw a rate of 3.636 per 1,000 — a 24.52 per cent rise from 2020. In 2022, the migration rate had surged to 4.353 per 1,000, a notable 19.72 per cent increase from 2021.

These statistics and trends not only highlight the pressing economic issues facing Nepal but also underscore the larger narrative of a nation grappling with the challenges of providing opportunities and stability for its people. The empty villages and the rising net migration rate are emblematic of a broader socio-economic struggle that continues to drive many Nepalis to seek a better life elsewhere.

Economic Challenges

Nepal’s economic environment is marked by slow growth, high unemployment and widespread underemployment. The scarcity of job opportunities perpetuates a cycle of poverty and restricts economic mobility. This situation is particularly disheartening for the youth, who face limited job prospects and are increasingly drawn to foreign labour markets in search of better opportunities.

Dependence on Remittances

In response to the sluggish domestic economy, remittances from abroad have become a crucial support system for many Nepali families. Workers in countries like Qatar, Malaysia and Saudi Arabia send essential funds back home, underscoring the deficiencies of Nepal’s domestic job market. While these remittances offer temporary relief, they highlight a more profound issue: the country’s inability to generate sufficient employment opportunities and sustain its population.

Political Instability and Corruption

Political instability and corruption have further destabilised the economy. Frequent changes in government and pervasive corruption erode public trust and obstruct effective policy implementation. The lack of consistent economic strategies and stable governance undermines long-term planning and investment, stifling growth and opportunity.

The trend of young people leaving the country for employment opportunities is growing. In the fiscal year 2013–14, the number of youths seeking jobs abroad first surpassed 500,000 in a single year. However, it is important to factor in the impact of the Covid–19 pandemic, which has influenced these figures. According to the Foreign Employment Board, over 600,000 individuals sought jobs overseas in the year following the pandemic, with that number rising to more than 750,000 in the most recent fiscal year. Currently, it is estimated that more than 7 million young people have been living abroad for over five years which, along with other absentee population, represents about 23 per cent of the country’s total population.

As evident in Table 2 below, the highest number of labour approvals was in Kartik (mid-October to mid- November) with 78,370; the lowest number of labour approvals was in Baisakh (mid-April to mid-May) with 54,457.





Table 2: Labour Approvals per month in 2080 Bikram Sambat (April 2022 – March 2023), not available for Asoj (mid-September to mid-October 2022); data based on myRepublica © Author.



Way Forward

Substantial reform is necessary to tackle Nepal’s economic and demographic challenges. Enhanced data collection can provide better insights into absenteeism and its causes. Strengthening support systems for both resident and non-resident populations, along with promoting sustainable economic development, are crucial steps. By focusing on job creation, better living conditions and addressing the root causes of migration, Nepal can strive towards a more resilient and equitable economy.

The 23 per cent absentee rate highlighted by the Census 2021 serves as a crucial reflection of Nepal’s economic and social landscape. Addressing this issue is vital for effective governance and sustainable development. By enhancing data collection, providing support to all Nepalis regardless of where they are and promoting robust economic growth, Nepal can work towards a more equitable and prosperous future for its people.

*

The views expressed here are those of the author and do not represent the views of the ‘South Asia @ LSE’ blog, the LSE South Asia Centre or the London School of Economics and Political Science. Please click here for our Comments Policy.

This blogpost may not be reposted by anyone without prior written consent of LSE South Asia Centre; please e-mail southasia@lse.ac.uk for permission.

Banner image © Rohan Reddy, Boudhanath Sadak, Kathmandu, 2018, Unsplash.

*



About the author

Vidhu Prakash Kayastha
Dr Vidhu Prakash Kayastha holds a PhD in Journalism and Mass Communication, and is a journalist, writer and media educator in Kathmandu. He contributes articles in English and Nepali, and writes in Nepalbhasa.

No comments:

Post a Comment