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A Brief Report on

STATUS OF FOREIGN EMPLOYMENT AND


INFLOW OF REMITTANCE

January, 2016
Kathmandu, Nepal

Abbreviation
BoP

Balance of Payments

CBS

Central Bureau of Statistics

CDR

Central Development Region

DoFE

Department of Foreign Employment

EDR

Eastern Development Region

FWDR

Far Western Development Region

FY

Fiscal Year

GDP

Gross Domestic Product

Ltd

Limited

MBNL

Mega Bank Nepal Limited

MoF

Ministry of Finance

MWDR

Mid-Western Development Region

NRA

Nepal Remitters Association

NRB

Nepal Rastra Bank

UAE

United Arab Emirates

USD

United States Dollar

WDR

Western Development Region

PART I INTRODUCTION AND METHODOLOGY

1.1.

General Background

Over the past decade, a surge in out migration for foreign employment to various countries has
been occurring in Nepal. Every year, about 500,000 labor forces are entering in to the international
labor market, the figures excluding the migration to India. The migration to India would be just a
rough estimate as the work permit is not required and long open border. Failure to provide adequate
employment opportunities within the country has led to the increased outbound trend of migrant
workers for foreign employment. As a result, the growth rate of workers remittance has continued to
swell in the recent years.
The ratio of remittance to GDP that stood 25.7 percent in FY 2012/13 reached 28 percent by FY
2013/14. The inflow of workers' remittances increased by 13.6 percent to Rs. 617.28 billion in the
FY 2014/15 compared to 25.0 percent growth of the previous year. An increase in workers
remittances helped the country to maintain the BoP (Balance of Payment) surplus of NPR 145.85
billion and foreign exchange reserves of NPR 702.88 billion in FY 2014/15. According to the World
Bank data, Nepal stands third among the countries in the world in terms of share of remittance to
GDP. Nepal receives workers remittance worth NPR 1.5 billion every day.

1.2.

Objectives of the Study

The major objective of this report is to analyze the trend of workers migration in the foreign
employment and the inflows of remittance in Nepal. However, some of the specific objectives are
listed below:
a. To identify the major destinations of foreign workers.
b. To analyze the migration data based on major districts, ecological and administrative regions
and gender.
c. To study the trend of the remittance inflows based on the volume and share of gross
domestic product (GDP) of Nepal.
d. To examine the pattern of usage of remittance income by Nepali households.

1.3.

Methodology

The report is based on the quantitative analysis of available secondary data published by the
Department of Foreign Employment (DoFE), Foreign Employment Promotion Board, Ministry of
Finance (MoF), World Bank, Central Bureau of Statistics (CBS), Economic Survey of Nepal 2014
and Nepal Rastra Bank. Similarly, the reviews of the literature such as newspaper reports, journals
and other project documents of NGOs/INGOs on the labor migration and remittance inflows in
Nepal have been made. Time series data of labor migration and remittance inflows have been
presented and analyzed. In addition, the analysis of the migration trend, based on gender, districts,
ecological belts and the administrative regions has been presented.

PART II ANALYSIS OF MIGRATION AND


REMITTANCE DATA
2.1. Labor Migration
The figure presented below illustrates the total numbers of approval granted for the foreign
employment and the growth in the numbers of the employment from FY 2008/09 to FY 2014/15. The
figures do not include the labor migrants to India as the labor approval or permit is not required to
work in India. Similarly, the numbers of the emigrant labors could be high due to the unregistered
and undocumented emigration from Nepal.
Total Number of Approvals for Foreign Employment and Annual Growth

600,000

40.00
527,814

500,000

512,887

450,834

400,000

354,716

30.00

384,665

25.00
20.00

294,094

300,000

15.00

219,965
20.61

200,000

17.20

10.00

17.08

5.00

8.44

100,000
2008/09

35.00

33.70
2009/10
C hange

0.00
2010/11

2011/12

2012/13

2013/14

2014/15
-2.83

-5.00

Total Approval for Foreign Employment

The approval for foreign employment grew by 15.70% on an average during the period of 7 years
reaching as high as 33.70% growth in approval in FY 2009/10 and as low as -2.83% in FY 2014/15.
The numbers of approval granted in FY 2008/08 was 219,965 that reached to 527,814 in FY
2013/14. However, the total numbers of approval declined by 2.83% and reached 512,887 in FY
2014/15. The number of people going abroad for foreign employment had declined due to the
impact of the earthquake and the strike of the manpower agencies against the governmental
decision of free airfare and free visa for the workers.

The average data of approvals disaggregated by


gender shows that 95.10% of the approvals are

Total Approval by Gender, FY 2008/08 - FY 2013/14

made for the male labors while 4.90% of the


492724

approvals are made for the female labors in

423092

foreign employment. The share of female as the

344300 361707

foreign employment labor is considerably lower

284038
211371

than the male. However, the numbers of female

22958

27742

29154

labor migrants for the foreign employment are

8594

rising. In terms of the total approvals, the female

2008/09 2009/10 2010/11 2011/12 2012/13 2013/14

10056

10416

Female

approvals have increased by 3.9% in FY 2008/08

Male

to 6.2% in FY 2012/13 before falling to 5.6%


increase in FY 2013/14. In terms of the numbers
of approval, both the male and the female
migrants approved for foreign employment had
increased.

The

numbers

of

female

Average Share by Gender, FY 2008/09 - FY 2013/14

getting

approval in FY 2008/09 was 8,594 that surged to

Female; 5%

29,154 in FY 2013/14. Similarly, the numbers of


male receiving approvals for foreign employment
had increased from 211,371 in FY 2008/09 to
492,724 in FY 2013/14.

Male; 95%

Share of Top Ten Districts in Total Approvals for Foreign Employment (in percentage)
District/Year

2008/09

2009/10

2010/11

2011/12

2012/13

2013/14

Average Share

Dhanusa

6.7

5.3

4.9

4.5

4.8

4.8

Mahottari

3.7

11.2

5.7

3.6

3.2

3.5

4.8

Jhapa

5.8

4.7

4.6

4.5

4.5

4.2

4.6

Morang

4.3

4.2

4.3

4.2

4.2

4.2

Siraha

4.6

4.2

4.3

3.5

3.5

3.9

Nawalparasi

3.1

2.9

3.3

3.3

3.1

3.1

Saptari

2.5

3.2

3.1

2.8

2.8

3.1

2.9

Sunsari

2.7

2.6

2.7

2.9

2.9

2.8

Sarlahi

2.1

2.3

2.4

2.2

2.6

2.5

Rupandehi

2.1

1.8

2.3

2.3

2.7

2.7

2.4

The table above represents the top ten districts of Nepal in terms of number of foreign labor
migrants. In FY 2013/14, people of Dhanusa district migrated more in number as foreign labor,
which constitutes 4.8% of total labor migrants. Moreover, over the last six years, Dhanusa

contributed more numbers of foreign labors. The data shows that the majority of the migration as
foreign labor comes from Eastern Development Region and Central Development Region.
Avergae Share of top-ten Origin Districts for Female Labor Migrants, 2008/092013/14

S indhupalchowk; 9%
Jhapa; 9%
Morang; 6%
Makwanpur; 5%
Remaining District; 50%
Kavrepalanchowk; 4%

Dolakha; 3%

Ilam; 3%

Kathmandu; 4%
Nuwakot; 4%
S uns ari; 4%

The above chart represents the top ten districts of Nepal with origin of female labors for foreign
employment over the period of six years. The data illustrate that Sindhupalchowk district with 8.86%
of the total female migrants stands at the top. Similarly, Jhapa (8.57%), Morang (5.87%),
Makwanpur (4.76%), Kavrepalanchowk (4.28%), Kathmandu (4.17%) are the major districts of the
origin of the female labors.

Average Share of Labor Permits by Ecological Regions, 2008/09-2013/14 Average Share of Labor Permits by Administrative Regions, 2008/09-2013/14

Mountain; 6%

WDR; 22%
CDR; 33%

Terai; 50%

Hills; 44%

MWDR; 10%
FWDR; 4%
EDR; 31%

In terms of ecological regions, the majority of the labors are from Terai region as shown by the
average share of labor permits during the FY 2008/09 to FY 2013/14. On an average, Terai
contributes 50.4% of the migrants, while Hills contributes 43.9% migrants as the foreign labors. In
other hand, Mountain region has the least i.e., 5.7% of the share in total labor permits over the years.
Similarly, the Central Development Region (CDR) and Eastern Development Region (EDR) contribute
33.27% and 31.42% of the total labor migrants. In addition, Western Development Region accounts
21.82% in terms of the labor permits obtained over the years.

Top Labor Destination for Nepalese Foreign Workers

Countries/Yea
r

2008/09

2009/1
0

Malaysia

29,320

111,366

Saudi Arabia

45,044

59,549

2010/1
1
106,02
9
62,499

Qatar

54,732

25,612

UAE

24,057

Kuwait

2011/12

2012/13

2013/14

2014/15

96,272

157,212

206,719

202,828

68,130

86,126

75,026

98,246

35,943

44,883

85,837

103,850

124,368

17,778

24,047

34,503

51,419

42,542

53,699

410

2,286

9,165

7,890

8,979

9,668

Others

66,402

77,503

131,712

62,350

90,698

24,078

Total

219,965

294,09
4

7,981
118,21
7
354,71
6

384,665

450,834

527,814

512,887

Malaysia, Qatar, Saudi Arabia, Kuwait,


UAE etc., are some major destinations for
the

Nepalese

foreign

employment

migrants. The total numbers of approvals

Major Destination Countries for Foreign Employment


600,000

600,000
527,814512,887

500,000

500,000

450,834
384,665
354,716

FY

400,000

2014/15. Among others, the approvals for

300,000

the employment in Malaysia have been

200,000

200,000

increasing till the end of FY 2014/15.

100,000

100,000

have

increased

except

for

the

400,000

294,094

300,000

219,965

However, the recent developments have

shown the declining trend of Nepalese


labor in Malaysia. Similarly, the numbers
of approvals have increased for other

Malaysia

Saudi Arabia

Qatar

UAE

Kuwait

Others

countries as well.

Total

Share of Destination Countries in FY 2014/15

In FY 2014/15, the work permits for Malaysia


had a share of 39.5%, while Qatar had a share

Kuwait; 2% Others ; 5%
UAE; 10%
Malays ia; 40%
Qatar; 24%

of 24.25%. Likewise, out of the total approvals,


19.16% approvals were made for Saudi Arabia,
10.47%

for

UAE

and

1.89%

for

foreign

employment in Kuwait. In other hand, 4.69% of


the approvals were granted for the foreign

S audi Arabia; 19%

employment in other countries.

The table below shows the numbers of death incidents occurred in during the foreign employment
from FY 2008/09 to FY 2013/14. The total numbers of deaths have been increasing from FY
2008/09. The total numbers of recorded death incidents in FY 2008/09 was 90 that surged to 842
deaths during the FY 2013/14. The numbers show that the total numbers of male deaths over the
period were 3,139 while the numbers of female death was 79 totaling to 3,272 deaths in 6 years
period. On an average, the death incidents have increased by 89%.
Total Numbers of Death Incidents from FY 2008/09 to FY 2013/14

Year

Male

Female

Total

2008/09

87

90

2009/10

399

19

418

2010/11

541

549

2011/12

632

14

646

2012/13

716

11

727

2013/14

818

24

842

3,193

79

3,272

Total

The numbers of death incidents are higher in

Countrywise Death Incidents, 2008/09 to 2013/14

countries like Malaysia and Saudi Arabia as

800

the majority of Nepalese depart to these

700

countries for foreign employment. The death

600

rates in these two countries have extremely


increased over the years. The recorded death
incidents in Malaysia and Saudi Arabia were
15 and 27 deaths respectively in FY 2008/09
that increased to 292 and 211 deaths
respectively in FY 2013/14. In addition, the

500
400
300
200
100
0

2008/09 2009/10 2010/11 2011/12 2012/13 2013/14

death incidents in Qatar, UAE, Kuwait, South


Korea, Lebanon and other countries have also

Malays ia

S audi Arabia

UAE

Kuwait

Qatar

increased in years.

2.2. Remittances
According to the government records, 1500 Nepalese on an average migrate to foreign countries,
mainly to the Gulf Countries and Malaysia for the foreign employment in the international labor
market and that figure is believed to be an undercount as many more cross the open border with
India regularly. Foreign employment has become the major source of income as the Nepali migrant
workers send back home remittances coming into the country which equals almost 30% of the GDP.
Nepals Economic Survey of 2014 states that almost 56% of the Nepalese households receive the
remittance income and household budget survey of FY 2014/15 conducted by NRB states that
17.61% of the household income is derived from remittance.

Remittance Inflows (in billion Rs.)


700

617.28

600

543.3

500

434.6
359.6

400
300 231.7

253.6

200

Share in GDP (%)


35
30
23.5

25
19.4
20

28

25.7

29.1

18.5

15

100

10

5
0
2008/092009/102010/112011/122012/132013/14

The remittance inflows have increased over the periods. The figure alongside shows that the
remittance income in FY 2009/10 was NPR 231.7 billion that have climbed to NPR 617.28 billion in
FY 2014/15. The remittance income experienced a healthy growth of 22.14% on an average during
the period of FY 2009/10 to FY 2014/15. In other hand, the share of remittance income in Gross
Domestic Product (GDP) has increased over the periods. In FY 2013/14, the share of remittances to
GDP was 29.1%, which remained at 19.4% in FY 2008/09 and 18.5% in FY 2009/10.
According to the Nepal Remitters Association
(NRA), 78.9% of the remittance income is
used for the consumption and entertainment

Cons umption

Use of Remittance
(%)

Repayment of Loans

7.1

while mere 2.4% is utilized in the capital


formation. Similarly, 7.1% is used for the

Education of Children

3.5
2.4
4.5

Capital Formation
0.6
0.5
2.5

repayment of loans borrowed to finance the


foreign employment while 3.5% is spent on

Purchas e of Hous ehold and Property

S avings

Bus ines s

Others

the education of children. Similarly, 4.5% is


spent on purchase of household properties.

78.9

The data reveal that the remittance that accounts more than the annual budget of Nepal has not
been channeled to the productive sectors thereby hindering the sustainable economic growth of the
nation.

World Bank's Estimate of Remittance Inflow to Nepal, FY 2013/14 World Bank's Estimate of Remittance Inflows from Gulf Countries and Malaysia, FY 2013/14

UAE; 15%

India; 14%
UAE; 11%
Saudi Arabia; 27%
USA; 5%
Kuwait; 4%
Malaysia; 3%
UK; 2%
Aus tralia; 2%
Qatar; 29% Others; 4%

Kuwait; 5%
Malaysia; 4%

Saudi Arabia; 37%


Qatar; 39%

The actual data on the remittance inflows in Nepal from different countries have not been published
or documented so far. However, it is crucial to know the major countries sending remittance to
Nepal. The estimate of the remittance to Nepal as receiving country in 2014 made by the World
Bank shows that Qatar, Saudi Arabia, India, UAE, USA, Kuwait, Malaysia etc. are the major
remittance sending countries. Remittance estimates were made using the migrant stocks, host
country incomes, and origin country incomes. The estimates are made in the millions of USD.
Based on the same estimate, the share of remittance coming from Qatar and Saudi Arabia was
comparatively higher. Both of these countries were estimated to send 29% and 27% of the total
estimated remittance to be received by Nepal. Similarly, India shares 14%, UAE shares 11%, Kuwait
shares 4% and Malaysia shares 3% of the total estimated remittance in 2014. Though the maximum
numbers of the Nepalese migrants fly to Malaysia, the estimated incoming remittance is lower in
comparison to the others.
In other hand, if the remittance of the Gulf Countries and Malaysia only is considered, Qatar sends
39%, Saudi Arabia sends 37%, UAE sends 14%, Kuwait sends 5% and Malaysia sends 4% of the
total estimated remittance to be received from the Gulf and Malaysia.

PART III CONCLUSIONS AND


RECOMMENDATIONS
3.1. Conclusions
The lack of manufacturing units and the slower growth in the productive sectors have led to
increased migration of Nepalese as the labor migrant in the international labor market. In addition,
the lack of commercialization of agriculture, underdevelopment of the infrastructure and the limited
access to market have repulsed the Nepalese youths from agricultural sectors. As a result of which
the Nepalese youths consider the foreign employment as the easy solution to the problem of
unemployment in Nepal. Despite the several efforts to create the employment within the country, the
current economic condition favors the more youths to join the international labor market in the days
to come. The major destinations of Nepalese migrants are Gulf Countries and Malaysia. During the
FY 2014/15, the total of 512,887 work permits was issued which was less by 2.83% in comparison
to the corresponding period of the previous FY. Out of the total work permit approvals, the average
shares show that the higher numbers of labor migrants are from Terai regions followed by Hilly
regions. The increasing labor migration contributes in higher inflows of remittance which now hovers
around 30% of the GDP of Nepal. The remittance inflows have supported in poverty reduction in
large extent. Nepal received NPR 617.28 billion remittance in FY 2014/15 which was 13.62% growth
in comparison to the corresponding period of the previous year.
Though the remittance income is growing, approximately 80% of the remittance received is used for
daily consumption while mere 2.4% is used for capital formation. Such tendencies might result in
the Dutch Disease, in our context; excessive reliance on the remittance income increases the
foreign exchange reserves and balance of payments reducing the share of the manufacturing sector
in the economy. Likewise, when the population receiving the remittance increases, it leads to the
higher demand in the consumer goods which will be heavily financed through remittance. The trade
competitiveness will fall and the trade deficit will grow.

3.2. Recommendations
The study suggests the growing labor migration trend and increased remittance inflows in the days
to come. As the remittance is the line of business of the Commercial Banks, the remittance is the
source of income for the Bank. Therefore, it is necessary to widen the remittance network based on
the major origin districts of labor migrants, the major destination countries and the estimated share
of remittance received by Nepal from different countries. It is suggested that the Bank should focus
in Terai regions and the Central Development Regions and the Eastern Development Regions for
the expansion of the remittance networks and partners. The Bank should focus on intensive
marketing for collecting the remittance money in the areas that stands the top ten origin districts of
labor migrants.

ANNEX

Work Permit Approvals Granted for Male and Female Labor Migrants, FY
2008/09 to FY 2013/14
Year

Male

Female

Total

2008/09

211,371

8,594

219,965

2009/10

284,038

10,056

294,094

2010/11

344,300

10,416

354,716

2011/12

361,707

22,958

384,665

2012/13

423,092

27,742

450,834

2013/14

492,724

29,154

521,878

2,117,232

108,920

2,226,152

Total

Share of Female Labor Migrants to the Total Labor Migrants and Growth of
Female labor Migrants, FY 2008/09 to FY 2013/14

Year
2008/0
9
2009/1
0
2010/1
1
2011/1
2
2012/1
3
2013/1
4
Total

Total Labor
Migrants

Total Female
Labor
Migrants

Rate of
Increase in
Absolute Terms

Percent of the
Total Labor
Migrants

219,965

8,594

294,094

10,056

17.00%

3.4%

354,716

10,416

3.60%

2.9%

384,665

22,958

120.40%

6.0%

450,834

27,742

20.80%

6.2%

521,878

29,152

5.10%

5.6%

2,226,152

108,918

3.9%

Numbers of Deaths of Labor Migrants in Different Countries, FY 2008/09 to FY 2013/14


Countries

2008/09

2009/10

2010/11

2011/12

2012/13

2013/14

Total

Malaysia

15

105

219

237

253

292

1,121

Saudi Arabia

27

124

133

179

206

211

880

Qatar

26

114

125

130

151

193

739

UAE

13

53

37

50

47

64

264

10

22

22

39

96

Kuwait
Bahrain

12

14

48

Rep. of Korea

14

13

41

Oman

14

36

Lebanon

20

Israel

Japan
Afghanistan

Sri Lanka

Russia

Germany

Maldives

Papua New
Guinea
USA
Libya

Italy
Total

1
90

418

549

646

727

1
842

3,272

Historical Trend of Inflows of Remittance and Annual Growth, 1993 to 2015


Year

Migrant remittance inflows (In million USD)

1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

55
50
57
44
49
68
83
111
147
678
771
823
1212
1453
1734
2727
2985
3469
4217
4793
5210
5433
6173

Annual Growth
(%)
-9.09
14.00
-22.81
11.36
38.78
22.06
33.73
32.43
361.22
13.72
6.74
47.27
19.88
19.34
57.27
9.46
16.21
21.56
13.66
8.70
4.28
13.62

World Bank Estimate of Remittance to Nepal from Sending Countries, 2014


Countries
Qatar
Saudi Arabia
India
United Arab Emirates
United States
Kuwait
Malaysia
United Kingdom
Australia
Bangladesh
Korea, Rep.
Hong Kong SAR, China
Thailand
Canada
Germany

In million USD
1,683
1,598
832
666
282
232
155
117
91
51
30
30
16
12
10

Spain
Denmark
Belgium
Norway
Netherlands
Finland
China
Italy
France
New Zealand
Switzerland
Vietnam
Bahrain
Austria
Ireland
Portugal
Bhutan
Brunei Darussalam
Czech Republic
World

8
6
5
5
5
4
4
4
4
4
3
3
2
2
1
1
1
1
1
5,875

Sources of Income and its Composition of Nepali Household, FY 2014/15


Sources
Salary, Wages, Allowances and Pensions
Business Income
Remittance
Agriculture, Livestock and Fisheries
Rent and Imputed Rent
Other

Share (%)
30.26
24.43
17.61
7.12
17.25
3.33