Impact Of Foreign Employment In Nepal

A Project Work Report

Submitted to:

Department of Management

Elixir Academy

Kharibot,Chabahil,Kathmandu

By:

Suhana karki

Department of Management

Elixir Academy,Kharibot,Chabhil,Kathmandu
 ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my subject

teacher for their able guidance and support in completing my
project. I would also like to extend my gratitude to the principal sir
‘Rabin Dahal’ and subject teacher ‘Rudra Gautam’ For providing
me with all the facilities that was required. While doing my project I
have learned various knowledge and developed my creative thinking
and Innovative habit.
This project has developed my thinking, writing and other creative
skills which develop my Critical Sources. Once again I want to
thank my subject teacher and my respective principle for giving me
the golden chance to show my skills through this project work.

1.1 Background of study

The process of people or person traveling to a new place or country usually in order to find work
and leave their temporary or permanently is known as migration. There are Various type of
migration. There are internal external permanent ruler to urban or urban to rural. Among other
countries. Foreign employment is regarded as an external migration. Most of the migration, like
foreign employment, have been taken places or the propose of Economic prosperity or utility
Maximization or. Improvement in living standards. In this sense, migration and foreign
employment are economic phenomena.

Main thrust of this study is closely related to remittance income which is the Consequence of
foreign employment. he remittance brings various kind of consequence in short and long run.
Due to globalization, mobilization and other global social economic phenomenon, foreign
employment rate is increasing in recent years.

Remittance means the transfer of funds from international migrants to their family member in
their home country. It is different from other external capital inflow like foreign direct
investment, foreign loan and aids. It is the largest source of foreign Extends earning for
developing countries. Foreign remittances are the source of poverty reduction, better health care
and education. Remittance can contribute to higher investment in human and physical capital.
But if remittance are used for consumption, not for investment, as is the nature of developing
countries then this can be harmful.

The migration from Nepal, in addition to India, to the Middle East, Saudi Arabia or Qatar and
UAE. And Southern Asia, such as Malaysia, has not only dramatically increased during the
armed conflit period in nepal. It also prolonged for a decade, even after singing the
Comprehensive Peace Agreement in 2006. It made the absentees population increased by about
two million, more than double than of the year 2001.

Remittance is an important source of foreign income for developing countries like Nepal,
increasing dramatically in size over recent decades. It is a private income that is regularly or
periodically Transformed from international migrants to family member In their country of
origin. It represents one of the largest source of financial flow is developing countries. Foreign
employment is gradually getting a major source of foreign exchange, earning and Sustaining the
positive balance of payment in Nepal. Remittance income has been mostly used on domestic
purpose such as managing land and building, child education, healthcare, entertainment and so
on. Moreover, it is Use in productive and commercial sector in some extent to operate micro And
macro level business? Huge amount of capital is needed to the underdeveloped countries for the
enhancement of productivity and economic development. Remittance income is one of the major
sources of capital formation in the context of Nepal. Furthermore, Magnuson is the only skilled
workers on return to their home countries Acquired Practical and useful skill in abroad. The
remittance has been a major issues in the international financial literature over a decade because
of their increasement of size and volume as well as rise in the number of migrants around the
world and Will likely continue in the future.

Nepalese economics is largely based on agriculture, However, the large number of people living
for foreign employment has been significantly increased due to the incredible number of
unemployment. Millions of youth are forced to heading for overseas seeking employment due to
failure in creating Employment Opportunity within the country. Statistics For the last three years,
shows on average 2,50,000 People leaving the country annually for foreign employment and the
number is on rise. Although foreign employment remains a major source of foreign currency for
the country, in the long run it Could fall in the remittance trap.

1.2 statement of the problems

Remittance has been one of the major source of foreign exchange earning. Few years Nepal
remittance is growing rapidly. Despite a context rise in remittance earning, The productive use
of remittance has been the matter of concern. Since they study under consideration Was
concerned with the contribution of remittance in per capita real GDP, So the study tries to
answer the following question.
1. What is the trend of remittance and per Capita Real GDP Nepal ?
2. What is the impact of remittance in per capita real GDP in Nepal?

1.3 significance of the study

There is significant contribution of foreign employment on social changes and development in
Nepal. Foreign employment is not only the sources of remittance, but also the transformation of
skill and knowledge. Foreign employment can change household income and living standard of
the people.

Foreign employment shall be developed as tool for transfer new skill and technology. Further
foreign employment returnees shall be recognized as development planner for the National
Development and Poverty Reduction by utilization of their skill and saving. The overseas
migration and remittance have been Instrumental in poverty alleviation As well as improving the
living standard of the people.

The basic objectives of the paper is to explore the current Situation of foreign employment status
of Nepal and also to analyse the economic impact of foreign employment on remittance and
social development.

1.4 objectives of the study

The main objectives of the Foreign employment is to analyse the situation of foreign
employment and its impact on the micro and macro level of Nepal. Beside this, the specific
objectives of this study are as follow,

1. Remittance inflow from foreign employment and its contribution to GDP.

2. Current status of foreign employment in Nepal. I

1.5 LIMITATIONS OF THE STUDY

There are a number of limitations of the study. The primary constraint was the lack of reliable
data on the stock of migrants that necessitated primary data collection via Nepalese diplomatic
missions globally. It is important to remember that while data was collected from all diplomatic
missions, the data maintained by them may also not be up-to-date and hence the margin of error
remains high. However, the analysis is made by minimizing the possible errors from all
prospectives adopting other reliable data, information and facts. In addition, given the open
border between Nepal and India, data estimated on Nepalese migrant population living in India,
the estimation of their returning (and re-travel to India) is particularly noisy. Similarly, he very
short duration accorded for the completion of the study, in addition to the mobility restrictions
due to the pandemic also posed a challenge in the data and information collection process as well
as for consultations. However, significant resources and effort have been dedicated to overcome
these challenges to ensure that comprehensive and accurate information is collected to the extent
possible. It is important to note that as a living document, many of the recommendations and
analysis presented in section 1 have already been submitted to the Government at various stages
of policymaking related to the repatriation and reintegration of returnee migrants, including
during the preparation of the annual program and the budget of 2020/21

1.6 literature review

Remittance is typically helpful to meet specific needs of the respondent’s family members and
thus tend to increase their standard of living. In lower class and poor household, they may use
their remittances to fulfill their basic needs, such as in consumption, housing, children education
and health care and to pay for loan. In middle class and rich households, they may provide either
loan for individuals going aboard or capital for business and entrepreneurial activities. From
macroeconomic point of view, this source may be more stable than capital flows (Gaudel, 2006).
The number of Nepalese foreign employment has been growing over time and most of rural
households now rely on at least one member’s earning from employment away from home.
Nepalese workers have sought foreign employment as both the agricultural and nonagricultural
sectors within the country struggle to generate new employment opportunities, with limited
arable land, landlessness is pervasive and the number of landless households has steadily
increased in the agricultural sector. In the non-agricultural sector, the slowdown in growth,
especially since 2000/01, due to the Moist insurgency and exogenous shock further retarded the

pace of employment reation. It had also promoted people to look for overseas employment
(Panta, 2011). Kafle (2018) analyzed the relation between remittances received and economic
growth in Nepal. There was a long run association between remittance, trade and economic
growth. Moreover, finding indicates that the relation between remittance and economic growth is
not significant in the short run. As results suggest an absence of short-run causation from
remittances to GDP, but there exists long-run relationship between economic growth and
remittance earning. Emigration can reduce output growth and exacerbate incentives to emigrate.
Reduced economic activity from labour outflows could dampen tax revenue (Gibson &
Mckenzie, 2012), while remittance inflows could raise consumption-based tax receipts or reduce
labour tax revenue by affecting labour decisions (Ebeke, 2010). Sending remittance in Nepal
from aboard through banking channel has become efficient and easy. It is now possible to
measure the amount repatriated by the Nepalese migrant from aboard to Nepal every year
through formal channel. However, it is estimated that only 40% of Nepalese migrants workers
use formal channel to send their earning back home. The rest still rely on the informal channels
like Hundi that is believed to be fast and economical. Workers remittance is now considered as
backbone of Nepalese economy. Shrestha (2008) remarks that revenue support for remittances
have emerged as one of the premier sources of foreign exchange and important avenue of
support for family members. Since last few years, remittance income is playing a vital role for

foreign currency earnings and favorable impact on bal ance of payment situation, to reduce the
number of people in the country below poverty line and ultimately to the economic growth of the
nation.
1.7 RESEARCH METHODOLOGY
This paper is based on secondary data and descriptive research design is applied to analyze the
data. All analysis and discussion is based on published sources of secondary data such as
Economic Surveys (2001/02-2018/19), Report of Foreign Employment Department (2019),
Quarterly Economic Bulletin (2019) published by Nepal Rastra Bank among others. Various
research documents have been reviewed for analyzing the social development of Nepal due to
the foreign employment. Some descriptive statistics such as percentage, ratio, pie-chart, bar
diagram and line chart are used to explain the growth and trends of foreign employment as well
as situation of remittance in Nepal. The economic impact of foreign employment has been
analyzed on remittance, contribution to GDP, employment and socio-economic changes.
Correlation is applied to show the relationship between foreign employment and remittance
inflow and simple linear regression model has been used to measure the impact of foreign
employment on remittance inflow.

1.71 SOURCES OF DATA

For the basis of contribution to employment, economic opportunity, poverty reduction,
remittance and national economic development, foreign employment is being very one of the key
sectors. Further, foreign employment is also an attractive sector for 3/4th adult those are entering
into labour market every year. Since the last decades, more than 1000 youth are going foreign
labour market each day only for foreign employment. Nepalese Foreign Employment Act 1985
made provisions for the matters relating to foreign employment such as counseling, complain
and compensation. National Labour Policy 1999 has dealt the government policies and programs
on different labour issues where the issue regarding the promotion and reliability of international
labour migration is also highlighted to some extent. The Labour and Employment Policy 2005
faced the existing challenges by exploring and tapping the new opportunities and potentials of
the labour and employment sectors. The policy aimed to promote production-oriented
employment by eliminating forced labour practices and make the just, healthy and cardinal
labour-related development

Fig1: GROWTH TRENDS OF FOREIGN EMPLOYEMENT AND REMITTANCE

FROM 2002\03-2018/19
 The contribution of remittance to the gross domestic product GDP has also increased every
year. Remittance has played a very vital role in economic growth in Nepal. In the year 2003
there was a 11.0% remittance of GDP and its decrease to 10.9. In 2005 there was a growth
from 11.1% to 14.9%. Similarly in year 2010 there was 19.4% of remittance of GDP. In 2019
and 2020 there was 22.4 and 22.47% of remittance of GDP. Over the year, remittance has
made a great contribution to the GDP. Remittance also has a great percentage of clear and
current account And current transform income.

Fig2:CONTRIBUTION OF REMITTANCE RATIO TO GDP FROM 2001/02-2019/20

The above table shows us that, in the Yours 2016 , There was 60.6% of remittance here to the
current account and 81.3% of this year of remittance to current transfer income. Likewise,
there was 62.4%. 63.7%. 66.3% And 70.6% of remittance years to the current account and
86.7%, 87.4%, 88.6%, 89.2% of remittance year to current transport income in Fiscal year
2018, 2019 and 2020 respectively. Due to lack of skill and knowledge, they have to risk their
life to earn. Therefore, many Nepalese labor died in foreign country due to risk in work and
due to other problems as well. There is detailed information about the number of deaths in
foreign employment.

1.72 POPULATION AND SAMPLE

Fig3:foreign employment of nepalese worker

In pie chart we can see the migration of Nepalese level to different countries of the world.
Most of the Nepali workers are working in Gulf countries. Qatar is the first destination of
Nepalese labour, followed by Malaysia and South Arabia. Qatar, Malaysia, and South Arabia
are the top three destination for foreign employment of Nepalese labour. More than 60% of
Nepalese worker are working in these top three places. But nowadays, the destination of
Nepalese live work seems to be changing and devising towards other country. Like Japan,
South Korea, Australia. Canada. Etc.