Opeds

Without imparting skills to migrant workers, the free visa policy will only generate unproductive remittances

Himalaya Kharel
The Kathmandu Post
24 July 2015

The government’s ‘free visa, free ticket’ policy has drawn the attention of migrant workers as well as other concerned stakeholders, albeit for different reasons. The Qatari Labour Minister’s visit to Nepal on April 4 with the “no cost to Nepali workers to be employed in Qatar” agenda provided the opportunity for the Nepali government to bring the free visa, free ticket policy. Further, perhaps the recent earthquake and its severe impact on public properties and livelihoods also acted as an added impetus behind

the introduction of the policy. The underlying assumption here being the government’s recognition of the fact that foreign employment can be adopted as a coping mechanism by the people affected by the disaster.

While there are other challenges emerging from this new provision, as shown by the media coverage since the enactment of the policy, we should, at least in theory, soon be seeing a dramatic increase in the outflow of migrant labour from this country. In light of this, it has become all the more crucial for us to divert our attention to the following pressing issues.

Skills and money
First, and perhaps most importantly, it is time to assess the skills of Nepali migrant workers, particularly in comparison to fellow workers from other countries at their work place abroad. The available evidence indicates that a majority of the Nepali migrants are working as unskilled workers in low-paying positions. In fact, the data from the Department of Foreign Employment shows that during the fiscal year 2013-14, among the 527,814 workers who migrated for foreign employment, 74 percent were categorised as unskilled and 12 percent as semi-skilled workers.

Despite the government’s migration cost ceiling of Rs 20,000 for Qatar, Rs 80,000 for Malaysia and Rs 70,000 for other Gulf Cooperation Council countries, migrant workers were charged three to four times the maximum limit. Nepal Migration Survey 2009 shows that the average migration cost for Gulf countries and Malaysia is Rs 109,700. Besides, the survey also indicates that the average annual remittance received by a household from the Gulf is Rs 163,000 and from Malaysia Rs 113,000. It shows that most of the migrant workers’ income is not even enough to cover the recruitment cost.

Thus, the free visa, free ticket policy will, pending resolution of current issues with manpower agencies, prompt increased mobility of migrant workers for foreign employment, comprising mostly low-skill and poverty-stricken people. In particular, people from the Far Western and Mid-Western regions who have traditionally gone to India for employment—owing largely to the open border and relatively minimal migration cost—may change their preferred migration destination.

The increase in migrant workers will invariably add to the national coffers in the form of increased inflow of remittance and help minimise unemployment. But if a majority of the workers continue to be employed in unskilled and semi-skilled positions, the country will not be able to fully benefit from economic or social remittances (knowledge of new technologies and skills) as envisaged by the Foreign Employment Policy 2012.

Investment of remittance
This brings us to the next pressing issue—productive investment of remittance. The Nepal Living Standard Survey 2011 reveals that 79 percent of the total remittances Nepal receives are used for daily household consumption, seven percent for repayment of loans borrowed during the migration process and only two percent for capital formation. In 2009, growing concerns over the productive investment of remittance prompted the government to start issuing Foreign Employment Saving Bonds (FESBs) through the Nepal Rastra Bank for Nepali citizens working abroad and non-resident Nepalis. The series of bond issued are not only a means of collecting funds for the government but also an investment opportunity for migrant workers through which they can ensure some security for their post-migration livelihoods.

However, the Rastra Bank was able to sell only 0.04 percent of the first round of bond issue amounting to Rs 1 billion in the fiscal 2009-10. Likewise, only 0.06 percent of the Rs 5 billion of the second bond issue in 2010-11and 20 percent of the Rs 250 million sixth bond issue in 2013-14 were subscribed. Further, the latest or seventh round of bonds have just recently been opened, and the response from the target groups is yet to be seen.     

Give them skills
Arguably, one of the reasons behind the low level of participation of the migrant workers in the FESB could be inadequate publicity of the bond issue and its benefits to the target groups. However, perhaps the bigger barrier is that migrant workers, owing to their low-paying unskilled jobs, simply do not have expendable money for investment. This implies that until and unless the income levels of migrants are not enhanced, they are unlikely to have the means to be able to benefit from investment-based schemes. Hence, there is a dire need for the government to introduce policies that seek to empower migrant workers with demand-based skill training. Otherwise, the free visa, free ticket policy will be confined to a means of generating unproductive remittances. Providing migrant workers with skills training would not only enable them to increase their earnings but also make significant socio-economic contributions to the country as a whole, be it in the form of increased remittance per worker or social remittance in the form of new skills and technologies learned.

Kharel is a research associate at the Centre for the Study of Labour and Mobility

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