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Concerns Over High Cost of Hiring Nepalis Could Hamper Labour Migration to Malaysia

With employers exploring more source countries, there could be a drop in migration of Nepali workers to the Southeast Asian nation.

Chandan Kumar Mandal
The Kathmandu Post
15 December 2019

When a group of youths approached a Kathmandu-based recruiting agency for jobs in Malaysia about a month ago, they did not know they were in for a rude shock. They had read and heard that Nepal and Malaysia governments had reached a deal for zero cost recruitment in the Southeast Asian country. But the recruiter was blunt to tell them to go and find any other agency that would send them to Malaysia without charges.

During job interviews, the four aspiring migrant workers from Parbat, Dhankuta, Morang and Tanahun tried to narrate the provisions under the labour agreement between Nepal and Malaysia that promised free jobs for Nepali workers.

“We had thought that after labour deal between Malaysia and Nepal, we don’t have to pay,” said a person willing to work in Malaysia.

But representatives from the recruiting agency—which was hiring security guards for a Malaysian company—not only said they would not provide them jobs but also explained why they had to pay for the jobs.

“They told us that they have to spend money to get worker demand,” said the man, 32, from Tanahun who did not want to be identified for fear of losing the job opportunity. “They said there is tough competition among agencies to get worker demand, which requires investment. They counted other expenses also, which they said migrant workers have to pay for.”

The labour agreement meant employers would be responsible for paying all the fees and costs on behalf of Malaysia-bound workers. Under the zero-cost model, also known as the ‘Employer Pay Model’, the employer is responsible for all the fees and costs of labour migration, including the service charges of recruiting agencies for facilitating the hiring process.

Before the pact, workers had to pay for various pre-departure services and shell out money for other charges to recruiting agencies and their sub-agents, which would go up to Rs100,000.

Despite the pact, Nepalis are still forced to cough up hefty amounts, and there are now concerns that Malaysian firms may not want to hire Nepali workers.

According to the Star, an English-language newspaper in Malaysia, Malaysian firms appear reluctant to pay the cost of hiring under the Malaysian government’s fair and responsible recruitment standards.

Implementation of fair and responsible recruitment standards says employers have to ensure the rights of migrant workers from possible threats, including the exorbitant fees for getting the jobs.

The enforcement of fair recruitment means the cost of hiring a Nepali worker, after the agreement between Nepal and Malaysia, has reached around 6,300-7,900 Malaysian ringgit (Rs172,505-216,316), a spokesperson for the Malaysian Human Resources Ministry told the newspaper.

This may have a direct implication on Nepalis aspiring to work in Malaysia.

Recruiting agencies based in Malaysia have started requesting their government to reduce the cost of hiring foreign workers by allowing migrant workers from more source countries, especially after the Nepal-Malaysia agreement signed in October.

Association of Employment Agencies Malaysia President Datuk Foo Yong Hooi told The Star that the government should allow more source countries for employers as well as help to improve ethical recruitment efforts.

“We admit that the move [to impose fair recruitment process] have improved efforts to boost worker’s rights under the International Labour Organisation standards, but Malaysia is not a fully developed country yet,” Foo was quoted as saying to the newspaper. “At the moment, it is quite a huge financial burden for us.”

Nepali workers’ migration to Malaysia had remained suspended for nearly 16 months after the Nepal government launched a crackdown on various agencies for asking hefty amounts from Malaysia-bound workers for pre-departure services. As the Nepal government wanted workers relieved of such fees, both countries agreed that Malaysian employers would bear all the costs and fees.

According to Jeevan Baniya, a labour migration scholar and assistant director at the Centre for the Study of Labour and Mobility, a research centre, demand for Nepali workers might see a drop because of the increased hiring cost now.

“Nepal has a level of surety for security sector jobs in Malaysia, but jobs in other sectors might be affected,” Baniya told the Post. “They can hire workers for other sectors from other countries, even if they continue hiring security guards from Nepal.”

The Southeast Asian country, which is one of the most favoured destinations among Nepalis aspiring to work abroad, will soon be signing ‘new and improved’ memoranda of understanding for labour supply with Bangladesh, Indonesia and Vietnam.

An official with the Labour, Employment and Social Security Ministry, however, remains optimistic about Nepalis’ migration to Malaysia for jobs.

“Nepalis are still preferred in the Malayasian labour market because of their reputation, as they are considered honest and hardworking,” the official told the Post on condition of anonymity because he was not allowed to speak to the media. “Nepal’s main competition is with Bangladesh, and the Malaysian government has expressed some reservations about workers from there for some reasons.”

But preference could be one thing, say experts. If Malaysian firms refuse to hire Nepalis citing the high cost of recruitment, there could be a significant drop in labour migration to Malaysia, they say.

That apart, the long impasse may also have forced Malaysian employers to consider bringing workers from other countries, according to Baniya.

“No country wants to rely on one country for its foreign labour force due to various reasons, though it’s not an explicit policy,” said Baniya. “Besides, the hiring of workers also depends on market dynamics.”

The labour agreement between Malaysia and Nepal was seen as a landmark pact for protecting and ensuring the rights of Nepali workers.

Various other labour source countries also praised the labour pact for its general provisions. But employers in Malaysia say investing nearly 6,000 Malaysian ringgit (approx. Rs 164,290) is too much for a Nepali worker.

“We agree with the ethical recruitment approach, but we are not yet ready for it during this particular economic situation,” Foo told The Star.

Owner of a security guard firm Datuk Seri Mustapa Ali told the paper that staff shortage was still occurring in the security services sector and hoped the government could find ways to address the issue.

“The cost is quite expensive and we are adhering to all the new regulations. But the cost is, of course, higher compared to before the MoU,” he said.

Malaysian employers are also raising concerns about the quality of Nepali workers after investing a huge amount for getting them to work in Malaysia.

“At the moment, these countries are saying that we have to pay high salaries to employ their workers, but the quality is not as hoped,” another employer was quoted as telling the paper. “Employers end up paying a lot of money but the quality was bad and some of them cannot even converse in basic English or Malay. Some of them want to go home even before their contracts ended.”

Recently, Nepal Embassy in Malaysia said it had approved the demand for over 31,000 Nepali workers for the Malaysian local market, which was seen as a major development, for it raised hopes that migration to Malaysia would start soon.

However, an official at the embassy told the Post last week that the increase or decrease of Nepali workers would solely rely on Malaysian employers in the future.

According to Rohan Gurung, former president of the Nepal Association of Foreign Employment Agencies, the umbrella organisation of 760 recruiting agencies supplying workers to foreign companies, the drop in demand for Nepali workers is expected in the future too.

“We have heard that there has been a demand for over 31,000 workers, but only 7,000 have got the final visa so far. Where have the remaining 24,000 gone?” Gurung asked. “The trend shows Malaysian employers are asking for workers. But after knowing about the cost of hiring Nepalis, they are backtracking and telling Nepali agencies to wait.”

The Labour Ministry official, however, said a visiting delegation of Malaysian security associations did not complain about the high cost of hiring when they were in Nepal recently. According to the official, the cost has not actually gone up.

“The cost has just come into the public domain as part of Malaysia’s bid to make hiring transparent. Nepali recruiting agencies are also complaining because they have to receive service charges through the banking channel now and this disallows them from engaging in unfair activities,” said the official. “Eliminating unhealthy and undue competition for securing workers’ demand between Nepali agencies and other unwanted expenses by employers can reduce the charges.”


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