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Recruiting Agencies Oppose Decision to Hike Guarantee Amount

Recruiting agencies for overseas jobs have taken exception to the government’s decision of raising their guarantee amount, saying that it would harm their business.

Chandan Kumar Mandal
The Kathmandu Post
19 February 2019

Recruiting agencies for overseas jobs have taken exception to the government’s decision of raising their guarantee amount, saying that it would harm their business.

By amending the Foreign Employment Act-2007, the government recently revised the guarantee amount which now would be deposited based on the number of workers they send abroad annually.

According to the new rate, recruiting agencies will be required to pay as high as Rs60 million, a twenty-fold increase from the previous Rs3 million, to run their business.

Nepal Association of Foreign Employment Agencies (NAFEA)—the umbrella organisation of recruiting agencies—has said the move is counterproductive to the government’s plan of managing the foreign employment sector.

“With the new guarantee amount, not a single recruiting agency can work by accepting the service fees as low as Rs10,000,” NAFEA President Rohan Gurung said.

As per the new provision, which was part of the Some Nepal Act Amendments in the Foreign Employment endorsed by Parliament on Friday, recruiting agencies have been divided into three categories based on the number of workers they send to foreign countries.

Companies that send more than 5,000 workers annually would have to deposit Rs60 million—Rs20 million as cash and other Rs40 million as bank guarantee. Those firms that send 3,000-5,000 workers every year would have to deposit Rs40 million—Rs10 million cash and Rs30 million as bank guarantee. Likewise, recruiting agencies that send up to 3,000 workers annually would have to deposit Rs20 million—Rs5 million as cash and Rs15 million as bank guarantee.

The government had proposed this new amount to regulate the foreign employment agencies and to offer small recruiting agencies the opportunity to merge.

 A large number of recruiting firms are either idle or sending a limited number of workers every year. A total 1,215 companies are registered with the Department of Foreign Employment. The new amendment also has the provision that any recruiting agencies sending fewer than 100 workers in a year would be scrapped.

In the ongoing fiscal year, 1,004 recruiting agencies have sent workers for jobs abroad. In the first seven months of this fiscal year, as many as 683 recruiting agencies hired fewer than 100 workers. Only one recruiting agency succeeded in sending over 3,000 workers in the same period.   

The bill is yet to be ratified by the Upper House for it to come into force.

Gurung said the hiked guarantee amount would promote unethical hiring of workers because the agencies would not be able to make profit.

“The burden is likely to fall ultimately on workers who would be possibly fleeced more money. The government should have followed the practices and policies of other South Asian countries,” added Gurung.

Meanwhile, labour migration experts have said the move would regulate the foreign employment sector by limiting the number of recruiting agencies that have mushroomed over the years.

Swarna Kumar Jha, migration researcher with the Centre for the Study of Labour and Mobility, told the Post that the decision was likely to help the government in managing the sector if it is implemented.

“The previous amount was insufficient when the government had to rescue and repatriate workers stranded in foreign countries. With that money, not much could be done,” Jha added.

He further said that the move would also encourage recruiting agencies to choose merger option and eliminate unethical competition.

“Many agencies would fight and get involved in dirty games for getting labour supply demand. With limited number of them, they will have more authority to bargain with the employers abroad.”


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