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Recruiting Agencies Want Their Guarantee Amount Back as Their Business Is Affected Due to COVID-19

Government could provide some concessions depending on the status of recruiting agencies but also need to make such agencies responsible towards plights of migrant workers, experts say

Chandan Kumar Mandal
The Kathmandu Post
26 May 2020

Foreign job recruitment agencies have demanded that the government return their guarantee deposits in light of the Covid-19 pandemic which has severely hit the labour migration sector.

It’s been more than two months since the country’s foreign employment sector came to a complete halt. It is the biggest crisis to hit the country’s foreign employment sector till date, and recruiting agencies are struggling to survive. 

They have demanded the government to return the guarantee amount, deposited while obtaining the operation licence, to shore up their business. 

In the wake of the Covid-19 pandemic, the Nepal government has banned all international flights as well as stopped giving labour permits.

“For two months now, our business is completely shut. Not a single person has been sent on foreign employment,” Sujit Kumar Shrestha, general secretary of the Nepal Association of Foreign Employment Agencies, told the Post. “Therefore, we have been demanding that the government temporarily return our guarantee deposits.”

All recruiting agencies should deposit guarantee—cash and bank guarantee—to get the operation licence. Last year, the government had hiked the guarantee amount and also categorised the existing recruiting agencies into three groups based on the number of workers they would supply in a year.

With the new groups, the government also set new guarantee amounts which reached a minimum of Rs20 million to Rs60 million maximum. A many-fold hike in the guarantee amount had reduced the number of recruiting agencies from 1,323 to 853.
According to Shrestha, the cash deposit amount has totalled to Rs4.31billion.

“There is no guarantee of when the business will bounce back. All these agencies have managed the deposit amount from somewhere else. They have bank interests to pay and other expenses to bear even though the business is close,” Shrestha said. “The government can at least return the cash deposit so that they can pay interests or start some other business jointly or individually. That’s a huge amount and should not stay unused.”

The association has taken the matter formally with the Ministry of Labour, Employment and Social Security. Shrestha said the ministry is positive about the concerns of recruiting agencies.

A source at the ministry said Labour Minster Rameshwar Ray Yadav has responded positively to the demand of recruiting agencies.

“There has been some discussion regarding the impacts of Covid-19 on recruiting agencies. Considering their business has been shut for at least two months now, the minister was positive,” the source told the Post.

In mid-March, all major labour destination countries recorded Covid-19 cases and adopted several measures like sealing their borders and banning outside arrivals. The Nepal government also stopped sending its workers to Covid-19 hit countries.

According to Jeevan Baniya, a labour migration expert, there should be a detailed study to understand the impact of the pandemic on foreign employment sector, future of foreign employment and steps to revive the sector.

“Foreign employment sector has been definitely hit hard due to the Covid-19 situation, as they have not been able to send workers,” Baniya, also the assistant director at the Centre for the Study of Labour and Mobility (CESLAM), told the Post. “The government can provide some kind of concession for recruiting agencies, like waiving off their loan interests as many of them have taken bank loans to manage guarantee deposits.”

Recruiting agencies have been saying that the government has options to utilise the money instead of letting it freeze.

“The money can either be invested in productive sectors, for instance, agriculture, which can further create more jobs, or the money can be given to existing entrepreneurs to jointly or individually start other businesses,” said Shrestha.

“The government can also tell us where to invest the money. A new business can be started under the public-private-partnership model. Investing the money for a labour bank, which supports workers and entrepreneurs, can also be an option.”

Although the foreign employment sector has suffered a great deal from the pandemic, Baniya says impacts on recruiting agencies are varied.

“Some big recruiting agencies, which have already earned huge money in the past, may not be affected so badly due to the crisis. Hence, relief should be provided to those agencies that have been hit hard,” Baniya said. “For some, this can also be an opportunity to withdraw the guarantee amount and switch to other businesses.”


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