Exporting Human Resources

Human resource is the primary resource of an economy and important drivers of long-run economic growth.Without human resources, physical, financial and all other resources cannot be put into use. Its macroeconomic determinants are still not well understood in Nepal. It is simply not possible to reap the fruits of modern agriculture and the abundance of modern industry without making large investments in human Beings.Optimal ratio of human resources to capital has to be maintained to reach the attainable rate of economic growth. Given the endowment of capital and other material resources, Human resources could accelerate the production process and thereby economic growth. However, there is increasing recognition of the need for skilled workforce as a basis for future development. Therefore, manpower planning is becoming a critical issue for least developed countries like Nepal. Development of human resources is primary objective of any country for long term economic growth but Nepal government has been giving increasing priority to exporting human capital rather than utilizing golden resources for country’s development.

Economic growth and development processes affect and are affected by migration of people. People migrate when they are pushed by lack of opportunities at home and pulled by the hope of economic gains elsewhere. The history of migration dates back to the beginning of human civilization. Migration and migrant are terms with several meanings. 

According to the IOM Migration Terminology, "Migration" is the movement of a person or group of persons from one geographical unit to another across an administrative or political border, with the intention of settling indefinitely or temporarily in a place other than their place of origin. The term “migrant” is a person who migrated. This term does not specify the direction of the movement like in the word “emigrant” or “immigrant”.
According to the World Bank’s Migration and Remittances Fact book 2016, more than 250 million people, or 3.4 percent of the world population, live outside their countries of birth. The volume of South-South migration stands at 38 percent of the total migrant stock, larger than South-North migration.

Migration of Nepal
Actually, no country wants to send large section of its workforce outside the border. Nepal is primarily an agricultural based economy with a real per-capita GDP of US$ 766 having GDP growth rate of only 0.77 percent in F/Y 2014/15 along with a rising unemployment rate, which reached 3.7 percent in 2014. Currently, more than one third of the country’s total population of 27 million is estimated to be working abroad. About six million Nepalese work in India alone; while remaining four million are employed in other countries. Unending political and economic chaos in Nepal has compelled a large number of youth to leave. Push factors such as poverty, unemployment and risk of life are coupled with pull factors like lucrative job opportunities abroad.

The current scale of foreign labor migration from Nepal is unprecedented, providing an alternative to hundreds of thousands of youth who are unable to find satisfactory, or even any, employment within the country. Foreign labor migration is now an intrinsic part of everyday life for a majority of Nepalese, with its impact clearly visible in every sphere of society – social, economic, cultural and even political. It has also become a source of lucrative business for those involved in sending workers abroad. Foreign labor migration, hence, has multi-dimensional implications and is of significance to all concerned, including, but not limited to, migrant workers and their families; foreign employment entrepreneurs; government agencies; and employers in destination countries(Labour Migration Nepal Policies).

History of Migration
Labor migration from Nepal to foreign lands has a long history, but this phenomenon has seen rapid acceleration in the past couple of decades.  The history of labor migration from Nepal dates back to the period of unification, more than 300 years ago. The mass migration from the unified territory to the neighboring countries to escape the new State’s taxation system, which was often exploitative, could be considered the first incidence of out migration of labor from Nepal.

The history of formal entrance of Nepalese citizens in foreign employment begins in 1814-1815 after the Nepal-British India war. The formal migration of Nepalese out of the country is generally associated with the induction of young Nepali males into the British army. A total of 4,650 Nepalese youngsters were recruited to the British armed forces as a British-Gurkha regiment. It was only in 1886 that the recruitment of Nepalis into the British army was formalized. Hundreds of thousands of Nepali youth fought in the First and Second World Wars on the side of the British, which were the earliest instances of a concerted recruitment of Nepali men to work abroad.

The 1947 Tripartite Agreement between Nepal, India and Britain opened the way for a newly independent India as well to recruit Nepali men into its army. Hence, even two centuries later, the tradition of recruiting Nepali youth into foreign armies (the British and Indian as well as the Singapore police) continues broken.

Even as some Nepalese were joining foreign armies, others had begun migrating to different states of India, particularly the Northeast. In fact, the migration of the Nepalese to Northeast India began as early as the 1820s and continues till today. The 1950 Nepal-India Treaty of Peace and Friendship formalized the free movement of people between the two countries without requirements of any formalities like passports and visas.

The human capital which have to consume efficiently within country has exported.

The  production and export of goods/services which is not happening because human capital had exported.

There is only production of unaccountable political leaders. Through this way achievement of development and growth is almost impossible.

The country has faced a rising emigration rate since the late 1990s, with a significant amount of remittances and, moreover, it’s largest source of foreign capital. The land-locked economy battered by a decade-long Maoist insurgency (1996–2006). It has made people displaced from their usual place of residence and the alternative means of employment for displaced youth is established as foreign employment. The conflict has also limited the development activities throughout the country and expansion of industries is stagnated. This situation has created more insufficiency to get employment within the national border and ultimate step of the people is to go abroad for foreign employment. Nepalese workers have often migrated to obtain better employment opportunities, higher wages and better working environments.

Income received from remittance source has become an automatic instrument for poverty reduction in Nepal as both the government and the private sector have failed to create adequate number of jobs. Since the last 30 years, a "culture of migration" has emerged, with millions of Nepalese eager to work abroad, despite the risks and vulnerabilities they are likely to face. Interests in leaving the country is not limited to adults, children of overseas foreign workers also had plans to work abroad. The development of a culture of migration in the Nepal has been greatly aided by migration's institutionalization. The government is trying to facilitate migration, regulates the operations of the recruitment agencies, and looks out for the rights of its migrant workers. However, the continuing demand for workers in the Gulf countries and the opening of new labor markets in other regions, especially in East and Southeast Asia, fueled further migration. On the supply side, the push factors have not abated. The absence of sustained economic development, political instability, a growing population, double-digit unemployment levels, and low wages continue to compel people to look abroad.

Labor Migration: Statistical Overview
Nepal’s population has grown rapidly over recent decades. According to the 2011 Census, Nepal’s population was 26.495 million, up from 23.151 million in 2001. The population is young: the median age was 21.4 in 2011, while around 70 per cent of the population were under the age of 35. The opportunity to reap a demographic dividend will persist into the 2040s. However, the success of this demographic transition depends on the nature of economic growth, structural transformation and job creation in the coming years. The economic impact of migration on origin countries, and in particular on economic growth, productivity and poverty alleviation is not uniform. It depends on the local context, as well as the nature and intensity of migration flows.

Source :Labour Migration Nepal Policies

As the decennial national census has been recording the population absent from home (including those who are out of the country) over the years, but the data collected groups together everyone who has left the country for any purpose (such as study abroad, marriage, business, etc.) and not just for foreign employment.Another source would be The Department of Foreign Employment does record the number of individuals going abroad for employment, but this source also does not accurately reflect the scale of foreign labor migration. First, it is based  only on the number of labor permits issued by the government to go abroad as labor migrants. 

Source : Labour Migration Nepal Policies

Hence, these records do not account for those who go to India for employment. Second, the data from the DoFE only indicates the number of labor permits issued and does not take into consideration the fact that the same individual may have received multiple permits over the years and/or there could be cases where permits have been issued but not used. Despite some shortcomings, the DoFE figures currently represent the most valuable source of information on the number of people who have left the country for foreign employment (to countries other than India). As shown in following Figure, the DoFE recorded 3605 Nepali migrant workers seeking foreign employment in the fiscal year 1993/94. 

Source : author's computation using data from DoFE,2016

Brain drain has important consequences for the sustainable development of origin countries. The impact depends on the size and level of development, the sectors and occupations involved, and the nature of migration (temporary, permanent or circular).The departure of skilled labor represents a loss of public investment in education, as well as in potential tax revenues. The departure of highly-skilled individuals could affect innovation and technological progress and, in turn, productivity and growth. Certain professions could be more affected by migration, e.g. health care and education, due to global demand which could lead to a failure in delivery of key social services in countries of origin. Moreover, migration raises the domestic skill level by increasing the interest in upgrading skills, which could benefit the domestic labor market.

Managing Migration 

International labor migration has emerged as a major global issue and ranks high on international, regional and national policy agendas. Patterns of migration are evolving rapidly, with the result that most countries are countries of origin, transit or destination. The main driver of migration continues to be employment related. Emigration rates tend to be higher in regions where overall economic conditions and in particular working conditions are poor and social protection low. Too many migrants face high social and economic costs in the migration process, inequality and discrimination in the workplace in destination countries, and difficulty in integration, particularly as integration programs have had mixed results.

The ILO projects that the labor force in Nepal will grow by 4.7 million or 30.1 per cent from 2015 to 2030. Over the longer term, therefore, the creation of more employment and entrepreneurship opportunities is critical. Only then will more Nepalese be able to earn a decent income in their country, further promoting sustainable development and poverty reduction.While observing the government policies and programmes, it is found several lacking to protect the rights of the migrant workers and assure their safe migration in the country of destination. Government has made promotional policy regarding foreign employment but at the same time less attention has been paid to provide services and facilities in the home ground. Some of the provisions mentioned in the Foreign Employment Act-2042 are like controlling the foreign employment business rather than promotional one.

Managing migration more effectively has to become a top policy priority for the developing countries like Nepal. But, Nepal government is unable to utilize and manage the available youth population  dividend  more effectively on time. It is widely recognized that migration, if properly managed, may generate important gains not only for migrants but also for host and sending countries.Developing countries like Nepal have to gain in terms of growth, investment, human capital accumulation and poverty reduction. If the government manage to restructure effectively their economies following emigration and diffuse these benefits throughout the economy. To do so, migration and development policies need to become more coherent. 

This blog post is prepared using different articles/News/study reports.