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Nepal's Dependence on Exporting Labor
By David Seddon
University of East Anglia
Nepal is one of the world's poorest countries, with a population of around 27 million and a per capita GDP of under US$1. It is also landlocked, between India and China, and mountainous, situated between the Himalayas and the plain of the Ganges River. Agriculture remains a major source of livelihood, and tourism is also important.
But one of Nepal's major exports is labor, and most rural households now depend on at least one member's earnings from employment away from home and often from abroad.
The Labor Act of 1985 has facilitated arrangements for Nepali migration to about a dozen specified countries, but the government has failed to develop a coherent labor export policy. Every five years, the government of Nepal produces a plan as a policy guideline. Although the current 10th Plan recognizes both the contribution remittances make to the national accounts and the increasing demand for Nepali workers abroad, the government is struggling to keep up with these trends.
In the last decade, foreign labor migration has become a major feature of Nepal's economy and society. Approximately 700,000 Nepalis work "overseas," meaning beyond India, mainly in the Middle East, East Asia, and Southeast Asia. About five percent of these are women. At least another 700,000 work in the private sector in India, and 250,000 in India's public sector.
Migration from the rural areas to the towns and abroad has increased in recent years because of the Maoist insurgency, which began in 1996 when the Communist Party of Nepal-Maoist (CPN-M) launched a "People's War" to overthrow the monarchy as well as the government with the aim of establishing a Maoist people's democracy. The government's security forces have killed and terrorized innocent civilians as well as Maoists, as part of their efforts to combat the insurgency, a tactic that has also encouraged migration.
The government and international development agencies have been slow to recognize the significance of foreign labor migration, instead emphasizing agriculture as "the motor" for growth and development. Most agencies endorsed the government's "Agriculture Perspective Plan" in the 1990s, despite its flaws, and supported the "liberalization" of capital and commodity markets, but paid relatively little attention to opportunities for the employment of Nepali labor abroad.
Nepal has a long history of foreign employment in India, dating back to the beginning of the 19th century, when men from the hill areas of what was then known as Gorkha migrated westwards to the city of Lahore in the northern region of Punjab. There they joined up as soldiers in the army of the Sikh Rajah, Ranjit Singh. Even today, those working abroad are popularly known as "lahures."
After a war in the Gorkha area with the British East India Company (1814-1816), an increasing number of "Gurkhas" (mostly, but not exclusively from present-day Nepal) also joined the British army in India, starting a tradition that continues today.
Throughout the 19th century and well into the 20th, Nepali men served in India, often accompanied by their wives and sweethearts, who either remained in the regimental "lines" or accompanied their menfolk on campaigns as camp-followers. As the Gurkha settlements in India increased in number and size, they also attracted Nepali workers seeking civilian employment. The brothels that developed in these new centers may well have included women from Nepal and from the surrounding areas.
In addition, the development of tea estates in northeast India (in Assam and Darjeeling) increased demand for labor. Nepali workers — both men and women — came in substantial numbers, and a significant expatriate Nepali community began to grow in those areas.
During World War I, Nepal provided hundreds of thousands of men to fight for Britain and the Allies, suffering significant casualties and losses. As a result, many Nepalis decided to settle in India, where the economy was rapidly growing and employment opportunities were increasing. By contrast, Nepal's autocratic Rana dynasty was presiding over a "semi-feudal" and predominantly subsistence-based agrarian economy.
During the 1920s and 1930s in particular, there was a significant increase in the number of Nepali men and women working in India. Some intellectuals regarded this as shameful because it reflected poorly on the state of development within Nepal and revealed the ruling Rana dynasty's failure to generate economic prosperity within the country.
One area to which migrants flocked was Darjeeling, not only to work in the now well-established tea estates, but also to take up a variety of other jobs in what had become a major "hill-station" or resort. In Darjeeling, Sherpas, mountain people from the Solu Khumbu area of Nepal, were increasingly employed as porters for the climbing expeditions that approached the Himalayas via Tibet in this period.
In World War II, Nepal again provided hundreds of thousands of men as soldiers, and again suffered significant casualties and losses. When India achieved its independence, in 1947, some of the Gurkha regiments remained with the British army; others merged with the Indian army.
Over the next few decades, Nepali soldiers in both armies saw action in defense of Indian and British interests in other parts of Asia, including Kashmir, Malaya, and Borneo. From the 1970s onwards, however, the number of Gurkhas in the army has declined, and today only some 3,400 Nepalis are employed in the British Gurkhas.
Nepalis in India Today
Significant numbers of Nepali men were employed in the Indian Army through the 1950s and 1960s, and recruitment to the Indian police and other services, including the civil service, augmented the total of those employed in the public sector in India. Towards the end of the 1990s, some 250,000 Nepalis were employed in India's public sector, of whom perhaps 50,000 were in the army.
According to research in 1997 by the Nepal Institute for Development Studies — the first systematic look at Nepali foreign labor migration — as many as 750,000 men and women were working in India's private sector. Most were engaged in manual labor jobs in industry, construction work, agriculture, or the service sector. Their wages tended to be low and the work was often dirty, dangerous, and even degrading. For example, some 100,000 to 150,000 Nepali women are estimated (by many sources, but with little empirical evidence) to be employed in the sex industry across India.
Although average earnings are low and individual remittances relatively small, the aggregate value of money sent (or brought) back to Nepal from India has been substantial — probably between 25 and 30 billion Nepalese rupees (NRs), or about US$450 million to US$500 million, in the mid-1990s according to a study by Seddon, Adhikari, and Gurung.
Foreign Labor Migration as Private Enterprise
With the approval of the Labor Act of 1985, the government of Nepal officially recognized the potential value of foreign labor migration "overseas," meaning beyond the Indian subcontinent. The government has done little since then to develop a coherent labor export policy or to provide any kind of training or support packages. The trade unions in Nepal are finally beginning to show an interest in overseas workers.
Foreign labor migration from Nepal is still largely a privately organized affair in which individuals make use of their own personal networks or make arrangements through a number of private, government-registered manpower or recruitment agencies. From the late 1980s onwards, Nepalis began to migrate in significant numbers eastwards to Southeast Asia and the Far East and, from the mid-1990s onwards, westwards to the Gulf countries.
According to research in 2002 by the Nepal Institute for Development Studies for the women's fund at the United Nations (UNIFEM), approximately 170,000 or more Nepalis were in East and Southeast Asia, with nearly 36,000 in Europe and over 10,000 in North America. However, the Gulf countries by this time had eclipsed Asian destinations; over 465,000 Nepalis were working in countries such as Saudi Arabia and Bahrain.
The majority of women migrant workers beyond India were in two countries — Hong Kong (44 percent) and Japan (9 percent) — with 56.5 percent in East and Southeast Asia. The remainder were in the UK (12 percent), the US (9 percent), Australia (6 percent), Bahrain (4 percent), and other countries. Most of them were working as domestics or in other areas of the service sector.
The Southeast Asia Connection
Links established through the Gurkhas stationed overseas in Hong Kong and Singapore made these countries prime destinations for employment. In 1997 it was estimated that over 40 percent of all Nepalis living and working overseas were in Hong Kong, Singapore, and Brunei — most of them in Hong Kong.
The next most "popular" destination at that time was Japan. Although immigration to Japan was illegal and the risk of repatriation (or jail) was high, Nepalis could earn over 10 times the average wage in Nepal, even in low-skilled manual jobs in the service sector. A significant Nepali expatriate population had also developed in the UK, largely as a result of the "Gurkha connection."
The majority of women working overseas were to be found in these countries, where remuneration rates are high, demand for domestic workers buoyant, and the support of significant expatriate Nepali communities plentiful.
In February 2001, the Malaysian government officially "opened" its labor market to Nepali workers. Within six months, over 12,000 labor migrants had left for Malaysia, and a year later Malaysia was hosting some 85,000 Nepali migrant workers.
In total, it was estimated in 1997 that the value of remittances from countries not including India amounted to between 25 and 30 billion Nepalese rupees (NRs), or between US$450 million and US$500 million — about the same amount thought to be coming from India. The bulk of these remittances came from Southeast Asia (Malaysia, Singapore, and Brunei) and the Far East (Hong Kong, Japan, and Korea).
That number, combined with the remittances from India, would be between 50 billion and 60 billion NRs — nearly US$1 billion and between 18 and 22 percent of Nepal's GDP — a very substantial contribution to the national accounts and the national, regional, and household economies.
Nepalis in the Gulf Countries
Increasingly, during the latter part of the 1990s, Nepalis began to migrate to the Gulf countries for work, particularly to Saudi Arabia, the United Arab Emirates (UAE), Kuwait, and Qatar. Within a short period, the number of manpower agencies operating in Kathmandu to recruit and send Nepalis to the Middle East had soared, as had the number of Nepalis migrating. The government's only contribution to this massive movement to the Gulf was to establish a consulate in Qatar to supplement the existing embassy in Saudi Arabia.
By August 2001, 87 percent of officially registered migrant workers (those recruited by recognized manpower agencies) were headed for the Gulf. An analysis of Nepali migrant workers in 2002 — by the Nepal Institute for Development Studies for UNIFEM, the women's fund at the United Nations — revealed that two-thirds of Nepalis working overseas were employed in the Gulf, mainly in Saudi Arabia (42 percent), Qatar (11.5 percent), and the UAE (nine percent). The total was estimated at 465,000 — 10 times more than in 1997.
In 1997, the value of remittances from the Gulf countries was estimated at 1.5 billion NRs, approximately US$25 million. Other things being equal, remittances, like the number of Nepali workers in the Gulf, may have increased tenfold between 1997 and 2002, although no reliable figures are available.
In the last five years, the importance of foreign labor migration to the Nepalese economy has increased as numbers of Nepalis leaving to find work abroad have soared. The total volume and value of remittances from Nepali workers abroad has increased significantly; remittances are possibly as high as 100 billion NRs (over US$1.5 billion).
Migration continues partly because of growing insecurity in Nepal's rural areas as the Maoist insurgency has come to control large parts of the countryside. In addition, Nepalis must confront a lack of economic opportunities at home and increasing opportunities abroad.
Indeed, there has been much talk in Nepal recently of "internal displacement" and "forced migration" as a result of the conflict. Certainly, some of the better-off Nepalis in rural areas have been displaced. But it is difficult to distinguish those seeking to avoid the conflict from the bulk of economic migrants because the rural areas are so impoverished and because there has been little research on internal migration.
The failure to create and implement a coherent overall development strategy mobilizing all of Nepal's resources — including effective education, training, and manpower planning for human resource development — has led to low rates of growth and high levels of unemployment and underemployment in what remains a largely subsistence agriculture, handicraft, and service-based economy, with around 40 percent of the population below the poverty line. Hence, the massive upsurge in migration from rural areas to cities and other countries.
The implications of this situation are far-reaching for Nepal as a whole, for the structure and dynamics of regional and local economy and society, and — perhaps most of all — for households and individuals all over the country, both those directly involved in foreign labor migration and those left behind.
David Seddon is Professor of Development Studies at the University of East Anglia. Although his major regional specialization is North Africa and the Middle East, he has also worked in Asia, including Nepal, where for many years he has been involved, as a researcher and consultant, with rural development issues, including those associated with migration.
The Nepal Institute for Development Studies (2003). "Nepali Women Workers in Foreign Lands: a study conducted for UNIFEM." Kathmandu, July.
Seddon, David, Jagannath Adhikari and Ganesh Gurung (2000). "Foreign labor migration and the remittance economy of Nepal: A Report to DFID, Kathmandu." Overseas Development Group, University of East Anglia, Norwich.
Seddon, David, Jagannath Adhikari and Ganesh Gurung (2001). "The New Lahures: foreign employment and the remittance economy of Nepal." The Nepal Institute of Development Studies, Kathmandu.
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