Is COVID-19 portending bleak days in Nepal?

Job-cut in Gulf countries to impact Nepal’s economy adversely


May 23, 2020


Is COVID-19 portending bleak days in Nepal?

KATHMANDU: With the widespread coronavirus pandemic and extension of the lockdown that most of the countries enforced to curb the pandemic, the world economy has come at its worst ever stage in history.

International Labor Organization (ILO) estimates that there will be at least 5 million job cuts in Gulf countries alone. According to its report published recently, 1.95 billion workers are going to be affected worldwide due to coronavirus pandemic.

The Asia Pacific region is going to be hard hit by the pandemic as 1.25 billion people are likely to lose jobs in this region alone.

This global job decline and job cut will have dual hazards in Nepal’s economy: the decline in the economic activities in the country due to the unemployment in the Asia-Pacific region, this will affect the labor market again; and the job closure in the Gulf countries which will paralyze national economy largely dependent on the remittance.

Due to the sudden outbreak of the pandemic, there are thousands of people waiting to be rescued home. They include those who lost the job due to pandemic; whose visa period has expired; those whose contract has expired and some more in unpaid leave.

There is uncertainty over whether they would be called back, and when they will be called back even if they have to be called.

Unemployment to hit worse than the pandemic

According to the Foreign Employment Board, there are more than 1.34 million people in the Gulf region.

According to Rajan Prasad Shrestha, the Executive Director of the Foreign Employment Board, some 1.34 million people are working as migrant laborers in the 7 Gulf countries. Out of them, 407 thousand want to return home now.

A study carried out by the Board in coordination with the diplomatic mission in the Gulf countries and Malaysia showed that 280 thousand Nepali workers are losing their jobs in those countries and 127 thousand of them want to return home and expect the government to rescue them during the lockdown.

“We estimate around 280 thousand people may lose their jobs,” Shrestha said, “And those with an expired visa, expired contract and offered amnesty during lockdown are willing to return home.”

Estimating the pandemic’s prospective impact on the economy, the Gulf countries have made up their mind on job reduction since its outbreak.

Saudi Arabia had declared amnesty to the illegal workers even before the lockdown was declared.

Kuwait offered the amnesty to such workers after the declaration of lockdown.

Around 3,500 Nepalis, getting such amnesty, are desperately waiting for their return.

The UAE and Malaysia have followed-suit Kuwait and Saudi Arab’s model in this regard.

The decision to offer amnesty to the illegal workers and send them home is an indication of the fact that the job market is shrinking, as the illegal workers are often the cheap manpower for the companies.

Countries like the UAE and Kuwait are not only offering amnesty but are facilitating such workers’ return promising to charter the planes home if needed.

The UAE has threatened not to renew the labor agreement with the countries which are unwilling to take the migrant laborers back home.

Provided such warnings go unheeded, the country is likely to endanger the job market of more than 275 thousand workers.

Some weeks back, UAE wrote to Nepal government offering to send Nepali workers in two chartered planes.

“We have received a letter with the promise to bring our workers back here in two planes,” Foreign Minister Pradeep Gyawali had once said in the meeting of a parliamentary committee last week, “But we can’t let them come unless we make further preparation.” This shows the poor preparation on the part of the government here.

The coronavirus pandemic and the decline of the oil price are forcing the gulf countries heavily dependent on petroleum products into crisis.

The worldwide lockdown and the dispute with Russia have resulted in the fall of the price and consumption of petroleum products. This is sure to affect the job market in the Gulf.

Impact on lifestyle and economy

Nepal used to receive 2.40 billion rupees as remittance daily till one day before the lockdown. This way Nepal did not get nearly 146.4 billion rupees in the 61 days of lockdown. The stranded migrant labors, like the bees surviving on the honey they stored earlier, are making their living with that amount now.

The remittance that used to reach the middle-class household is obstructed which has impacted adversely 60% of the 5.4 million households of Nepal. The stoppage of such remittance means no smoke from those chimneys; paralyzing the installment in the cooperatives or banks and failure to pay the children’s fee in school.

The obstruction of more than 13 billion has affected the foreign currency reserve in the country. The decline is such reserve results in the imbalance in the import and payment in foreign currency.

Every year 512 thousand youths turn mature for the job market. Most of them choose to seek their fortune as migrant labor abroad.

Min Bahadur Shrestha, former Vice Chairman of the National Planning Commission fears that nearly 500-700 thousand people may lose the job in Malaysia and the Gulf countries.

“The failure to generate employment opportunities here on the one hand and the closure of foreign job market, on the other hand, are likely to make use face the crisis we never faced before,” Shrestha said, adding, “Failure to address such issues may result in dissatisfaction everywhere even in the political system itself.

The remittance effect will be noticeable from the first six months after such pandemic.

Shrestha estimates that nearly 2.5 to 3.0 million Nepali workers in India, the Gulf countries, and at home here are likely to lose their job due to this pandemic induced economic crisis.

Shrestha, along with other experts, thinks agriculture the best area to start their rehabilitation with and appeal government to focus on it till other alternatives are sought.