The Flip side of Remittances
A large number of under-SLC students are eyeing foreign employment bringing huge foreign remittances back to Nepal. The question is it a long term solution?
By Joshua S. Leslie
July 2nd, 2011
Every day more than eight hundred young Nepalese leave the country hoping to get a job in the Gulf and East Asian countries. However, all are not lucky and many have returned with empty hands even after working years.
According to Nepal’s Central Bank, Nepal received over 230 billion NRs from foreign remittances in 2009-2010, covering over 22% of the country's GDP, which is more than the annual budget of the government; however, the flip side of such an over-reliance on remittances have been the low SLC results in the country.
The decline in the number of students passing their SLC exam compounds fears of Nepal turning into a country that supports developed and developing countries, especially the Gulf States and India, by providing prodigious amounts of unskilled laborers. The Ministry of Labor and Transport shows that Nepal is currently sending over 300,000 people for foreign employment every year, and the country is estimated to have around 6.5 percent of the total population absent from Nepal, significantly higher than the official record of 3.3 percent.
Experts argue that high rates of poverty and a high unemployment rate further exacerbate the problem of mass migration as youth begin to feel disenfranchised by the lack of job opportunities available in Nepal. Furthermore, the high salaries, compared to local earnings, for these unskilled positions in foreign markets make a potential laborer more determined to find a job in a foreign country than in Nepal.
Nepal seems to find its absolute advantage within the global economic market by providing cheap, unskilled laborers to more advanced countries. A case study done in 2002 on the amount of money remitted per person found that migrants in India remit around 9,000 NRs per year, whereas migrants in Western countries are able to send an average 450,000 NRs, and remittances from Gulf States average 90,000 NRs per year. Nepal's GNI per capita in 2009 was $440 (31,500 NRs per year), clearly demonstrating an almost pure arbitrage between working in Nepal and in foreign states.
The opportunity cost of a college education, especially if one wants to reach a Masters or PhD level in Nepal, has lost its intrinsic value as post-secondary schooling is extremely costly and the current low SLC test scores seem to indicate that Nepali society at large is aware of the futility in finding professional, well-paying jobs in the Nepali market.
Therefore, the encouragement and support usually afforded to pre-SLC students begins to diminish as parents realize that they are only pushing their children into a deeper and more difficult abyss, so instead of putting money into their child's education, a family would rather risk entrusting their child's future well-being to a manpower agency rather than an educational institution. With a rise in the number of workers going to foreign lands and earning more money in jobs that require less skills than they could possibly earn in Nepal, Nepalese students themselves are probably not as keen to study and pass their SLC without at least a semblance of assurance over their immediate future.
Foreign countries use the large pool of unskilled laborers currently available from Nepal to decrease their own costs, but as xenophobia, protection of citizen’s rights, and immigration become larger problems within foreign countries in the near future, it would be foolhardy for Nepal to always rely on foreign countries to provide jobs for its population.
Therefore, Nepal's SLC results will not increase without substantial assurances of high paying, professional jobs by market forces and the Government of Nepal.
Until then, this country will remain a pool in which foreign countries remove the necessary flow of young educated people -- before they finish their educations.