The global economic meltdown that troubled world economy for almost two years has dragged down the growth of remittance, which account for one-fifth of the Gross Domestic Product (GDP) of Nepal. [break]
Experts say volume of remittance flow in coming days largely depends on how the economies of host countries perform in coming days. They said prediction on remittance flow has become difficult because of lack of reliable information about the situation in labor markets.
“We don´t have reliable data on exact number of workers who lost their jobs in overseas labor destinations on the back of financial crisis. We can only say that remittance flow will depend on how fast the economies of labor destinations bounce back,” Dr Ganesh Gurung, an expert on remittance and migration issues, told myrepublica.com. Gurung, who is conducting research on impact of remittance in national economy, said remittance inflow largely depends on economic future of Qatar, UAE and Saudi Arabia - the key four host countries that are absorbing over 90 percent of annual outflow of Nepali jobseekers.
Though the government has opened 107 countries (Iraq has been deleted from the list due to security reasons), Nepali workers are working in over five dozen countries across the world. The government´s plan to maintain proper record of Nepali workers facing lay off in overseas destinations due to financial crisis is yet to materialize.
According to data compiled by Nepal Rastra Bank, the remittance growth stood at 6.6 percent to Rs 67.74 billion during the first fourth month of fiscal year 2009/10, as compared to the remittance earning that the nation received during the same period last fiscal year. The government received Rs 63.45 billion in 2008/09 during the review period, up 65.9 percent as compared to previous year´s record.
“Reduction in remuneration and working hours by troubled employers is also the key reason behind the plunge in remittance growth,” Gurung added.
Despite drop in the number of outbound Nepali workers and their wages, Gurung said the remittance did not drop as expected. Gurung categorically stated that distress remittance -- money sent back by workers after salvaging their belonging, rise in the value of US dollar and retention of workers by employers albeit giving lower salary rather giving them pink slips and expanding network of money transfer companies, as major factors that prevented sharp drop in remittance earning.
According to Department of Foreign Employment (DoFE), number of workers leaving for foreign employment during the last five months of current fiscal year declined to 100,051, down from 102,852 recorded during the same period last fiscal year.
Gurung said most of the workers remained associated with their employers despite drop in their remuneration and other benefits, hoping improvement in financial condition of their employer companies.
Tilak Ranabhat, president of Nepal Association of Foreign Employment Agencies (NAFEA), also agreed with some issues raised by Gurung. Ranabhat also argued that the decline in remittance growth is also caused by the tendency of workers to hold their money with them, discouraged by the deteriorating investment climate in the country.
“Workers didn´t have to face higher living cost as their destinations didn´t face rising inflation over the year in comparison to other countries,” said Ranabhat.
Despite decline in remittance growth, Chandra Prasad Dhakal, proprietor of IME -- a leading remittance company, however, is optimistic about the rise in remittance earning in the days to come. “I haven´t seen any indications that financial health of labor destinations will worsen in the days to come. Remittance earning will increase once the number of workers leaving for overseas jobs increase,” Dhakal added.
prabhakar@myrepublica.com
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