Can Nepal build a better economy for its workers?

Can Nepal build a better economy for its workers?

Although Nepal has made some progress since the devastating earthquake of April 2015, when it comes to rebuilding the economy, there is still much more that needs to be done.


Two years after the devastating April 2015 earthquake, which killed an estimated 8,700 people and destroyed over half a million homes, Nepal is struggling to get back on its feet. The earthquake hit while the country was in the midst of a historic political transformation, which reduced the state’s capacity to lead on recovery efforts. As a result, today many people remain homeless and are still in need of humanitarian aid.

A new report by the Just Jobs Network and the Solidarity Center argues that the time is ripe for Nepal to take advantage of reconstruction to build a better local economy, and also to address another growing challenge – Nepal’s over-reliance on remittances. The money sent back to Nepal from its large migrant worker population abroad accounts for an astounding 23 per cent of national GDP.

For years, Nepal has been one of the world’s top migratory nations. India and Malaysia are the top destinations for Nepali workers, followed by several Middle Eastern countries, most notably Qatar – where hundreds of Nepali construction workers have died building infrastructure for the 2022 World Cup – Saudi Arabia, and the United Arab Emirates. These workers are highly vulnerable with high profile stories showcasing the challenges that many Nepali migrant workers deal with every day.

“The levels of exploitation for migrant workers abroad can indeed be very severe...[including] wage theft, physical abuse, confiscation of passports and forced labour,” explains Greg Randolph, one of the authors of the report and executive vice president at the Just Jobs Network.

According to the United Nations Nepal Information Platform, “most remittances are used by households to cover consumption needs and repayment of debts rather than for investment in productive sectors that can create avenues for breaking the migration cycle and have an impact on the development of Nepal’s economy.” In fact, reliance on remittances creates a cycle of dependency that can be hard to break. This is why many Nepali migrants often return abroad, as the lack of opportunities at home makes migration the only option, even where awareness of risks is high.

This, says the General Federation of Nepalese Trade Unions (GEFONT), is unsustainable. “Remittances can’t be the goal to develop a country,” GEFONT president Bishnu Rimal tells Equal Times. “Nepal is trying to emerge from a cycle of political chaos and from the ashes of destruction. It is a time to chart new course of development.”

Reconstruction and a new Nepali economy

The report, released in April, emphasises the potential for reconstruction to transform Nepal’s economy, especially as Nepal is in a better position today than it was two years ago. Not only has a new constitution been agreed to but many also hope that the recent local elections will increase the capacity of the state to govern. However, when it comes to rebuilding the economy, there is still much more that needs to be done.

“The distance from the earthquake means that Nepal has shifted its attention from immediate relief and humanitarian aid to medium- and long-run reconstruction efforts,” says Randolph. “This shift presents an opportunity to ask harder, deeper questions about Nepal’s economic model, which has been defined by a reliance on labour migration to address un- and underemployment, alleviate poverty and boost economic growth through consumption.”

Currently, Nepal is facing a number of serious economic challenges. Unemployment is around 50 per cent, while nearly 70 per cent of the population works in agriculture. There is also a notable lack of skilled labour. The report argues that job creation and building infrastructure to support local and national value chains should be the central focus of future recovery efforts. This includes skill development to support import substitution, better policy coordination amongst ministries and donors, and more local participation to develop local and regional development strategies.

“The reconstruction effort could be part of a broader framework to create a more inclusive economy in the country,” said Randolph.

Rimal agrees with the main findings of the report, believing that Nepal needs new, labour-focused national policies. “To make Nepal more sustainable and inclusive, first we need wage-led growth,” says Rimal. “We need to invest in infrastructure and green energy – especially hydropower – in construction and other means of connectivity.”

That includes creating new roles for returning migrants. In fact, one key point emphasised in the report is that returning migrants can be a valuable source of skilled labour, if utilised properly. Then, they won’t need to return abroad in order to support their families.

“We argue that safe migration and fair working conditions in destination countries should be combined with another goal – to build inclusive, job-rich economies so that migration becomes a choice and not an economic compulsion,” said Randolph.

Fair, inclusive policies

This also means that investment in jobs and infrastructure needs to also happen in the poorest regions of Nepal, such as Madhesh, near the border with India, which has four of the five districts in Nepal with the lowest literacy rates, not to mention a high rate of migration.

“Madhesis have historically been ignored by both the government and also by aid agencies,” says Puru Shah, founder of Madhesi Youth, a Nepal-based news website for marginalised groups. “The government and international NGOs need to exercise fairness. [They also need to] plan and implement projects based on people’s needs; not on their geographical, ethnic or arbitrary preferences.”

Just Jobs and the Solidarity Center plan to engage with Nepal’s trade unions to push for the inclusion of the report’s recommendations as the country begins to implement new labour and economic policies.

“Workers are generally left out of these discussions,” Sonia Mistry, senior Asia program officer at the Solidarity Center, tells Equal Times. “There is an opportunity and importance in engaging workers and their unions. If we’re actually talking about poverty alleviation and making migration a choice then you need to engage workers and look at decent work in the country of origin.”

For Nepal, where economic challenges, political instability and natural disasters have been a way of life for too long, the opportunity to shift to a more inclusive, local economy is an opportunity that should not be passed up. But change will require the entire country – and international donors – to come together and put the needs of workers first.