With more of the active population going abroad for employment, Nepal’s receipt of daily remittance income is equivalent to one-fourth of the average daily gross domestic product (GDP) of the nation. Nepal received Rs 1.13 billion daily on average in the first 10 months of the current fiscal year, according to the macroeconomic data of Nepal Rastra Bank (NRB). Likewise, according to the Central Bureau of Statistics (CBS)’s projection for fiscal year 2012-13, the country’s average daily GDP amounts to Rs 4.6 billion. The seemingly attractive pay packages that even menial unskilled jobs offer has lured a large number of Nepali workers to foreign jobs. The average monthly income of these workers range between Rs 10,000 to Rs 20,000, while the government fixed minimum wage for a Nepali industrial labourer is Rs 8000. Due to the obvious difference in wage in Nepali jobs and income abroad, a large number of Nepalis are choosing to join the workforce of foreign countries. “The domestic wage-rate might look less in comparison to what the same unskilled worker could earn in foreign countries, but the work load and expenses are lower here,” pointed out economic adviser at the Finance Ministry Dr Chiranjibi Nepal. “Moreover, in the context of wage and productivity compatibility, the Nepali minimum wage can be considered quite high as industrial productivity is in a sorry state,” he added. According to CBS data, gross output of manufacturing sector has increased by 8.6 per cent while gross output of agriculture sector has gone up by 15 per cent. However, remittance income has supported the growth of the Nepali service sector that is estimated to grow at a rate of 6.3 per cent. Likewise, the import bill has also swollen by 20 per cent in the review period. According to Department of Foreign Employment (DoFE) almost 400,000 workers have got approval to work in foreign nations in the first 10 months of current fiscal year, which is more than the figure of the entire fiscal year 2011-12. “It is unfortunate that many able labourers are exiting Nepal in the absence of an effective government policy to employ them,” said Dr Nepal, adding that the country has not been able to take full advantage of 57 per cent of the population that is in the economically active age bracket. According to official data, by mid-May of the current fiscal year, total incoming remittance amounted to Rs 342.6 billion, which is an increment of 21 per cent as compared to the corresponding period of the previous year. NRB only records money entering Nepal through formal remittance channels. Amount that is transferred to country through friends and ‘hundis’ is estimated to be equivalent to not less than half of formal remittance. “The worst aspect is remittance is not being utilised in a proper manner as households that get remittance consume 79 per cent, while a mere 2.4 per cent is channelled towards capital formation, thus, in the long run this labour exporting trend will not benefit Nepal.”
Posted on: Mon, 17 Jun 2013 06:17:42 +0000
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