Migration and Nepal’s Economy: The Paradox of Development

13 August, 2023

Economics and Trade



Migration is essentially a common phenomenon amongst the youth predominantly, and in Nepal, this is on the rise. Every day, almost 1700 Nepali people migrate in search of a better life abroad. According to 2021 census data, almost 2.2 million Nepali people live abroad.[i] There is a need to understand the factors behind the migration and its impact on the economy of Nepal. Migration is a process which has two-fold effects on the economy of a country; it either aids the country through its liquidity flow or it hampers the economy due to the lack of a skilled workforce. It is a complex process which has elements which interact with each other in different situations. Learning about the causes of migration and its impact on the economic sector of the country gives us a concrete idea of the issue.


Migration as the safe option

Migration to countries abroad has become a trend over the past couple of years, especially after Covid-19. The Nepali economy is highly dependent on remittances and liquidity flows from abroad. In 2020, the Department of Foreign Employment (DoFE) has approved labour migration to 110 countries.[ii]


People migrate for so many reasons, such as better quality of life, education, job opportunities and better salaries. Amongst the 2.2 million Nepali people who migrate abroad, 81.28 percent are male and 18.72 percent are female. These statistics point toward the trend of male-dominated migration from Nepal. Almost 7 percent of the Nepali population lives abroad. Recent years have also seen a surge in the number of Nepali students going abroad for education. Almost 400,000 No Objection Certificates were issued for this purpose in the last decade.[iii] Most of these migrants are aged 25 to 35 years and mostly male. People migrate from Nepal to the top GCC countries and Malaysia. Also the same report shows migration to countries such as Albania, Croatia, Cyprus, the Maldives, Malta, Poland, Romania, Turkey, and the UK is very high.[iv]


Migration is so common in Nepal that one out of every five families has a family member living abroad. This trend of migration has increased after the Covid era, which essentially gave insight into the weakness of the Nepali economy and the lack of employment opportunities. For Nepali people, the most common reason for migration is better salaries in other countries. Some of these people migrate to the Middle East where working conditions are inhospitable, yet the mirage of a good life is what keeps them moving.


The special case of Middle East 

Nepal is said to have sent 620,000 workers in 2021 alone to the Middle East. People migrate to the region because of higher wages, which they remit to their families. These migrants are a reason for the economic stability of Nepal in times of economic crisis. These remittances have helped lift many families out of poverty. But migrant workers in the Middle East are highly susceptible to violence and cruelties. Data from the government’s Labour Migration Report show that at least 7,467 migrant workers have died abroad since 2008, with 750 of those deaths documented between 2018 and 2019. And these figures only cover the legal migrants.


Recruitment agencies employ intermediaries to seek workers and they are often deceived and never fully aware of their working conditions in the Middle East, they are instead promised a better life there with other benefits. Upon arrival, the workers are made part of the Kafala system, which gives the employer complete ownership of their passports and their movements. The host country often requires the employer to play recruitment fees, which these employers pass on to migrant workers. The workers are on terms of sponsorship, which lets the employer exploit them. This system allows employers to move things according to their wishes; they can reduce the workers' wages or even put them in inhumane working conditions, restricting movement and other freedoms. Cases of sexual violence against female workers have also come to light.


Generally, the employers pay the workers less than the amount mentioned in the contracts and also do not care for the well-being of workers. This issue came to light in the run up to and during the FIFA World Cup 2022 held in Qatar.[v] Many workers died because of terrible working conditions and a sizable proportion of them were from Nepal.


Gender-based violence

More often than not, women and men face the same issue differently because of the concept of gender. Women are always vulnerable to gender-based violence and discrimination at the workspace. Most women workers from Nepal or other countries head to countries like Saudi Arabia, Kuwait, the UAE, and Lebanon for work. Studies show 1,174,154 women migrant workers are working in Gulf and 46,764 women are only in Lebanon and about 28,000 undocumented female workers in Kuwait.


Undocumented workers are often exploited more than documented ones as the employers are aware of the extent of their rights. Most of these women are illiterate, work in low-skilled jobs and often face sexual violence from employers. A UN report published in 2013 is a case in point: It states that about 29.3 percent of the workers in Saudi Arabia were physically abused and five percent sexually abused; 54.4 percent of the workers in Lebanon were physically abused and five percent sexually abused.[vi] While it is important to understand that these are only the filed cases or documented ones, many go unnoticed or ignored.


The paradox that plays itself out

While these migrant workers face several issues at work, their families are being pulled out of poverty. In Nepal, one out of three houses are dependent on remittances. In the year 1999/2000, the GDP from remittances stood at 10 percent, while it stands at 23.3 percent currently. Remittances has improved the living standards of households and helped the economy in the long run. Remittances, which accounts for 54.6 percent of the country's total foreign exchange over the past five years, is spent on education, health care and other lifestyle expenses.[vii] This investment has powered the national economy, at least in the short run. But most of the remittance is spent on daily necessities, leaving too little for investment in productive sectors. In the long run, this can result in a yawning trade deficit as the money gets spent on importing merchandise and not on boosting exports. 


Migration of male counterparts affects females in a different way as these women have to shoulder more responsibilities with scant recognition for their increased contributions. the cost of economic development comes as a trade-off between humanitarian concerns and better lifestyles of the people and the most important question is if people are ready to bear these costs.



Migration in Nepal has had a drastic effect on its economy as well as the social lives of the people. Despite stories of abuse and cheating, thousands of people apply for work in the Middle East, for the sake of their families. Skilled human resources believe that they get paid better abroad than in their home country, and this motivates them to go abroad. Unskilled laborers are not paid well in developing and underdeveloped countries. They are paid better in developed nations. All these factors contribute to migration. 


What can governments do, especially in the interest of vulnerable workers? 


Governments need to coordinate with embassies abroad and make a list of viable and trustable recruitment agencies for the safety of migrants. As a result of constant lobbying, governments often do not intervene in the interest of migrant workers, thanks to the remittance that helps keep the economy afloat. 


Governments must also follow security protocols and safety mechanisms. The lack of awareness amongst the elderly population is also a reason behind migration. This needs to be addressed seriously. Migrants must be aware of their rights in the host country in order to avoid any violent attacks. A more active role of the government is essential to help the workers rather than seeing them as a source of investment.







[i] Aarya Rijal, (2022 August 10), Opportunities and Challenges of Migration for Nepal, Nepal Economic Forum

[ii] Ibid

[iii] Migration and Skills Development, Policy Brief International Organization for Migration, United Nations Report

[iv] Ibid

[v] Ibid

[vi] Ganesh Gurung and Padma Khatiwada,(2013),  Nepali Women in the Middle East - A Situation Report, UN Women, Asia and the Pacific

[vii] Ibid