Human Resources, Foreign Employment, and Remittances in Nepal

GP Chudal

Human Resources, Foreign Employment, and Remittances are three interconnected aspects crucial to the Nepalese economy. As a low-income country, Nepal cannot create sufficient job opportunities for its growing population. As a result, foreign employment and remittances have become a vital source of income for Nepalese households.

Foreign employment has significantly contributed to Nepal’s economy, with over 5 million Nepalese working abroad. According to the Department of Foreign Employment, more than 6,30,000 Nepalese workers went abroad for employment in the fiscal year 2020/21. Most Nepalese workforce abroad is employed in the Gulf Cooperation Council (GCC) countries, Malaysia, and South Korea. Remittances from these migrant workers accounted for 29.7% of Nepal’s GDP in the fiscal year 2020/21, with a total of Npr 1.24 trillion (USD 10.5 billion).


The government of Nepal has recognized the importance of foreign employment and remittances to the country’s economy and has taken measures to promote safe and legal foreign employment. The government has established the Foreign Employment Board and the Foreign Employment Promotion Board to regulate and promote foreign employment. The government has also signed labor agreements with various countries to ensure the welfare and protection of Nepalese workers abroad.

Human Resources Meaning and Definition

Human resources (HR) are the people who make up an organization’s, business’s, or economy’s workforce. It includes the people’s knowledge, skills, abilities, talents, and potential that contribute to the growth and development of an entity. Human resources are important to any business because they drive productivity, new ideas, and competition. Human resource management is the process of finding, hiring, training, developing, and keeping good employees. It also involves ensuring that the workforce meets the goals and objectives of the organization.

Gary Becker defined human resources as “the knowledge, skills, and habits embedded in individuals that enhance their ability to earn an income.” He believed that investing in education and training would increase the productivity of individuals and contribute to economic growth.

Adam Smith viewed human resources as the source of a nation’s wealth. He believed that a skilled and educated workforce could contribute to the prosperity of a nation by increasing productivity and innovation.

Theodore W. Schultz defined human resources as “the knowledge, skills, and abilities that make people productive.” He argued that investing in education, healthcare, and other human capital could increase workers’ productivity and contribute to economic development.

Difference between Human and Human resources

BasisHumanHuman Resources
DefinitionRefers to individuals as biological beings.Refers to the workforce employed in an organization.
ContextSocial and cultural aspects.Economic and organizational aspects.
PurposeDescribes a person’s existence in society.Describes an individual’s contribution to organizational growth.
ScopeCovers individuals and their characteristics.Covers skills, knowledge, and abilities that individuals bring to an organization.
ManagementIndividuals manage themselves.Managed by HR professionals within an organization.
MotivationIntrinsic and extrinsic motivators.Monetary and non-monetary incentives.
RecruitmentRecruited for personal or social purposes.Recruited to fill a specific job or position.
TrainingSkill development for personal or social purposes.Skill development to improve job performance.
EvaluationBased on social and cultural standards.Based on organizational standards and performance metrics.

Human resources in Nepal

Nepal’s human resources are those who live there and can work in different parts of the economy. Nepal has a large and growing population of 2,91,92,480 people, with about two-thirds of them being of working age. Here are some key points about human resources in Nepal:

  1. Population: Nepal has a large and growing population of 2,91,92,480 people.
  2. Labor force: The labor force in Nepal is estimated to be around 15 million people, with about two-thirds of them being of working age.
  3. Education: In Nepal, the number of people who can read and write has steadily increased over the past few decades and now stands at about 68%.
  4. Skills: Nepal has many skilled workers, particularly in sectors such as tourism, agriculture, and information technology.
  5. Youth unemployment: The youth unemployment rate in Nepal is relatively high, with around 19% of young people aged 15-24 unemployed.
  6. Brain drain: Nepal is experiencing a significant brain drain, with many highly skilled workers leaving the country to seek better opportunities elsewhere.
  7. Remittances: The money Nepalese workers send home is a big part of the country’s economy, making up about 25% of GDP.
  8. Gender: Women comprise around half of Nepal’s population but are often underrepresented in the formal labor market.
  9. Migration: Many Nepalese people move to other countries to find work, especially in the Gulf and Malaysia. They often work in low-skilled jobs like construction and housework.

Foreign Employment in Nepal

Nepalese citizens working in foreign countries under various employment categories, such as skilled, semi-skilled, and unskilled labour, are referred to as foreign employment in Nepal. Over the years, foreign employment has significantly contributed to the Nepalese economy. Over 5 million Nepalese are estimated to be working abroad, primarily in Gulf countries, Malaysia, and Qatar.

The foreign employment sector is important to Nepal’s economy, accounting for more than 28% of the country’s GDP. According to the Department of Foreign Employment (DoFE), 429,439 Nepalese workers were granted permission to work abroad in the fiscal year 2020/21. 60% of them were men, and 40% were women. Approved foreign employment applications have increased yearly, indicating a growing demand for Nepalese workers in foreign countries.

The top three destinations for Nepalese migrant workers are Gulf countries: Saudi Arabia, Qatar, and the United Arab Emirates. According to DoFE data, 32.5% of Nepalese workers went to Saudi Arabia in the fiscal year 2020/21, followed by Qatar (25.5%) and the UAE (17.2%). Malaysia, Kuwait, Bahrain, and Oman are among the countries that have employed Nepalese workers. Many Nepalese households have relied on foreign employment to supplement their income.

Nepalese migrant workers’ remittances have been critical in supporting the country’s economy. Remittances inflows totaled NRs. 1,154 billion (approx. USD 9.85 billion) in the fiscal year 2020/21, accounting for approximately 25% of the country’s GDP.

Remittances in Nepal

A remittance is the transfer of money from one country to another by a person who lives and works in one country. It is commonly used to refer to the transfer of funds from a migrant worker to family members or relatives back home. Remittances can be sent via various channels, including banks, money transfer operators, and online payment systems. Many developing countries and economies rely heavily on remittances for income.

Remittances have made a big difference in the Nepalese economy, especially in reducing poverty, increasing household income, and making life better for people. Sending money home has helped boost domestic spending and investments, especially in the real estate market. But because people depend on remittances as a source of income, they don’t invest in productive sectors and instead rely on the service sector.

Remittances are an important part of the Nepalese economy because many Nepalese people work abroad. Nepal Rastra Bank, the country’s central bank, says that remittances have steadily grown over the years, making them an important way for the country to earn foreign currency. In the fiscal year 2020/21, Nepal received a record high of NPR 1.37 trillion (about USD 11.6 billion) in remittances. This made up 29.7% of the country’s GDP.

The following table presents the remittance inflow trends in Nepal from 2018 to 2022:

Fiscal YearRemittance Inflow (in NPR)Remittance Inflow (in USD)Percentage of GDP
2018/19879.49 billion7.46 billion25.1%
2019/20890.95 billion7.56 billion27.8%
2020/211.37 trillion11.6 billion29.7%
2021/22*1.33 trillion11.28 billion28.5%

Source: Nepal Rastra Bank

As the table above shows, remittances to Nepal have been going up steadily, and a big jump is expected in the fiscal year 2020/21. But there is a small drop in remittances in the fiscal year 2021/22.

Merits of Remittance in Nepal:

  1. Contribution to the economy: Remittance is a significant source of foreign exchange earnings for Nepal. In 2021, remittance inflow amounted to approximately USD 8.8 billion, which accounted for 30% of Nepal’s Gross Domestic Product (GDP).
  2. Poverty reduction: Remittances have helped to reduce poverty in Nepal by providing a stable source of income for families. The money sent by migrant workers has enabled families to meet their daily needs, such as food, clothing, education, and health care.
  3. Increase in investment: Remittance has led to increased investment in Nepal. Families have used the money to invest in education, housing, and small businesses, creating job opportunities.
  4. Human resource development: Remittance has contributed to developing human resources in Nepal. Migrant workers who have worked abroad have gained skills, knowledge, and experience that they can use to contribute to the development of Nepal.

Demerits of Remittance in Nepal:

  1. Brain drain: Remittance has resulted in a brain drain from Nepal. Highly skilled and educated individuals migrate abroad for better opportunities, resulting in a shortage of skilled workers in Nepal.
  2. Dependence on remittance: Nepal’s economy has become heavily dependent on remittance. This dependency poses a risk to the economy as the inflow of remittance is subject to the economic conditions of the host country.
  3. Social problems: Remittance has led to social problems such as family disintegration, cultural erosion, and drug addiction. The absence of migrant workers has resulted in family disintegration and the erosion of cultural values. Moreover, remittance has led to increased drug addiction among young people, who often misuse the money sent by their family members abroad.
  4. Lack of investment in productive sectors: Remittance has resulted in a lack of investment in productive sectors. Families often use the money to invest in non-productive sectors such as real estate and consumer goods, which do not contribute to the economy’s growth.

Remittance and Dutch Disease in Nepal

Dutch disease is an economic term that describes how the discovery and use of a natural resource (like oil or minerals) can hurt a country’s economy. This is because a sudden influx of revenue from a natural resource can cause the country’s currency to appreciate rapidly, making exports more expensive and less competitive while increasing imports, including luxury goods.

Regarding remittances in Nepal, the Dutch disease is called the “remittance trap.” This happens when a country’s foreign exchange earnings come from remittances, creating an economy heavily dependent on remittance income. This can lead to a neglect of other sectors of the economy, such as agriculture and manufacturing, making them less competitive and capable of contributing to the country’s economic growth.

But it’s important to note that remittances can positively affect the economy, like more spending and investment, which can help the economy grow and develop. Also, remittances can help families and communities have a social safety net, which can help reduce poverty and inequality. As a result, rather than relying on remittances as the sole source of foreign exchange earnings, it is critical to balance their positive and negative effects and use them as a tool for economic development.

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