Nepal’s migrant workers sent home a record Rs2.363 trillion in FY 2025/26, up 37.1 percent. Yet since the Iran war began on February 28, new approvals for Gulf-bound workers have fallen by more than half. The money keeps coming. The jobs that keep it coming are disappearing. 

For many Nepali households, a migrant worker’s earnings pay for children’s education, parents’ healthcare, debts, housing and a cushion against financial shocks. Labour migration has become a privately financed system of household welfare, deeply embedded in Nepal’s broader social protection system. That is why the pressure now building matters: Gulf labour-market nationalisation policies that prioritise citizens, and regional instability, including the US-Israeli confrontation with Iran and reported Houthi attacks on Saudi Arabia. Together, they raise a fundamental question about the resilience of Nepal’s remittance-dependent household economy. 

Most Nepali migrants, particularly in the Gulf, go temporarily to earn rather than settle, keeping strong family ties at home. That dependence creates vulnerability. When overseas hiring declines, the effects reach Nepali households with a delay, as existing contracts and savings temporarily sustain remittance flows. 

The Gulf makes this contradiction particularly consequential. Approximately 1.9 million Nepalis work in the region, nearly 60 percent of Nepali migrant workers abroad. The Middle East contributes around 40 percent of remittance inflows, with Saudi Arabia, Qatar and the UAE alone accounting for approximately 37 percent. Any prolonged instability in the Gulf could trigger a major economic shock, threatening household incomes, employment and Nepal’s foreign-exchange stability.

What lies beneath remittance boom

The 37.1 percent increase demands explanation. First, currency matters. In US-dollar terms, Nepal’s remittances rose 28.1 percent, to $16.19 billion. The nine-percentage-point gap points to a substantial exchange-rate effect, since foreign earnings translate into more rupees when the rupee weakens, though it does not precisely measure depreciation’s contribution. 

Second, the overseas workforce continues to earn and send remittances. Those who left Nepal in earlier years remain employed, renew their permits and continue sending money. In 2025/26, renewed labour approvals rose to 385,783, from 333,309 the year before, which helps explain why remittances can rise even as first-time departures fell substantially.

Third, greater use of formal channels may be improving the visibility of remittances. Financial awareness, banking access and regulated remittance services draw transfers away from informal hundi networks. But the published figures do not quantify how much of the increase this explains. It would be misleading to attribute the entire boom to any single factor.

Finally, rising uncertainty from the wars in Iran and Yemen may have led workers to clear their savings from local banks, adding to inflows.

The deeper point is that remittances measure money from a large stock of workers already abroad, whereas labour approvals offer a glimpse of the future supply of overseas jobs. For a brief period, the two can move in opposite directions without contradiction.

Gulf’s shrinking job opportunities

That distinction becomes urgent in the labour market. According to the Department of Foreign Employment, new approvals for Gulf-bound workers fell 52.12 percent between the start of the Iran war and mid-September, compared with the same period a year earlier: from 228,165 to 109,249.

The fall was uneven. Approvals dropped 59.05 percent for the UAE and 57.02 per cent for Saudi Arabia, with significant falls for Bahrain, Kuwait and Qatar. Only Oman recorded an increase. The Gulf is not one uniform labour market.

The Iran war is the most important immediate shock. Disrupted business confidence, tourism, transport and hospitality have led employers to postpone recruitment, cut staff or put existing employees on unpaid leave. The human consequences are already visible.

But the war cannot be a catch-all explanation. Saudi Arabia’s Saudization, the UAE’s Emiratisation and similar localisation drives were reshaping recruitment, particularly in selected occupations and sectors, before the conflict began. The available figures do not establish how much of the recent decline is due to war and how much to localisation, sectoral conditions or other factors. What is clear is that Nepali workers face both cyclical uncertainty and longer-term competition from other labour-exporting nations.

India’s place in Nepal’s economy

A complete account must also look beyond the Gulf. Along with Southeast Asia, Europe and North America, India has long employed Nepalis through a uniquely open cross-border relationship, and earnings from work there, along with pensions paid to eligible Nepali residents, are economically significant. The Reserve Bank of India’s Indo-Nepal Remittance Facility explicitly facilitates transfers by Nepali workers and pension payments to former Indian army servicemen settled in Nepal.

Yet it would be premature to conclude that India’s contribution is excluded from official remittance totals, or that India is the largest source once pensions are added. The published data do not allow either claim to be established. The open border and circular movement complicate conventional migrant counts, and better data would make this relationship’s contribution easier to assess.

The bigger question is whether Nepal should treat overseas jobs, India included, as proof that its migration-dependent model is sustainable forever. The country benefits enormously from workers’ earnings, but it exports labour because domestic jobs remain insufficient. If foreign recruitment stays weak, the effects may appear gradually: fewer new salaries, greater pressure on returning workers, weaker household consumption and, eventually, slower economic growth.

Nepal should neither discourage migration indiscriminately nor celebrate every increase in overseas employment. It must strengthen labour-market intelligence, transparent recruitment, consular protection, wage recovery mechanisms and reintegration support for returnees. Diplomatic missions should help diversify destinations, while the government invests in productive jobs at home. Nepal also needs coordinated monitoring with Gulf governments and employers to identify workers facing unpaid leave, lost wages or insecure residency status.

The challenge is not simply to sustain remittance inflows but to keep overseas employment safe, fairly paid and accessible. Returning home should be a choice made with dignity, not a consequence of sudden unemployment. Record remittances reflect what migrant workers contribute today; declining recruitment raises a more consequential question: who will generate these earnings in the future?