Things were already expected to be bad for Nepal’s foreign employment sector. Now it is looming towards the worse.

Reeling under the pandemic, Nepal’ foreign labour market is likely to experience a severe downturn with Malaysia, a top destination for Nepali workers, showing the signs of stopping the hiring of foreign workers.

Through a series of recent announcements, Malaysian authorities have hinted that there will be a cap on the arrival of foreign workers into the country and that jobs would be reserved for local citizens.

Last month, Malaysian Human Resources Minister Datuk Seri M Saravanan said there would be no new intake of foreign workers in all sectors until the year-end as locals would be given priority in existing job vacancies.

“We will not allow [new] foreign workers until the year-end. They [foreigners] can come as tourists if they are allowed,” he had told local media at the launch of the Human Resources Development Fund initiative under the National Economic Recovery Plan. “We try to reduce foreign workers in the workforce besides giving priority to locals to secure jobs.”

On Tuesday, Saravanan once again urged Malaysian employers to hire locals via the MYFutureJobs portal, which is the Malaysian government’ national employment services portal that serves both job seekers and employers. Besides, the Malaysian government has also rolled out incentive programmes to employers for encouraging them to hire local workers.

Malaysian government’s intention and recent initiatives, however, do not augur good news for Nepal, for which the Southeast Asian country remains a favoured employment destination for tens of thousands of its citizens and a source of remittance worth billions of rupees.

According to Jeevan Baniya, a labour migration expert, the move was anticipated but will hit Nepal’s labour market in Malaysia.

“Whenever there is economic distress or shrinking jobs in the internal labour market, countries often come out with such policies. The country’s internal political situation also inspires such moves,” said Baniya, who is an assistant director at the Centre for the Study of Labour and Mobility of Social Science Baha. “But this will definitely affect Nepal’s labour migration scenario as Malaysia has been one of the most preferred labour destination countries for our workers.”

The Covid-19 has already resulted in a massive drop in labour migration numbers with no signs of immediate recovery.

During the 2019/20 fiscal year, the number of permits issued saw a remarkable drop of 27.5 percent, compared to the 2018/19 fiscal. Overall labour permits issued last fiscal year, when 59,714 Nepalis departed for Malaysia, were the lowest in the past five years.

With the prolonged global economic slowdown caused by the pandemic and nationalisation of jobs, the country’s labour market is likely to shrink even more in the months to come, warn experts.

“Foreign employment sector, which has been completely shut down for over six months due to the impact of Covid-19, is headed towards more uncertainty. We had thought that the sector would see a revival in the next few months, but that is unlikely now,” said Rohan Gurung, a Kathmandu-based recruiting agency operator.

According to Gurung, who is the former president of Nepal Association of Foreign Employment Agencies—the umbrella organisation of recruiting agencies in the country, stopping labour migration to Malaysia would mean loss of thousands of jobs for Nepalis.

“In one year, as many as 175,000 Nepalis went to Malaysia. Malaysian employers have been hiring foreign workers like Nepalis as it must have been an easier and also cheaper option for them,” said Gurung. “The Malaysian government is now encouraging local employers to hire local workers as they are also facing unemployment after workers must have returned from developed countries as well.”

Malaysia currently hosts nearly two million foreign workers, including over 400,000 Nepalis.

Although labour migration to Malaysia witnessed a surge in the 1990s, Nepal started issuing labour permits to Malaysia-bound workers only in 1997, as per a factsheet report of the Centre for the Study of Labour and Mobility.

Malaysia, however, recognised Nepal as a source country for foreign workers only in 2001. And since then, Nepalis have worked in various sectors like manufacturing, construction, plantations, agriculture and the service industry.

Now, in a bid to encourage local employers to hire Malaysian citizens, the incentive programme pays between RM800 and RM1,000 per worker for up to six months.

Under the National Economic Recovery Plan, which was introduced to reduce unemployment by hiring local talent and upskilling workers, has employed 46,043 job seekers between June 15 and September 9.

Such a move can have a ramification for Nepal, where the unavailability of jobs to migrants who had returned home after losing jobs in the wake of Covid-19 has triggered re-migration.

“We have seen Nepali youths desperately trying to enter India from the Gauriphanta border. While the labour market abroad is shrinking, schemes rolled out so far to provide jobs to returnees have been ineffective as they are willing to migrate again,” said Baniya.

“Economic slowdown, new labour force entering the market every year amidst the existing unemployed population and the shrinking labour market will place the country in a difficult situation and also see a rise in social problems.”

Labour migration to Malaysia was slowly reviving from a 16-month-long suspension enforced by the government. Within the next few months, the government stopped issuing labour permits due to the fear of infection among migrants after Covid-19 ripped through labour hosting countries.

Now, when the government has started issuing labour permits, Malaysian policy is likely to affect Nepali workers’ prospect of travel in the next few months.

“Nepalis have been getting to work in Malaysia, which has climatic conditions similar to Nepal and is relatively freer than the Gulf countries. Nepalis have been getting to work as factory workers in giant multinational tech companies,” said Gurung.

“Sooner or later, Nepalis will start migrating due to the absence of jobs at home. They will have no option than going to Gulf countries and work in hot conditions away from factories in Malaysia.”