Chandan Kumar Mandal

The Covid-19 pandemic dealt a major blow to Nepal’s hundreds of recruitment agencies that supply Nepali youths to overseas companies and employers, a recent study has shown.

The study, ‘Rapid assessment of the impact of Covid-19 on private recruitment agencies in Nepal,’ found that Nepal-based agencies suffered the impact of the pandemic on various aspects of their business operations, such as recruitment, deployment, and the decline of labour demand from destination countries.

The study findings, which were released last week, showed that at the time of the survey (July-September 2020), most private recruitment agencies’ business operations entirely stopped due to the Covid-19 related restrictions imposed in the country.

According to the study, conducted by the International Labour Organisation, Nepal, 84.4 percent of the agencies in Nepal had fully stopped their operation, whereas the other 15.6 percent were partially operating and mostly conducting internal administrative work.

None of the agencies surveyed—128 selected from a pool of 854 agencies registered in Nepal—had recruited any workers after Nepal went into a blanket lockdown in March 2020.

“Through this assessment, we aimed to understand the impact of the Covid-19 pandemic on the recruitment industry in Nepal, which is one of the key stakeholders, to facilitate labour migration,” Neha Choudhary, National Project Coordinator of Integrated Programme on Fair Recruitment (FAIR) under ILO Nepal, told the Post. “Not only do they facilitate employment for those going abroad, but also generate employment nationally for those who work in the industry. We found that almost 84.4 percent of the recruitment agencies had already halted operations between the study period. We are back to a similar, if not worse, situation now.”

Amid rising Covid-19 cases in labour destination countries, Nepal government had stopped giving labour permits to outbound migrant workers in mid-March last year. Eventually, when international flights were halted, labour migrations also suspended for several months, leaving job-seeker Nepalis without opportunities and recruiting agencies without business.

Due to the Covid-19 pandemic, none of the private-sector recruiting agencies, excluding four, were able to deploy workers whose recruitment process had already started. Among them, 77 agencies were unable to deploy a total of 2,176 workers although their labour permits had already been issued, found the study.

According to the findings of the study, the remaining agencies had a total of 10,575 workers whose recruitment process had been partially completed, but they could not receive their labour permits, resulting in the loss of their investments.

Likewise, 68.8 percent of the agencies had suffered a significant decrease in the demand for Nepali migrant workers from employer companies due to the pandemic. In addition, recruiting agencies reported that the demand for Nepali workers from all the major destination countries had dried up.

The Nepal Association of Foreign Employment Agencies (NAFEA), the umbrella organisation of such agencies, has been complaining that the government has ignored their concerns despite facing massive financial hardships.

“The government has shown apathy to the problems faced by agencies as they have continued to face hard times because of the pandemic for several months now,” Sujit Kumar Shrestha, general secretary of the association, told the Post. “Even in the budget for the upcoming fiscal year, there was no announcement of any relief package or measures for recruiting agencies who play a crucial part in ensuring jobs for Nepalis overseas and at home.”

According to Shrestha, nearly Rs500,000 per month is required for the operation of a recruiting agency.

“One can imagine the loss these more than 850 recruiting agencies have borne in the last fifteen months,” said Shrestha. “The financial loss can run into billions.”

Nearly a quarter of the agencies reported an increase in the demand for migrant workers, but they were unable to supply workers as the issuance of labour permits and international flights from Nepal were suspended.

Most Nepal-based recruitment agencies reported that although they were facing many challenges, the primary problem was the cash crunch to maintain security deposits or run their offices. Being out of business for months, some agencies reduced the size of their staff to minimise their expenditure.

But, none of the surveyed agencies reported receiving any government support to face their economic challenges. An overwhelming majority of the recruitment agencies, 87.5 percent, did not consider that the government’s measures to address the Covid-19 crisis applied to them or took their problems into account.

They also complained that the government snubbed foreign employment agencies’ concerns in the national budget of the financial year 2020-2021.

“The sector which brings in valuable remittances and makes a contribution equivalent to nearly 30 percent of the country’s GDP has been left to fend for itself,” said Shrestha. “Should the government not come forward to rescue the foreign employment sector?

Recruiting agencies are critical stakeholders in the country’s labour migration sector. Such agencies play a crucial part by connecting job-seekers with employers abroad and helping Nepali migrants wade through the bureaucratic hurdles of the migration process.

Their significance in the country’s foreign employment sector, which is a single-largest source of foreign exchange, can be seen from the fact that nearly 90 percent of migrants land in destination countries after being facilitated by these agencies.

“Government officials and ministers often highlight the value of foreign employment for foreign currency deposits, but their actions are in the opposite direction,” said Shrestha. “It was the government that stopped labour permits and flights, but recruiting agencies had to face losses for which there has been no compensation. Even during the second wave when international flights to major labour destinations were suspended, flights to India continued.”

Since the beginning of the pandemic, which resulted in a massive decline in labour migration numbers in the fiscal year 2019-20, agencies have been demanding that the government should either return the guarantee amount that they have deposited for running their business or scrap the provision that makes it mandatory for agencies to send a minimum of 100 workers for two consecutive years for renewal of their licences.

As the ongoing fiscal year is about to end, a majority of recruiting agencies have failed to meet the workers export threshold and fear losing their licences.

“In 2004, when 12 Nepali workers were killed in Iraq and many recruiting agencies were vandalised, the then government had allowed agencies to use the guarantee money,” said Shrestha. “We have not received any such support this time when the crisis looks much bigger. Recruiting agencies have been struggling to pay rent and their staffers. The least the government could do is allow us to mobilise the guarantee deposit and help us bounce back.”

During the study, a majority of recruiting agencies reported that it would take more than six months for them to fully restore normal operations.

With the second wave of the Covid-19 restrictions in force, which once again saw the suspension of international flights and destination countries sealing their borders for outsiders, the labour migration sector once again stares at uncertainty.

Experts like Choudhary think providing support to recruiting agencies, which are key actors in Nepal’s foreign employment sector, is also vital for promoting ethical recruitment practices. 

“If we want to ensure fair recruitment practices, we need to have an agile policy framework that responds to the dynamic nature of the labour market that we have been witnessing since the beginning of the pandemic,” said Choudhary. “We also need to recognise and include the recruitment industry in Covid-19 response programme, as any other sector, to ensure that in the long term the constraints they are facing now do not become a burden–financial or otherwise–which get passed on to migrant workers.”

Published on: 21 June 2021 | The Kathmandu Post