Corruption in Overseas Employment in Nepal

Narayan Manandhar

Governance Expert

With a third of Nepal’s male population expected to be working abroad and the remittance money constituting a quarter of country’s GDP, overseas employment has turned out to be a big business in Nepal. In 2010-11, the government data shows a total of 354,716 Nepali workers migrating to Malaysia, South Korea and Gulf countries for income and employment prospects. This is gives roughly 1000 workers per day leaving Nepal. Since the figure is only an officially recorded figures, the actual numbers may be substantially large, given the fact that

(1) Nepal shares an open and unregulated border with India in the South, and

(2) overseas employment business still operate at an informal level. However, the business itself is riddled with corruptions, frauds, malpractices and inefficiencies.

The Prime Minister’s sacking of Minister for Labour and Transport Management, Ms Sarita Giri, in March, probably marks the height of corruption in overseas employment business in Nepal. The lady minister (please note, women are less corrupt than men) was sacked for blocking PM’s reform measures. There are two departments within the Ministry. Both of them are equally renowned for corruption – Department of Transport Management which basically deals with driving licenses and blue books and Department of Foreign Employment (DoFE) which deals with issuing permits for overseas employment business.

The recent data released by the DoFE shows a sharp rise in the number of complaints in overseas employment. The Graph presents a trend, from 2004/5 to 2011/12, in total number of complaints lodged at DoFE and the amounts claimed. There is an abrupt rise in complaints in 2010/11. Compared to 2009/10, there is three-fold increase in complaints, both in numbers and claimed amounts. Since year 2011/12 is still running, only five months data are available to date, yet on can assume the figures to rise in 2011/12.  

The figures on the number of complaints can be used as a proxy to measure the extent of corruption and mismanagement taking place overseas employment. The data published by DoFE, commensurate to government fiscal year, running from mid July 2011 to mid June 2012, a total of 1898 complaints claiming Rs1 billion ($12 million) compensations have been lodged with the department. The DoFE categorizes complaints into two, namely, individual and institutional. Individual complaints are related to frauds, cheating and malpractices by manpower agents or dalals in Nepali, who are basically, engaged informally in recruitment business. Institutional complaints are related with the formal manpower or recruitment agencies. The complaints lodged at DoFE are related to issues like excessive recruitment charges, delays in recruitment, and changes in terms and conditions of employment and non payment of wages during overseas employment. The classification of complaints into individual and institutional is a bit artificial as many manpower agencies also engage agents at an informal level or sends workers though individual channels after getting approval for institutional channels. This has led DoFE to come up with two types of stickers identifying the status of the workers at the time of issuing work permits. [Source: Data up to 2008/9 from Nepal Migration Year Books, NIDS, from 2009/10 -2011/12, DoFE. Please note, the annual data been adjusted from mid December (paush) to make it comparable with earlier publications. For year 2011/12, it for five months, beginning mid December 2011.]

62 percent of the complaints are individual and 38 percent institutional.  In terms of claimed amount, ratio of individual to institutional complaints is 80:20. The greater share of individual complaints indicates that the informal channels of overseas employment are more prone to corruption risks. Now, the cheatings and frauds do not run in hundred thousands, they run in millions of rupees. In June 2012, media reported Rs120 million ($1.40 million) swindling by a manpower agency from 300 workers promising them employment opportunities in Afghanistan. Similarly, in November 2011, a manpower company went large after cheating 600 workers of Rs130 million ($1.50 million) for getting jobs in Poland. News story like this are making headlines in local newspapers.   

DoFE has managed to resolve 22 percent of the cases; return/withdraw 17 percent and send 8 percent to the court. Remaining 53 percent must be pending in the department as backlog files. In order to speed up the settlement process, the government, in May 2010, established Foreign Employment Tribunal. Again going by the number of cases filed in the tribunal, compared to individual cases, there are less numbers of institution related cases. However, the payoffs involved in institutional cases (on average $24,000) are substantially larger than individual cases (on average $267,000).

There are a number of factors that make the business of overseas employment vulnerable to corruption and malpractices. First, the business is a one-shot activity. With travel deadlines and involvement of foreigners or strangers staying in distant places, there are high chances of corruption in overseas employment. Second, often the victims are poor, illiterate and desperate workers, seeking any how, some how to travel abroad for employment. They do not have protections from the employers or the trade unions. Hence they become easy pickings. Third, there are multitudes of agents involved in the transaction. As these agents seek to increase their payoffs, there is a kind of competition for bribery and cheating. Fourth, the labyrinthine bureaucratic procedures contribute to increase opportunities for corruption. The bureaucratic hassles push the transactions to take place at an informal level. It is estimated that about 40 percent of migrant workers travel through informal channels.  Fifth, the crime is very much organized as it involves elaborate networks and connections. The minister mentioned at the start of this writing must have fallen prey to this grand design. Earlier, we have estimated a minimum of Rs17.4 billion loss per year due to leakages and corruption in overseas employment business. This is around 10 percent of total remittance money received from overseas employment.

The major sources of corruption, cheating and malpractices in overseas employment business include:

(1) producing fake demand letters by the manpower agencies and agents to lure aspirant workers and secure approval from the government;

(2) excessive overhead charges by the commission agents and manpower agencies, a migrant worker pays fees more than what is prescribed by the government; extra fees have to be paid to secure safe travel;

(3) documentation forgery; there is a black market for every travel documents (pass ports, visa, permit letters, medical certificates, orientation certificates, insurance etc.) and the easy access to black market has attracted even migrant workers from Bangladesh to come to Nepal to secure work permits;

(4) the workers are issued fake contracts just be replaced by a new one with new terms and conditions of employment, upon arrival at the destination countries;

(5) finally, the workers are exploited during the course of employment; these practices include

(a) non-payment or payment of low wages,

(b)  no jobs or employing them in inferior jobs,

(c) no compensations for injuries, mishaps and job termination.

There are cases reported regularly in the media, with impounded passports by the employers, the Nepali migrant workers are being put under bonded labor like situation.

The major impact of corruption in overseas employment business is that it increases the cost of migration. The increase in cost of migration not only limits the supply of migrant workers, it also discriminates the labor market – only a few who can afford to travel or who have links with the people in power can join overseas employment. The desperate workers may also be put into heavy debt burden. Poor migrant workers often resort to informal lending market with high interest rates to fund their overseas employment. The worst part of corruption in overseas employment is that it tarnishes the image of the sector. People equate the business of overseas employment as the business of human trafficking and smuggling. Those who run this business are called “thekedars” or contractors” in local language, equating the business with other corrupt sector, namely, public contracting.    

(Dr. Manandhar is a freelance writer on corruption and governance issues and is based in Nepal)

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