With the flow of globalization, foreign employment, which began in the 1980s, spread rapidly in Nepal after the 2050s. Amid sluggish economic growth, decades of political instability, and limited domestic employment, the foreign labor market became not only a compulsion for Nepalis, but also a door of hope. The remittances that entered through that door lit the stoves of millions of households, supported the economy, and played an important role in the journey to reduce poverty.

Nepal Rastra Bank's macroeconomic report for the current fiscal year up to Magh shows that remittance inflow increased by 39.8 percent to about 200 billion. In addition, the number of people who obtained final work permits and re-obtained work permits for foreign employment during the review period is about 470,000.

Remittances earned from foreign employment, i.e. remittances, have made a significant contribution to maintaining the country's economic stability, reducing poverty, and improving the living standards of millions of families. According to the Nepal Living Standards Survey-2079/80, about 77 percent of households have directly or indirectly benefited from remittances.

However, as the saying goes, ‘Even when the sun is shining, there are clouds in the sky’, today’s international environment – ​​especially the conflicts and instability seen in the Middle East – is exposing how sensitive this backbone is. The future of millions of Nepalis working in destinations like Qatar, Saudi Arabia, the UAE, and Kuwait is becoming uncertain. The possibility of losing jobs, reducing income, and having to return home suddenly is no longer just a guess – it is a shadow of reality. If such a situation becomes widespread, its impact will not be limited to a decrease in remittances. Just as ‘when many rivers are blocked at once, the river dries up’, similarly, when the pressure in the labor market increases at once, employment opportunities narrow, unemployment increases, and the socio-economic balance is disturbed. In this way, foreign employment is no longer just a story of opportunity, but also the reality of a structure that carries risks.

Remittances: A refuge or a limitation?

Remittances received from foreign employment have given a new shape to Nepal’s economic structure and have also had a profound impact on the basic structure of Nepali society. Remittances from foreign employment are a major source of foreign exchange for Nepal. Remittances from Nepalis, especially those going to the Gulf countries, are not useful for capital formation as they are spent on food, housing and healthcare. However, they have become a major source for household income, consumption and foreign exchange earnings.

However, since remittances cannot be mobilized in productive sectors, their usefulness in capital formation has not been increased significantly. In a sample survey conducted by the Tribhuvan University, Economic Development and Administration Research Center in 2081 regarding the usefulness of the money sent by people who have gone for foreign employment, about 97 percent said that they spent it on family food and clothes, while only about 3 percent said that they invested in starting a new business.

The available data confirms that remittances have not been mobilized as expected for long-term employment creation, production expansion and economic transformation, which is why workers who have returned from foreign employment are forced to go abroad again to make a living. Although foreign employment and remittances, which are part of the ‘Dutch disease’, may seem to be beneficial for the time being, they are likely to be counterproductive in terms of sustainable economic growth and development.

Middle East crisis: ‘Early warning’ for Nepal’s economy

The Middle East region is a major labor destination for Nepal. Millions of Nepali workers are employed in countries such as Qatar, Saudi Arabia, the UAE, and Kuwait. Since the economies of these countries are mainly based on oil, geopolitical tensions, wars, or economic fluctuations are directly affected.

The current instability points to two major risks. First, new employment opportunities may decrease, which will reduce foreign employment opportunities in the coming days. Second, the employment of workers working there may become insecure, leading to a situation where a large number of Nepali youth may have to return home.

Is Nepal ready if a large number of workers return home? This question is not just a policy question, but an existential one. In the current situation, the necessary infrastructure, services, and opportunities for reintegration are not sufficient. ‘If a guest returns home and has no place to stay, he will set off again’ – in the same way, without systematic reintegration, there is a risk that workers will be forced to migrate again.

Returning workforce: Seeds of possibility

The potential expansion of tensions and conflicts in the Middle East has created additional uncertainty for Nepali workers dependent on foreign employment. In this context, it is necessary to view return migration not only as a humanitarian crisis, but also as a complex mix of economic and social opportunities and challenges.

Nepali workers who have returned from foreign employment are not just a group of ‘job seekers’ but also carriers of economic transformation that comes with international experience, skills, a cultured work culture and capital. If appropriate policies, structures and an appropriate environment are provided, they can become the seeds of internal economic transformation.

Especially in the current uncertain international environment, if remittances can be mobilized in productive sectors by utilizing the skills and experience of returnee workers, it can significantly contribute to achieving the new government’s goal of achieving a gross domestic product of $100 billion and a per capita income of $3,000 within five years. In this sense, the crisis has also brought opportunity.

However, the reality is not yet as expected. Due to lack of financial literacy, lack of enterprise advisory and business development services, limited access to concessional credit, difficulty in entering the market and value chain, and policy instability, the skills and capital of the returnees have not been effectively mobilized. As a result, this group full of potential is still mired in structural barriers.