Youth Exodus A Threat To Economy

Nepal has a long history of people who obtained education abroad and returned home to serve their country in their various capacities. For example, martyrs Dasharath Chand and Shukraraj Shastri, poet Bhanubhakta Acharya and Dr. Sanduk Ruit received their education from India and hugely contributed to their respective fields. However, the trend of Nepali students pursuing further education abroad has increased exponentially in recent years, which could have negative consequences for the country's development. In the past 16 years, a total of 646,196 NOCs have been issued. In the fiscal year 2008/09 24,824 NOCs were issued, which surged to 117,563 in 2022, a staggering 373 per cent increase. 

A well-educated labour force is a vital building block for any economy. As the Nepali youths flee the nation in search of better education and better job prospects, they leave behind a massive void in the domestic labour market. According to the Nepal Medical Association, as many as 30,000 doctors, including dentists, are registered with the Nepal Medical Council. However, only 18,000 are currently working in Nepal.  Similarly, at least 71,000 engineers are registered with Nepal Engineering Council, and more than 55 per cent of Nepali engineers have migrated abroad for better opportunities. 

Shortage of skilled workforce 

Moreover, 70 per cent of the graduates from the hotel management training institutes emigrate yearly to work abroad, creating a huge shortage of workforce and highlighting Nepal’s difficulties in retaining its skilled human resource. The significant scale of youth outflow has in fact generated the shortage of skilled workers, necessitating foreign workers to be employed. According to the Federation of Nepal Gold and Silver Dealers Association, the gold and silver business sector employs around 25,000 workers of which, 60 per cent are Nepalese and 40 per cent are Indians. Federation of Contractors Association of Nepal reports that a large number of Indians have to be employed due to labour shortages, particularly those specialised in handling equipment.

Moreover, around 55 per cent Nepali and 35 per cent Indian workers are employed in around 11,000 grill and steel factories across the country. The rest of the workers in this industry are from Bangladesh and China. Kewal Prasad Bhandari, former secretary at the Ministry of Labour, Employment and Social Security, stated that there was an extreme shortage of skilled manpower in the country. Furthermore, a report by the Overseas Development Institute (ODI), ‘Pathways to Prosperity and Inclusive Job Creation in Nepal’, predicted that Nepal may face shortage of 3.6 million workers by 2030 if people continued to leave the country for jobs in foreign labour markets. 

This trend of youth outflow possesses a severe challenge to the economy in the long term. It not only creates labour deficit but also results in the loss of innovation, creativity and entrepreneurial ventures. Nepal ranks 109th among 133 countries in the Global Innovation Index 2024, revealing the poor state of innovation and the slow adoption of technology. Without an innovative labour force capable of implementing creative ideas, establishing businesses and engaging in politics, national development is inconceivable.

The unprecedented rate of outward immigration exposes Nepal to the fast growing aging population that can't fuel development. Instead, the country needs to spend a sizable chunk of budget for it as seen in Japan. As per the statistics, Nepal’s population is growing by an average of 0.93 per cent, the slowest growth in 80 years. It is primarily because a large number of women and men of the reproductive age group are residing abroad and many young people in the country are following suit. These statistics show that Nepal will not be a young country in the next two and a half decades.

 The number of the population aged 68 and above in the latest census is 1,524,763 — a 52.56 per cent increase from the last census. An aging labour force, accompanied by a lower geographical mobility rate, only adds to labour shortages. Students studying abroad also deplete the nation's foreign reserves. Only in the last fiscal year, Nepali students studying abroad took Rs 1.25 trillion along with them. However, this spending is countered by the increased remittance, which makes up 25 per cent of the GDP. 

Remittance undoubtedly plays a vital role in alleviating poverty and stabalising the economy, however, it is not sustainable in the long run. Excessive dependency on remittance exposes Nepal to the risk of external shocks – conflicts such as Russia-Ukraine war and host countries’ policy change that may directly influence the Nepali economy.  The country felt some heat when Malaysia stopped hiring foreign workers, a top destination for Nepali youths. Moreover, recession in the host country could severely impact Nepal’s remittance inflow. Therefore, overreliance on remittance may make economy volatile and disrupt the livelihood of Nepalis.

Limited goods and services

Governor of Nepal Rastra Bank Maha Prasad Adhikari has said that Nepal's financial sector is stable and inflation has been balanced with good foreign exchange reserves. However, existing indicators point to a disturbing scenario. High rate of outward immigration means that youths are not getting jobs or creating employment opportunities and setting up industries by unlocking their creativity and innovation to adapt to an ever evolving business trends. This undoubtedly stagnates economic activity, with limited goods and services to sustain ourselves. 

Moreover, the aging population can't fill the void left by the out-migration and the labour shortage will surge. In the long run remittance inflows also might decline as Nepalis, especially students start to settle in foreign countries permanently. The government must find ways to stop the youth exodus by providing better education, job opportunities and improved living standards to them.  It is imperative to retain its skilled human resource essential for building a self-sustaining and prosperous economy. 

(Upreti is a freelancer.)