A Term Paper

Brain Drain: Unemployment Situation of Nepal

Submitted By
Prabin Ghimire

Global College International

Macro Economics and Global Economy

Submitted To
Khim Singh Dhami

April, 2015

1.1 Introduction
Migration of people as a phenomenon differs from country to country and from time to time.
It is misleading to generalize about the possible effects of migration from LDCs. But even
more fundamentally, one can argue that different studies are measuring differing things.
Migration of people from LDCs like Nepal may be due to several different sets of underlying
social, political and economic forces. The phenomenon of migration of high quality
manpower can justify the use of the expression on the term "brain drain", but one has to be
cautious in using the expression drain universally. Brain drain represents the defector transfer
of resources spent on imparting education and nurturing technical skills of the drained brain
in question by the parent country (DCs) to the country of the transfer. The developed nations
concerned saves her pounds and dollars on professional education and training and in the
process obtains the services of trained doctors/ engineers who/earn very much more than their
native counter parts and have more comfortable styles of living. Therefore the brain drain
could be defined as an abnormal form of scientific exchange between countries, characterized
by a one- way flow in favour of the most highly developed countries". One of the most
comprehensive reports the main characteristics of brain drain as follows:
a) There are numerous flows of skilled and trained persons from developing to developed
countries
b) They are characterized by large flows from a comparatively small number of developed
countries and by small flows from a larger number of developing countries
c) In these flows engineers, medical personnel and scientists usually tend to predominate
d) The above flows have grown with increasing rapidity in recent years
e) The higher the level of skill/training, the greater the susceptibility to migration tends
f) The flows respond increasingly to the changed economic complexity of world societies and
to legislation which reflects the demands of a new era.
g) The migratory trends are stimulated both by the character of national educational systems
by lack and inadequate planning for the training of students from developing countries, in
developed states.
1.2 Reasons of Brain Drain in Nepal
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1.2.1 Political Problem

When the best of professional manpower leave their home country and settle in a more
developed one, it is a political phenomenon, but it only rarely occurs that the motives are
exclusively political. It involves uncharacteristic contradiction; it simultaneously indicates the
lack of production and over production of professional manpower on the drained country. In
this sense, brain drain is a symptomatic phenomenon, but at the same time it is expressive of
a fundamental difficulty. To some extent it has an objective basis, as the attraction of a more
developed country compared with those of the less developed ones has always existed in the
course of history The net effect of this is that the development of science and technology has
been accelerated in the developed countries and has been slowed down in the drained
countries.
1.2.2 Economic Problem
The economic aspect of brain drain cannot be divorced from the political aspect. First of all,
it should be emphasized that it is in contradiction with the great international economic and
political objective, namely the narrowing of the gap between the developed and the under
developed countries. It expresses at the same time the complexity and the inter-dependence of
different societies; it derives from disproportionate economic, technological and scientific
development of the developed and the developing countries, entailing contradiction in the
training of professional manpower and ability to satisfy the several demands for this group. It
is characteristic of brain drain that the more underdeveloped a country is economically, the
more it loses by brain drain while only developed countries profit from the process. It occurs
through a complicated interplay of direct and indirect economic `push' and `pull' factors. It is
stimulated by the lack of an educational system as well as the absence of a manpower policy
in most of the under developed countries, these deficiencies normally hindering the really
efficient use of those qualified as well as those having talent. As against this, there are higher
living standards and better research and working opportunities of the more developed
country, which provides thousands of possibilities for developing human potential. In
addition to these objective economic factors brain drain is also stimulated by the actually
realized intention of the developed countries to acquire intellectual capital free, and quick as
possible.
1.3 Current Trend of Brain Drain in Nepal
Total Number of labour permits issued yearly, 2008/09-2013/14

Sources: Department of foreign employment

There has been a considerable decrease in the total number of labour permits issued to
individuals applying on their own over the six years. One of the factors associated with the
decreasing numbers is the Directive for Acquiring Labour Permits through Individual
Process, 2012, which was issued to regularize and monitor the acquisition of labour permits
through that approach. Labour migrants who obtain their permit on their own also make their
employment arrangements on their own and thus if they encounter any difficulty in the
destination country, they do not have a recruiting agency to turn to for help. The intent of the
Directive is to better control the process of migration for the safety of workers; by providing
government oversight, workers ideally can be protected from unscrupulous agents and offers
that ultimately entail exploitive and abusive work.
1.4 Origin Districts of Labour Migrants
No geographical information is available for labour migrants receiving permits on their own.
Thus the following data represents only labour migrants who obtain a permit through a
recruitment agency, which, as previously noted, is used by more men than women. Of the
more than 2.2 million labour permits issued over the past six years, 1,729,252 of them were
arranged through a recruitment agency. The receivers represented all 75 districts of Nepal,27
with the top-ten districts of origin Dhanusa, Mahottari, Jhapa, Morang, Siraha, Nawalparasi,
Saptari, Sunsari, Sarlahi and Rupandehi (figure 5). The top-ten districts constituted 36.4 per

cent of all labour permits issued over the six-year period, and as shown, are largely southern
border districts. Of the ten districts, Dhanusa has the largest number of migrants overall, at 5
per cent of all the labour migrants who received a permit over the past six years. The bottomfive districts of origin (see Annex IV) are Dolpa, Mustang, Manang, Humla and Mugu all
located in northern Nepal, near China. Mahottari district, which has the second-largest
grouping of labour migrants with permits, has the lowest score of the ten districts on the
United Nations Development Programmes Human Development Index. Mahottari, Siraha
(No. 5 on the top-ten list) and Sarlahi (No. 9) are three of the countrys most poorly
performing districts in terms of education they have the smallest number of school going
young people, a high drop-out rate and inadequate educational facilities. In terms of trend,
although the top-ten districts remain the geographical source for most of the labour migrants
in foreign employment, their share of the total labour migrants has been slightly decreasing as
more people from other districts take up foreign employment. For instance, a considerable
increase is evident in the acquisition of permits of workers from Dang, Kailali, Rautahat and
Bara districts, which are located along the border with India in the western and southern areas
of the country.
1.5 Conclusions:
Brain drain or human capital flight is a large emigration of individuals with technical skills
or knowledge, normally due to conflict, lack of opportunity, political instability, or health
risks. A brain drain is usually regarded as an economic cost, since emigrants usually take with
them the fraction of value of their training sponsored by the government. It is a parallel of
capital flight which refers to the same movement of financial capital. The term was coined by
the Royal Society to describe the emigration of "scientists and technologists" to North
America from post-war Europe. The converse phenomenon is brain gain, which occurs when
there is a large-scale immigration of technically qualified persons. Brain drain can be stopped
by providing individuals who have expertise with career opportunities and giving them
opportunities to prove their capabilities There is lack of a contributory social protection
scheme in collaboration with employers it destination countries that should be resolved in the
origin country, such as when a bilateral MOU is drafted. Social protection schemes tend to
still take a workers welfare approach rather than recognizing that migrants have rights as
workers as well as their other human rights.

There social cost of labour migration is

troubling, particularly the family breakdown, the increasing number of divorces and the
parenting void for the children left behind. The increasing trend in suicide among migrants
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and those who have returned is troubling as well. The economic cost of labour migration,
such as the charges, commissions and fees, including unseen expenses for foreign
employment and labour permission, is high. Many labour migrants need to use their
remittances to repay the debt incurred for the foreign employment.

A uniform and

compatible database system across all institutions is needed, particularly consisting of

required fields as mandated in the Foreign Employment Act. Currently, the database does not
have fields for details on the parents, spouses or children of migrant workers, which hampers
the provision of services in an emergency (such as a permanent disability due to work-related
injuries or death); the household information needs to be kept current. The process for labour
migration is not yet systematic or transparent, from the advertising for jobs available to the
contract signing and permit approval and through the journey in the destination country,
particularly in relation to governance and human security. There are contradictions between
the Foreign Employment Act, 2007 (and its Regulations) and the 2012 Foreign Employment
Policy, particularly in promoting good governance in relation to labour migration with a
strong mechanism for monitoring and evaluation. The law does not have provision for
monitoring and evaluation while the policy does; law seems to offer more protection to
recruitment agencies while policy is more protective of workers. These and other
limitations should be addressed under the on-going review of the Foreign Employment Act.
The Ministry of Labour and Employment has yet to establish an inter-ministerial coordination
committee as a proactive mechanism in addressing all the issues of labour migration in line
with the international and national labour and other human rights standards. The formal
processes for labour migration are cumbersome and frustrating due to the many requirements
of the documents, the time required, the medical examination certificate need and the costs,
beyond the official fee, are high. The Department of Foreign Employment needs to bring all
processes together in one place to better discourage migrants from leaving the country
without a labour permit. Unhealthy competition and unfair practices among recruiting
agencies and institutions are common. There is no policy environment for the utilization of
earned capital and acquiring skills.