Over dependence on foreign job market to hurt economy

Weakening overseas demand could dampen growth that could feed economic and social instability, according to International Labour Organisation's (ILO) latest report.
"In some economies like Nepal, Bangladesh, Sri Lanka and the Philippines, which rely heavily on remittances to maintain macroeconomic stability and support investment and consumption, weakening overseas demand for their workers could dampen growth and feed economic and social instability," the report said, adding that both migrant sending and receiving countries have felt the impact of the global crisis.
Similarly, Asian Development Bank's (ADB) flagship publication Asian Development Outlook 2011 also stated creating jobs for the country’s burgeoning young population is a major challenge, unless managed properly, it could put at risk the country’s economic growth prospects.
Some 450,000 workers enter the labour market annually. More than half of them seek — and get — jobs in the Middle East and East Asia, particularly low-end work in construction and manufacturing. "But it is Nepal that bears the social costs," the ADO stated.
The country has received Rs 138.9 billion remittance -- that was 11.7 per cent more than the same period last fiscal year -- in first seven months of the current fiscal year, according to the central bank.
However, according to ILO, demand for foreign labourer in the Republic of Korea -- one of the key lucrative destination for Nepalis -- has weakened sharply since 2008.
"The number of foreign workers employed under the Employment Permit System (EPS) rose to around 181,000 in 2008 but decreased in 2009 and fell again in 2010 to around 64,000," the ILO said, adding that reduced demand for foreign labours from these regions would hurt sending countries labour markets, in particular in South Asia and in Nepal.
The trend of youth going for overseas jobs, if reversed, due to current unrest in the Middle East, the country could have to bear more than a social cost as it could lead to social unrest back home.
While under- and unemployment are widespread in all segmentsof the population, the position is particularly depressing for youth. Their nationwide unemployment rate is twice the national average. It is even worse in urban areas, where the decade-long conflict, lack of job opportunities in rural areas, and the concentration of higher level education institutions there have contributed to an influx of younger people, according to the report.
The ADO has suggested reform in the labour laws that according to the report is the most rigid in South Asia and modify cirriculum. "Labour Law is a major block to job creation, and need to be reformed to facilitate quicker recruitment and release of workers," it suggested. "Moreover, the academic curriculumneeds to be modified to reflect labour market needs and to facilitate self-entrepreneurship, in part to capitalise on close ties to India and its prominence as a business services hub."
Progress toward completing the peace process, thereby leading to stronger investor confidence, will be important for faster job creation.