The workforce retention problem in Nepal extends beyond individual firms or sectors and is a long-standing national issue. The increasing trend of young Nepalis leaving the country for education or employment is becoming more serious with each passing month. But the efforts from the public or the private sector to address the concern have so far proved futile.
Businesses receive various advice on retaining their workforce, including training, career development opportunities, and competitive salaries. But even firms implementing these measures are finding it challenging to retain their employees. The issue does not arise from employees switching to other domestic firms; rather, they are leaving the country, often accepting foreign jobs that allow them to save the same amount of money they would have saved if they had stayed in Nepal.
This trend of people leaving the country is akin to an epidemic or a fashion. It is not solely driven by job dissatisfaction. Even students in colleges and schools express their aspirations to go abroad. The same applies to individuals undergoing skill training programs. Even those currently employed are eagerly awaiting a work experience certificate that may help them get foreign employment. As a result, the entire country is grappling with a human resource problem, affecting both professional and menial labour positions. This situation explains the stagnation or decline observed in sectors such as agriculture, manufacturing, construction and services. The entire economy is running with mostly inefficient and physically weaker human resources that are unfit for foreign jobs. The proportion of better able individuals working within the country is very low. As a result, the country's economy is destined to remain in a state of low-level equilibrium, with certain sectors already in a downward spiral.
The situation is exacerbated by government policies. The Foreign Ministry is focused mostly on issuing passports for individuals seeking to go abroad, while the Ministry of Labour is primarily dedicated to facilitating foreign employment without paying much attention to the well-being of these individuals after they leave the country. Other crucial aspects of labour market management have been neglected.
The labour market encompasses more than just the demand and supply sides. It represents an ecosystem that impacts various socioeconomic factors. People opt for foreign jobs despite similar salaries because of the numerous additional benefits they can enjoy abroad. These benefits include a stable currency and prices, better healthcare and social safety nets, improved infrastructure such as roads and transportation, a more pleasant environment, a stronger legal system, less menial and more mechanised work resulting in increased cleanliness and reduced fatigue, and greater prospects for career growth.
Individuals calculate the weighted average of the benefits and costs before making the decision to migrate. The perceived benefits abroad often outweigh those at home. Even first-time migrants are attracted to the improved quality of life that their relatives are experiencing abroad, contributing to the trend becoming fashionable. Once individuals are actually abroad, they can make a more accurate comparison between their expectations and reality in both contexts. The fact that individuals who have previously migrated continue to do so repeatedly upon returning home suggests that the benefits truly are better abroad.
This means, the solution to this labour market problem is not limited to the employers here. Many factors lie beyond their sphere of influence. The society as a whole and the government in particular have to rethink a wide range of aspects and do the necessary interventions in multiple fields. Merely focusing on increasing the minimum wage rate each year and imposing it on employers will only exacerbate the problem. The social security system introduced with so much fanfare in the name of Social Security Fund without corresponding freedom of ‘hire and fire’ has miserably failed to solve the labour market problem in Nepal. Sooner it is realised and necessary steps are taken, the better.