The theory and practice of zero-cost migration

Nepali Times Archives/Om Astha Rai

Nepal has set a positive image in the region for adopting a ‘employer pays’ principle that removes the cost burden on its overseas migrants. The reality is that it has remained just that: a principle.

Only a negligible number of Nepali workers have benefited from the free visa and free ticket policy – even under bilateral agreements with some Gulf countries and Malaysia that require employers to pay the costs.

The issue of recruitment costs has resurfaced with the Israel-Nepal agreement for caregivers signed last week. Early indications are that the recruitment fees may not be zero, and workers will have to bear costs such as air travel and pre-departure training.

Nepal has bilateral agreements with other countries which do not have the employer pays model. Korea has signed Employment Permit Scheme (EPS) with 15 countries for employment in five sectors. Japan has Specialised Skilled Worker program with 10 countries for employment in 14 specific sectors. The agreement between Israel for 500 more Nepali caregivers is similar to the ones it has with Georgia and the Philippines.

Nepali workers stuck in no-man's land, Nepali Times

In all cases workers have to bear some of the cost of recruitment, all countries have specific quotas. And they are often the only legal pathway for Nepalis to get jobs in those countries. The criteria of these overseas worker programs uniformly apply to the sending countries.

Nepal’s agreements with the Gulf states and Malaysia, however, are different. They are generic and not part of any specific overseas worker employment program with criteria that apply to all sending countries. The provision in the agreements are outcomes of country-specific negotiations, there are no quotas, and jobs are not tied to any sector. With or without MoUs, Nepali workers continue to migrate legally to those countries.

While there is more leeway in the negotiations of such generic agreements, it is difficult for Nepal to be a sole fighter for the employer pays principle in specific bilateral labour programs such as those with South Korea and Japan.

Average recruitment costs also vary widely across sending countries (see figure). For example, the Philippines allows an equivalence of one month’s salary as recruitment fee. South Korea is not going to have a flagship bilateral labour scheme for Nepal that says ‘workers from 14 countries will pay $700 but Nepalis will pay 0’.

There are therefore limitations to what labour diplomacy and negotiations can achieve. A zero-cost or bust strategy may deprive Nepali workers from benefiting from the most attractive opportunities overseas with guaranteed returns.

Average recruitment costs and monthly earnings (2016) of Nepali workers. SOURCE: IOM/KOICA

It would help if all sending countries adopted a single voice on common issues such as recruitment costs. Regional platforms like the Colombo Process for cooperation between sending countries have very little to show for now. Instead, each sending country’s priority is the size of the quota it can bag for its workers in South Korea or Japan.

Recruitment costs also need to be considered not just on their face value but in terms of their equivalence to wages. There is a vast difference in the returns to employment across countries. Some are more attractive than others in terms of returns and in our case, Japan, Israel and South Korea are relatively better despite room for improvement in worker treatment.

The difference between job opportunities in Israel/South Korea versus the Gulf/Malaysia may be an inter-generational social mobility jump versus just sending enough remittances to make ends meet.

EPS workers in South Korea have three advantages: they are charged the same amount, there is a transparent breakdown of costs involved that apply equally to all, and they will be able to recoup this cost within a month.

On the other hand, workers headed to Malaysia face a completely different reality, even if there is a zero cost pact between the two countries: they are arbitrarily charged as per the recruiter’s demand. There is no certainty when they can recoup costs, usually it will take many months.  If workers headed to Malaysia knew that they would be able to recoup recruitment cost within a month of arrival, as in the case of South Korea, they would likely see it as a blessing considering the status quo.

Zero-sum game in zero-cost migration, Upasana Khadka

Nepal’s bilateral schemes with Korea, Japan and Israel have evolved to address high recruitment costs. The EPS itself is remodeled after its predecessor, the Industrial Trainee Scheme, under which workers paid as much as $10,000 for their jobs, and the process was rife with malpractice and exploitation.

The Israel market was shut down for Nepali caregivers in 2012 when recruiters started charging up to $8,000 each. Removing intermediaries in these programs is an attempt to reduce costs for workers. In the quest for the ideal ‘employer pays’ model in which workers pay nothing, we disregard the achievable progress in government-to-government schemes like the most recent Israel-Nepal agreement.

While Nepal may have signed agreements with employer pays provisions for visa fee and air tickets, there are no mechanisms to ensure its implementation. These principles are only as good as the impact they bring to migrants.

In the past few years since it was set up, the Ethics Practitioners Association of Nepal (EPAN), an umbrella organisation of recruiters committed to ethical recruitment including no cost for workers, has been able to mobilise zero workers. The only reason they are surviving is because they have alternate businesses in other sectors.

There are some positive signs. Glove factories in Malaysia are reimbursing recruitment fees of workers from all nationalities – not just workers from Nepal with which Malaysia has signed a zero-cost pact (see figure). This move was not due to the goodwill of employers or the Malaysian Government, but pressure from the United States after their exports faced a ban from CBP (Customs and Border Protection) and a potential damage to their reputation from profiting during the pandemic.

Recruitment costs (Months of earnings at destination) SOURCE: World Bank

This calls for a more strategic approach to bring real change alongside non-binding, soft commitments, or moral agreements on zero-cost migration that get all the media attention. Another unintended consequence of focusing only on the principle of no-cost migration is that more practical solutions may be disregarded.

One of the biggest downsides of financing recruitment costs for Nepali workers is that they are slapped hefty interests by informal lenders that add up significantly. Financing collateral free, low interest loans, as was implemented by DfID in Province 2 before the lockdown, is an example of a more practical short-term approach to ease the burden on migrants.

Is it fair to deprive them of low cost financing solutions knowing that workers are paying to go abroad regardless of whether it is to a country with which we have signed a zero-cost pact or not,

Nepal’s well-intentioned policies have failed to deliver, but anyone who cares about migrant welfare will champion the employer pays principle. The bosses of migrants, often migrants themselves but referred to as ‘expats’ for being in a higher position, are not only exempted from recruitment costs but also get compensated for relocation. It is counterintuitive that those in the lowest rungs of the ladder who cannot afford the costs are being made to borrow to pay exorbitant fees just to get the jobs.

Nepal’s implementation capability and whether policies are practical in the current context, the incentives for those involved, regional dynamics, and the diverse situation of worker treatment across countries, all have to be taken into account.

Turning this aspiration to reality is a long game, and we would be remiss to disregard a whole range of shorter-term, practical alternatives en route.

Upasana Khadka writes the column Labour Mobility every month in Nepali Times analysing trends affecting Nepal’s workers abroad.