Nepal | September 30, 2020

Opening manpower agencies to cost a fortune

Jagdishor Panday
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Kathmandu, February 11

A parliamentary panel has endorsed a proposal to jack up cash deposit and bank guarantee required to establish a manpower agency by up to 29 times and 17 times, respectively, in a bid to tighten the noose around companies that do not work in the interest of overseas job aspirants.

The new security deposit thresholds for manpower agencies are included in the Foreign Employment Act, which was amended and approved by the Law, Justice and Human Rights Committee of the Federal Parliament today.

“The revised act will soon be forwarded to the Parliament and the president’s office before it is enforced,” committee Chairperson Krishna Bhakta Pokharel said.

Once the new act comes into force, manpower agencies exporting up to 3,000 workers per year must deposit Rs 5 million in government coffers and furnish a bank guarantee of Rs 15 million to start operation.

If manpower agencies intend to export 3,000 to 5,000 workers per year, they must park Rs 10 million in state coffers and present a bank guarantee of Rs 30 million to operate their business. Agencies that export over 5,000 workers per year, on the other hand, must deposit Rs 20 million in state coffers and provide a bank guarantee of Rs 40 million to start operation.

These amounts are security deposit and will be reimbursed once manpower agencies terminate their business. But if they are found working against the interest of overseas job aspirants, the government will use the security deposit to compensate workers who have been duped.

Currently, manpower agencies can be established upon depositing Rs 7 lakh in state coffers and furnishing a bank guarantee of Rs 2.3 million. However, the government has put a moratorium on opening of new manpower agencies since October 2011.

Previously, the Ministry of Labour, Employment and Social Security, which also looks after foreign employment, had proposed to provide two types of operating licences to manpower agencies. It had proposed cash deposit of Rs 10 million and a bank guarantee of Rs 20 million for manpower agencies exporting up to 5,000 workers per year. For manpower agencies exporting over 5,000 workers per annum, the ministry had proposed cash deposit of Rs 20 million and a bank guarantee of Rs 40 million.

“The amounts proposed by the ministry were exorbitant. So, we decided to issue three types of operating licences to manpower companies,” said Pokharel.

Minister of Labour, Employment and Social Security Gokarna Bista said the upward revision in security deposit would reduce fraudulent activities in the overseas employment sector. “If manpower agencies dupe overseas job aspirants, we will dip into their security deposit and compensate workers,” said Bista.

Currently, around 1,100 manpower agencies are actively conducting business. The revised Foreign Employment Act intends to reduce this number by merging multiple companies operated by a single family.

“We found one family operating as many as 17 companies,” Minister Bista said.

The revised act says each family operating more than one manpower agency will be given six months time to merge them. If they fail to abide by this rule, all the companies will be scrapped, says the revised act. Also, operating licence of manpower companies that fail to send 100 employees to foreign destinations annually will not be renewed, according to the revised act.


Cost barrier

  • For exporting up to 3,000 workers per year, manpower agents must deposit Rs 5 million in government coffers and furnish a bank guarantee of Rs 15 million to start operation
  • To export 3,000 to 5,000 workers per year, they must park Rs 10 million in state coffers and present a bank guarantee of Rs 30 million to operate their business
  • Agencies that export over 5,000 workers per year must deposit Rs 20 million in state coffers and provide a bank guarantee of Rs 40 million to start operation

 


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