Impact of the Iran Conflict on Nepali Workers in the Middle East

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Officials from the Foreign Employment Entrepreneurs’ Association have reported that since the United States and Israel began their attack on Iran over 100 days ago, demand for Nepali workers in key Middle Eastern labor destinations has dropped by more than half. “The outflow of Nepali workers has been significantly affected. Quantitatively, there is about a 50 percent decrease in labor demand compared to before the war started,” said the Association’s President, Dik Bahadur Khatri.

Mira Acharya, Director General of the Department of Foreign Employment, noted that while the number of individuals applying for labor permits has not declined markedly, there has been a noticeable decrease in those going through institutional channels. “The number of workers going through manpower companies has fallen. It is necessary to study why companies have been unable to generate demand,” she said. Following developments in the Iran conflict, the government temporarily suspended labor permits on February 28 (Falgun 17), a ban that was lifted after 50 days on April 20 (Baisakh 7).

The ban applied to countries including Saudi Arabia, the UAE, Qatar, Kuwait, Bahrain, Oman, Iran, Yemen, Jordan, Lebanon, Turkey, and Israel. Among these, the number of Nepali workers is in the millions in Saudi Arabia, UAE, and Qatar, and in the thousands in the others. The attack on Iran began on February 27 (Falgun 16) by the U.S. and Israel, with Iran responding by striking Israel and U.S.-aligned Gulf states. According to figures from principal destinations UAE, Qatar, and Saudi Arabia, institutional labor permits issued in February were approximately 6,000, 2,000, and 2,000 respectively. No institutional or individual permits were approved in March in these countries.

Although labor permits resumed on April 20, the number of institutional permits issued in April remained low at 6,000 for UAE, 2,600 for Qatar, and 4,000 for Saudi Arabia. “Despite reopening after a 50-day halt, there was no significant rush for work,” said Director General Acharya. “Very few have left their jobs due to perceived risks.” However, during the peak of tensions, the Ministry of Foreign Affairs had requested a list of Nepali nationals requiring possible evacuation. By early March, approximately 73,000 names were recorded, with around 5,000 expressing that they felt unsafe. “That was a very serious period, but very few were evacuated specifically,” Acharya added.

Association President Khatri emphasized that the real impact has been seen in institutional labor permits, noting a lack of demand particularly in the hotel and restaurant sectors. He explained that aside from some construction work, there are few productive industries employing Nepali workers in those areas. “We are still waiting, but the need to decentralize the labor market has made the situation more complicated,” he said. “Under these circumstances, the government should diversify labor deployment towards Europe, Korea, and Japan, though there are policy challenges involved.”

Remittances Remain Unaffected

According to data released by Nepal Rastra Bank for the current fiscal year ending in mid-April, remittance inflows have risen significantly compared to the previous year. “While remittances grew by 13.3 percent by last fiscal year-end, this year they increased by 41.2 percent during the same period,” said spokesperson Guru Prasad Paudel. The remittance amount for April alone reached NPR 25.749 billion, up from NPR 16.530 billion in April last year. Despite a 10.4 percent depreciation of the Nepali rupee against the U.S. dollar compared to last year’s end of Ashad, remittance in dollar terms increased by 33 percent. Currently, 335,000 Nepalis have obtained new labor permits and 326,000 have renewed theirs. “Remittances from Gulf countries rose by 8.5 percent compared to March and about 49 percent from last April to this April,” Paudel added. “Although effects are evident, the current situation has not immediately impacted remittance flows; therefore, the Gulf tensions have so far had little effect on Nepal’s remittance income.”

On April 8, a preliminary ceasefire was established between the U.S. and Iran, but tensions have reignited hostilities between Iran and Israel. The Department of Foreign Employment reported that in the last fiscal year, approximately 274,000 workers were sent to the UAE, 152,000 to Saudi Arabia, 150,000 to Qatar, and 86,000 to Oman. Over the past four years, about 3 million Nepali workers have sought employment abroad.