Youth Migration, Economic Frustration, and Governance Challenges in Nepal

Introduction

Nepal faces a complex interplay of economic stagnation, political instability, and social 

discontent, with youth migration emerging as both a symptom and a driver of these 

challenges. Remittances from migrant workers contribute over 25% of the country’s GDP, 

offering critical lifelines for households but masking deeper structural weaknesses. Despite 

short-term financial benefits, reliance on migration has intensified youth frustration, 

unemployment, and protests demanding accountability.

Economic Dependence on Remittances

Remittances have grown steadily in recent years, increasing from NPR 10.7 billion in 

2021/22 to NPR 12.2 billion in 2022/23 (Nepal Ministry of Finance, 2023). While this 

inflow sustains household consumption, it conceals underlying issues such as limited 

domestic job creation, weak investment climates, and widespread corruption. Heavy 

dependence on remittances also leaves households vulnerable to global shocks, such as 

economic downturns in the Gulf region, where many Nepali migrants work.

Youth Discontent and Protests

Over 60% of Nepal’s population is under 30, yet unemployment among this demographic 

exceeds 20%. The mismatch between educational attainment and labor market 

opportunities has left many young people disillusioned. Frustrations erupted in September 

2025, when Generation Z–led protests initially triggered by a social media ban expanded 

into mass anti-corruption demonstrations. Protesters denounced nepotism, unemployment, 

and exploitative migration practices, framing these issues as evidence of a 'stolen future.' 

The unrest caused estimated economic losses of $22.5 billion, nearly half of Nepal’s GDP, 

further worsening youth employment prospects.

Deficiency of Domestic Investments

Nepal lags behind its South Asian neighbors in attracting foreign direct investment (FDI). By 

2023, total FDI stock amounted to only $1.5 billion, far below levels in Bangladesh or India 

(U.S. Department of State, 2024). Barriers include bureaucratic red tape, political instability, 

corruption, and infrastructural weaknesses. Comparatively high wages and low labor 

productivity also deter investors. As a result, many youth turn to migration as a survival 

strategy rather than pursuing opportunities domestically.

Corruption and Exploitation in Migration

Corruption is pervasive in Nepal’s migration sector. The Foreign Employment Act of 2007 

sets fee limits for recruitment, but workers often pay three times more than the legal ceiling 

(Amnesty International, n.d.). At Tribhuvan International Airport, immigration officials 

demand bribes ranging from NPR 10,000 to 60,000, especially from women seeking 

domestic work in Gulf countries. In May 2025, a high-profile scandal exposed an organized 

racket involving officials and agencies, demanding up to NPR 300,000 for European visas 

(Bhattarai, 2025). Such practices deepen debt cycles and push desperate youth into unsafe 

and illegal migration channels.

Remittance Costs and Informal Channels

Even after navigating corrupt recruitment systems, migrant workers face additional costs 

when sending earnings home. Official remittance channels are burdened by high fees, which 

have risen since Nepal’s placement on the FATF grey list in 2025 due to weak anti–money 

laundering measures (FATF, 2025). This has fueled reliance on informal systems such as 

hundi, which offer lower fees but bypass taxation and oversight, undermining formal 

banking. Collusion between officials and hundi operators perpetuates these challenges.

Fraud and Trust Erosion

Fraud within the foreign employment sector further erodes trust. Between 2023 and 2025, 

agents swindled an estimated NPR 2 billion, stranding thousands of workers abroad. 

Despite Nepal’s ratification of the UN Convention against Corruption in 2011, no 

recruitment agencies have faced serious penalties. This impunity has fueled public outrage, 

amplifying calls for systemic reform.

Conclusion and Way Forward

Nepal’s reliance on remittances, coupled with weak domestic investment, systemic 

corruption, and exploitative migration practices, has created a cycle of frustration among 

youth. The 2025 protests underscored the urgency for reform, particularly in strengthening 

governance, diversifying the economy, and creating sustainable job opportunities at home. 

Addressing corruption and ensuring transparent recruitment systems would alleviate 

financial burdens on migrant workers. Likewise, improving investment climates and 

vocational training programs could channel the energy of Nepal’s youth toward productive 

national development rather than forced migration.