By Raghu Kshitiz
The Labor market of Nepal is a complex topic as there are many
socio-economic factors that have contributed to the current state of the labor
market.
It is characterized by low levels of education and skills, a
large informal sector, and a lack of formal job opportunities. The unemployment
rate in Nepal is estimated to be around 2.2%, however, this number is likely to
be higher as the informal sector is not well-captured in official statistics.
The unemployment rate in Nepal is projected to trend
around 3.00 percent in 2023 and 2.60 percent in 2024, according to the Trading Economics
econometric model.
As the labor market in Nepal is characterized by rigid regulations and unionization that reduce the incentives to hire workers through formal contracts, resulting in insufficient job creation and high levels of unpaid work and underemployment, which drives thousands of young Nepalis to migrate for work abroad, particularly to the Gulf countries and Malaysia.
According to the World Bank, more than 4 million Nepalis,
out of a population of around 30 million, are working abroad. Remittances from
these workers are a significant source of income for Nepal and makeup around
30% of the country's GDP.
Whereas, the majority of the Nepali labor force is engaged in
agriculture, with more than 70% of the population depending on it for their
livelihood. However, agriculture is not a very productive sector in Nepal and
it is not able to generate enough jobs to keep pace with the growing
population. Additionally, the agricultural sector is highly vulnerable to
natural disasters such as floods and landslides, which further exacerbates the
situation.
The formal sector of the Nepali economy is relatively small
and is mostly limited to government jobs and a few large private sector
companies. These jobs tend to be concentrated in the urban areas and require a
high level of education and skills, which many Nepali workers do not have. The
majority of Nepali workers are therefore forced to work in the informal sector,
where wages are low and working conditions are very poor.
The lack of employment opportunities, poor working conditions, and low wages are major issues that need to be addressed, along with the need for better education and training for the workforce. The government should continue to focus on policies and programs aimed at promoting economic growth and job creation in order to improve the lives of the Nepali people.
To address the problems in the labor market, the government
of Nepal has implemented various policies and programs. These include programs
to promote education and skills development, as well as efforts to increase
foreign investment and expand the formal sector.
Additionally, the government has also implemented various
policies to increase the productivity of agriculture and has provided subsidies
to the sector. However, the progress is slow and more initiatives are needed to
develop the labor market of Nepal.
