It will not be out of context to say that the only resource that is abundantly available in Nepal is the human resource, or the country's labour force. This must be the reason why we are exporting people rather than products. It is now widely recognised that a country's development hinges on the knowledge and skills of the available human resources and their productive use. Nepal's natural resources like water, land, forest and tourism have no meaning without the development and utilisation of human resource. With the publication of Nepal Labour Force Survey (NLFS 2008), we have two labour force surveys to compare and mull the changes in the labour sector over a decade - the first survey was conducted in 1998/99 (NLFS 1998). It will also be interesting to keep an eye on the trends, patterns and dynamics of employment/unemployment when labour tensions are running high in the country.

The first labour force survey gave us an estimated population of 19.1 million; the second survey gives us a population estimate of 23.5 million, an increase of 23 percent over a decade. That means we have more people to feed, clothe and take care of. Since children and old people do not work, we need to look into the actual labour force or the working age population (15-64 years). The proportion of working age people has slightly increased from 54.6 percent in 1998 to 56.5 percent in 2008. This is a good sign. An increase in working age population means a reduction of dependency ratio. Earlier in 1998, if 84 people had to work to support 100 people, only 77 have to now.

Since all available labour force or working age population do not work - some may be sick, others may be studying, etc - what should be of our interest is the economically active population. Here is the bad news: there has been a slight reduction in the proportion of active population aged 15 years and above. In 1998, out of 100 working age people, 85.8 people were active; in 2008 the commensurate figure had come down to 83.4. The reduction in active population implies an increase in unemployment.

NLFS 1998 has estimated unemployment in Nepal to be 1.8 percent; NLFS 2008 estimated it to be 2.1 percent. Since we do not enjoy the comforts of unemployment as in the developed countries (unemployment doles, insurance benefits), people have to do any available work just to survive. Therefore, the low rate of unemployment in Nepal is in no way comparable to unemployment rates in developed countries. Rather, underemployment rate gives a clearer picture of our labour utilisation. NLFS 2008 mentions three kinds of underemployment rates, namely, time related underemployment (people want to work more but the work is unavailable), earning related underemployment (inadequate earnings) and skill related underemployment (skills mismatch). The respective figures for these three kinds of underemployment are: 6.7 percent, 8.1 percent and 13.2 percent. Clearly, skill mismatch is more a serious issue in Nepal compared to lack of working time or inadequate payment. The rate of unemployment and underemployment is a serious issue in urban areas, especially with the youth in 15-24 age bracket. In 1998, the youth unemployment rate was 7.6 percent; this has now increased to 13 percent. This explains why it is so easy to organise political demonstrations in urban centres.

On an average a Nepali works 38.7 hours per week. In 1998, the figure was 39.4 hours, which marks a marginal reduction in working hours. The average earning per month of a paid employee is Rs. 5,117. The commensurate figure in 1998 was Rs. 2,143. Have wages sharply increased in Nepal, then? More sensible way to answer this question is to compare the average wage with the prevailing statutory minimum wages. In 1997, the minimum wage of an unskilled worker was fixed at Rs. 1,800 per month; the rate increased to Rs. 4,600 in 2008. What this implies is average wage rate in Nepal hovers around minimum wages. This is the reason why fixation of minimum wage has been a contentious issue in Nepal. An average Nepali also spent a considerable time in non-economic activities like cooking, cleaning, minor repairs, shopping, personal care and child minding. On an average, a total of 11.6 hours per week is spent on these activities.

The share of agriculture sector on GDP may have gone down sharply but, with 74 percent of the labour force still engaged in agriculture, Nepal's labour force is highly dependent on it. Over the last decade, there has been only a marginal two percentage points reduction in the proportion of those dependent on agriculture. Until there is no major shift in employment from the agriculture sector to other sectors of the economy, it will be difficult to imagine Nepal's development.

Outside the agriculture sector, 70 percent of the people work in informal sector. The formal sector (organised sector) outside agriculture sector provides jobs to 932,000 people. In 1998, the figure was around 600,000. This implies that during the last decade, additional jobs were created for only 332,000 people in the formal sector.

In terms of institutional employment pattern, the private sector provides jobs to 38 percent, government to 17 percent, public corporations to four percent and I/NGOs to three percent. The remaining 39 percent is unaccounted for as 'others', probably meaning self-employed workers.

One positive from the survey is that child labour is down, implying an increase in school enrolment. One other interesting thing is the sharp decline in male/female sex ratio. In 1998 the sex ratio or the total number of males per 100 females was 97. The figure has come down to 90. The increase in female population is also accounted by a sharp increase in female-headed household: from 14 percent in 1998 to 22.1 percent in 2008. The reason must be the increase in out-migration of male population in search of employment and income opportunities. NLFS 1998 did not have data on labour migration and remittances. Therefore, comparable picture is not available. Yet given the fact that 15 percent of Nepal's population are absentee population - 51 percent staying outside Nepal, 78.5 percent of them males and 51.4 percent citing work as the reason for their abroad stay - one can safely assume that outmigration is the main cause of increased imbalance in sex ratio. Is this good or bad? I leave the gender specialists to decide this. However, I have connected the circle that I started at the beginning of this write up - Nepal is a people exporting country.

Published on: 6 January 2010 | The Kathmandu Post