Remittances have contributed on average a quarter of the gross domestic product, but Nepal needs a homegrown supply of meaningful and productive jobs.

Faris H Hadad-Zervos

Reflecting on the future of a child born in Nepal today leaves me with a sense of optimism but also of longing and urgency. Going by the World Bank’s Human Capital Index, a child born in Nepal today will only achieve 49 percent of her/his potential as an adult, compared to those who have full access to quality education and health services. In other words, the fate of a Nepali child’s success is a function of their access to proper nutrition, health, and education from birth and onto adulthood. It is not just one thing: it is all three together. This is a significant finding and requires immediate action.

So, it seems that the first challenge is to ensure that a young Nepali adult is the product of years of human capital investment since her/his birth. That is one massive challenge, requiring a continuum of long-term coordination between the institutions of health, education and social protection. And then there is the other challenge; to provide this ready and primed young adult with the opportunity to find a meaningful livelihood and rewarding life. Growing up, the choices of young people on where they work, how much they earn, and how much they contribute to the country’s development are often limited, and more so for the vulnerable.

In Nepal, the latest labour force survey shows that more than 900,000 people are looking for work. Almost 70 percent of these job seekers are youth (aged 15-35). More than 11 percent of the population is unemployed—a burden that is disproportionately affecting women. Young people in rural Nepal are very likely to have a first job that takes them away from their country and families. While in some of the other Asian countries employment satisfaction rates range between 74 and 90 percent, the rate in Nepal is only 41 percent. Similarly, 45 percent of Nepali youth workers want to change employment, compared to between 13 to 42 percent in the other countries.

In a way, the fact that so many Nepali youths have left their homes and country to seek jobs outside has been a saving grace of the economy. At the family level, these overseas jobs have provided a relatively stable and steady income for low-income families to make the best use of their resources as well as to prepare themselves for shocks, instead of having to take their children out of school or sell a hard-earned asset to cope. Country-wide, these remittances have contributed on average a quarter of GDP, have brought in needed foreign exchange and have helped propel growth. Yet, remittances are also a source of vulnerability, making Nepal susceptible to the policies and practices of other economies.

Then, it would make sense to balance the reliance on remittances with a stronger homegrown supply of meaningful and productive jobs. For that to happen, there is, unfortunately, no shortcut. First and foremost, we need a predictable and robust investment ecosystem where the private sector can hire and flourish; this is the demand for labour. Secondly, there must be a supply of well-trained and productive workers. Last but not least, there needs to be a system of institutions and information systems to match this demand with the supply.

Under federalism, with a new mandate for provincial and local governments to deliver services to their citizens, this information management responsibility falls on municipalities of varying capacities and sizes. While the 753 municipalities are each different and represent their geographical disparities, they need to adopt a uniform set of systems that form part of a larger national market of labour demand and supply. This includes employment services such as guidance on job/career choices, information on job opportunities, assistance in applying, tracking, etc. Employment Service Centers (ESCs) play a key role in this regard, where any working-age person should be able to register and get support to find suitable work, as well as access training needed for the job. In an ideal case, citizens should not only be able to get help to find wage employment, but also to find opportunities for self-employment.

The Ministry of Labour, Employment and Social Security has already started to implement one response to the above challenges through the Prime Minister’s Employment Programme, by supporting the provision of employment information, creating temporary employment in public works and providing unemployment benefits. In addition, the upcoming Youth Employment Transformation Initiative (YETI) project aims to complement this by addressing the additional parts of the ‘job storyline’. The YETI project will improve the employability of the poor and vulnerable job seekers through cash benefits from temporary employment, in parallel with on-the-job and life skills training. It will also provide direct support to the government in its efforts to build a systematic approach for employment services—one that identifies the right beneficiaries and makes sure their skills are upgraded.

To be impactful, the YETI project will also target the capacity of local level ESCs to help job seekers find employment opportunities in the provinces and municipalities. Working alongside the Prime Minister Employment Programme, other existing employment promotion services, and the private sector, the World Bank will seek to contribute to a long thread of engagements that ultimately must align to make a difference in the lives of people.

We often hear said that Nepal’s path to federalism and sustainable growth is strewn with challenges and opportunities. This is true. Insofar as this path is meant to be travelled by the country’s youth and future generations, then they should be the focus of our investment and effort.

Published on: 10 September 2019 | The Kathmandu Post