Formalization of the country’s agriculture, trading, construction, transport and micro enterprise sectors could play an effective role in discouraging out-migration, said experts.

The state’s failure to formalize and regulate the economic sector has led to widespread exploitation of workers besides crippling the national economy as a whole, they said, and warned that institutional protection of the informal economy could even lead to a dearth of human resources in the country. According to the figures released by the Department of Foreign Employment, around 2,000 Nepali youths leave the country daily for employment abroad.

Experts have attributed the exodus of young people to foreign job markets to the government’s failure to ensure their social and occupational safety in the country. “Lack of social and occupational security is one of the major reasons why more Nepali youths are taking up jobs overseas. To ensure security for workers, the informal economy should be recognized by the government so that they can enjoy the rights and the facilities provided by the country,” said Tara Bahadur Karki, chief executive officer at Lalitpur Sub-Metropolitan City.

Speaking at a programme in Lalitpur on Tuesday, stakeholders said the present Labour Act had failed to deal with the problems of the workers employed in the informal sector. They have urged that amendments be made to the existing plans and policies to make the laws labour-friendly. The failure to implement the law has aggravated the problems of the labours.

“Everyone should work from their individual level to improve the working environment of the workers instead of waiting for the government and other authorities to do it,” said Shailendra Kumar Jha, ILO programme coordinator for Nepal. The failure to systematize the labour market, lack of skilled workers and organisations to provide them the required skills and lack of awareness about occupational responsibilities among workers are some of the major challenges towards formalization. “These problems can be solved if the people respect the work of such labour,” said Karki.

Among the other reasons in the way of the formalization of the economy are legal and institutional obstacles, discrimination among workers and poor governance. “The problems of the informal sector like construction can be addressed through social dialogue, implementation of skill development schemes and elimination of discrimination in the wages of male and female workers,” said Jha. Migration out of Nepal increased to 7.3 percent in 2011 with 75 percent of the registered overseas workers being engaged in unskilled low-paying jobs.

According to World Bank data, Nepal has been placed in the second spot in terms of the most informal economy in South Asia after Sri Lanka and in the 37th rank globally in 2012. About 38.4 percent of Nepal’s gross domestic product is generated by the informal sector.

Published on: 21 August 2014 | The Kathmandu Post