The government had boasted it would help 50,000 youths create own jobs over this fiscal year with Youth Self-Employment Program (YSEP). However, records show the program has so far catered to only 3,343 youths with just 3 weeks left for the completion of the fiscal year .

Such mediocre achievement of the program, which was designed largely to enable urban youth get jobs, indicates the program was a complete flop. As a result, it fared badly in containing urban poverty, which contrary to rural poverty, grew over this fiscal year.

According to data compiled by Ministry of Finance (MoF), the urban poverty jumped by 5.91 percentage points since 2003/04 to 15.46 percent. Rural poverty, on the other hand, has decreased by 7.19 percentage points to 27.43 percent over this period.

“The drop in rural poverty is attributed to positive impact of remittances inflow and relatively better performance of Poverty Alleviation Fund (PAF) Nepal,” said a MoF source.

The report that MoF is incorporating as a part of the Economic Survey for 2011/12 says the government has failed largely in addressing urban poverty because it has failed to create jobs. “Performance of government´s targeted YSEP remained dismal. And it also failed to encourage private sector investments,” reads the report.

Records of YSEP Secretariat show, the government had approved Rs 2.89 billion in the fiscal year 2011/12 for the implementation of programs, under which banks were assigned to issue collateral-free loans of up to Rs 200,000 to each aspirant self-employee.

However, as of date, the secretariat released only Rs 785 million and the banks supposed to use them to issue collateral-free loans have invested only about Rs 335 million.

Referring to such cases, MoF admitted the government had failed to address poverty largely because it lacked a clear policy framework and well-designed and executable programs.

“The main reason behind high poverty is lack of opportunities in the job market. And we have no policy that deals with job creations,” reads the report. “The public sector has very limited jobs opportunities and private sector too has not been able to expand to create jobs.”

According to the report, some 400,000 Nepalis enter into job market every year. While some 300,000 of them eventually leave the country for foreign employment, only a few thousands are absorbed in the formal sectors. “Unemployment rate at present stands at 2.2 percent, but if we look at the rate of under-employment, the number suddenly jumps to 30 percent,” said the MoF source.

Given the situation, the MoF report has stressed on the need to formulate a clear policy on job creation and better design the targeted self-employment schemes. “Our incentives to the industries and private sector should be aligned as per the thrust of this policy if we are to achieve the desired poverty reduction. Otherwise, we will continue to fail,” said the source.

Under the ongoing Three-Year Development Plan, the government has targeted to lower poverty incidence at 21 percent by the end of 2012/13. Presently, the poverty incidence stands at 25 percent.

Published on: 24 June 2012 | Republica