The Future of Work in Nepal

The Future of Work in Nepal

This article on the future of work in Nepal examines aspects of the post-pandemic era, ranging from the overall status of the local labor market up to the long-term influence on consumer consumption and business recovery. See how organizations respond towards the impact of automation and technology on job availability and employment growth in the new normal. There is also assessment on commitment to gender equality, diversity, and inclusion as well as decisions by policymakers and business leaders on aspects of cybersecurity management and data and privacy protection.  

Status of Local Labor Market 

Nepal’s population in January 2021 is about 29 million and will reach its peak of 35 million before 2050 based on projections of the latest United Nations data. It is a relatively young country, with at least 65% in the 15-64 age group. Fifty-four percent of Nepal’s population is female, while 46% of its population is male. 

Workforce participation rate dropped to 77% in December 2020 compared with 82.4% in the previous year due to job loss and lack of available of local employment opportunities. The COVID-19 pandemic has led to a severe unemployment problem in Nepal which has forced a sizeable chunk of the total population to work abroad. This has created a huge shortage of labor in various sectors such as in agriculture, business and trade, construction, manufacturing and production, and tourism. 

As per the estimate made by the International Labor Organization (ILO), work disruption has displaced 81% of Nepalese workers in the informal sector, 1.4 million of work-from-home employees, and 2 million personnel in sectors such as wholesale and retail trade, food services, accommodation, transport, real estate, and administration. 

More challenging for Nepal is the quality aspect of employment, characterized by low earnings and poor working conditions. This, in turn, manifested large numbers being underemployed – the so-called working poor. The Ministry of Labor and Employment is currently developing a comprehensive national Employment Policy to focus on the informal economy, social protection, and youth employment – specifically, the provision of higher income and dignity at work. 

Consumer Consumption and Business Recovery 

Gross Domestic Product (GDP) contracted by 1.9% in 2020 from 6.7% in 2019 due to pandemic-induced disruption in supply channel and lower agriculture yields. Industry, on the other hand, contracted by 4.2% while services which is responsible for half of the GDP contracted by 3.6%. Private investments in energy and services slumped by 3.5% while public investment also decreased to 5.4% due to delays in construction and procurement. Annual average inflation rose from 4.6% in 2019 to 6.2% in 2020 due to smaller harvest, weak domestic demand, intensified inflationary pressure, and higher prices for Indian imports.  

Agriculture, which contributes about 35% to the GDP, is expected to by increased paddy plantation amid abundant rainfall this monsoon season. Industry output is expected to grow, thanks to a large increase in export volume and stronger domestic demand, as the rollout of the national vaccination plan will reduce infection rates over time. 

The government’s fiscal policy for 2022 largely focuses on strengthening the nation’s health care system. Monetary policy will accommodate a dedicated refinancing facility, concessional lending for priority projects and for affected businesses. Growth in services will accelerate because of increased economic activities in the wholesale and retail trade, transport, and financial services along with the vaccine rollout nationwide. 

Impact of Automation and Technology to Job Availability  

There is much concern today that new automation technologies and robotics will displace humans in the workplace. When labor-saving machines are introduced into the productive process, a firm can lay off workers and produce the same amount of goods than before. Keeping in mind the decreasing rate of population coupled with companies’ desire to get more done in a less amount of time, developed countries have switched to automation. Studies by Frey and Osborne (2017) have estimated that automation has the potential to replace up to 70% of jobs in Nepal in the next decade or two. 

Nepal needs to adopt proactive measures and start investing in information technology education. This is to ensure that low-skilled workers will have the required knowledge and technical know-how as well as problem-solving, discursive reasoning, and socio-behavioral skills to thrive in techno-sensitive industries. They won’t feel much threatened by the increasing use of technology in the workplace. 

A 2020 World Bank report also the Nepalese government to design universal social protection as well as policies that support greater productivity, skills development, and human capital in the new normal. The report explained that if Nepal prioritizes investments in automation and robotics technology, improves digital access, and supports workers to take advantage of online platforms, this will lead to more job opportunities. Taking advantage of innovative automation practices and technology will make Nepal more competitive and better integrated into markets. 

Commitment to Gender Equality, Diversity, and Inclusion 

According to Nepal Jobs Diagnostic, many companies and businesses favor men as workers and employees – and that most of the working women are unpaid. Nepal remains a highly rural economy where subsistence farming is the main economic activity for women. This means that most working women use their productive capacity to feed their families. Yes, this is an important use of women’s time, but it generates no income for them, underutilizes their human capital, and leaves them economically isolated and with limited agency. As a result, Nepal’s economy is losing out on much of the production potential of women. 

Despite the significant gains Nepal has made in promoting women’s education over the last decade, women’s participation in the labor force was significantly lower than men’s participation. The population of working-age females in the country is higher than that of males and yet, females still lag far behind when it comes to employment – and the pay gap between the genders is also huge. 

According to the Nepal Labor Force Survey 2018, for every 100 males in the working-age population, there are 125 females, but for every 100 employed males, there are only 59 employed females. The population of working-age males stands at 9.2 million while that of working-age females stands at 11.53 million. The working-age population has been defined as people with age 15 and above. 

Sexual harassment is another alarming issue with both formal and informal enterprises. Moreover, sexual harassment is naturally more visible in the informal sectors of work. In addition, women from working families being trafficked for commercial sexual exploitation is very common. This is due to having pro-male policies-programs and election manifestos. Also, feudal socio-economic relations are stronger among employers.  

According to the Federation of Women Entrepreneurs’ Association of Nepal (FWEAN), government efforts in implementing existing policies and programs in favor of women entrepreneurs should be strongly implemented to foster the spirit of women entrepreneurs in the country. 

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