Tackling Unemployment Problem

Shyam Prasad Mainali

With a population of around 29 million, Nepal faces acute unemployment problem. Two-thirds of the population is under the age of 30 and the unemployment rate within this demographic group is about 20 per cent. This number is far greater than the national average joblessness. A report suggests that 500,000 people enter the domestic and international labour market every year, a clear indication of the quantitative component of the employment challenge in Nepal. The unemployment issue also has a qualitative aspect as it is mostly confined to informal sectors where earnings and working conditions are subpar. As a result, Nepal faces a situation where it must lower the unemployment rate as well as create meaningful and secure employment opportunities. 

A growing population and lack of opportunities have a negative impact on unemployment numbers. As a result of the industry and factory system, cottage industries have been discouraged. The lack of well-paid jobs within the country has also forced many to look at the international labour market. Many Nepali youths find themselves risking their lives to work in the heat of the Gulf countries, South Korea and Malaysia. Manpower companies charge exorbitant fees and exploit hopeful workers who are trying to find opportunities abroad. 

Temporary venture

About 32 per cent of GDP is contributed by remittance from migrant workers. Due to this influence of remittance, the policy and priority of the government are diverted toward expediting more jobs abroad instead of encouraging domestic industries, opening factories, and creating environment conducive for investment. Sending youths overseas to benefit the economy is a risky and temporary venture. 

The government should have concrete plans to utilise the expertise of returnees. These vulnerabilities came to the fore during the COVID-19 pandemic as many lost their jobs abroad, which severely hampered Nepal's economy. The creation of domestic long-term opportunities is of paramount importance to the country. The education system of the country is also not appropriate as higher education is focused on creating clerks. Whilst the country has enormous agricultural potential, this industry has been abandoned for several reasons. For some, there is a shame attached to working within the agricultural sector and they move to the cities to secure a more socially respectable job. 

Agricultural imports from India have also led to a decrease in demand for Nepali products. This has discouraged farmers from the industry. The government has also failed to provide proper support for farmers making agriculture an unattractive means of living. Finally, climate change is also having an inimical effect on agricultural yields and farming has become less lucrative. This has caused people to abandon their land and moving to urban centres for employment. A government job is still very prestigious and, therefore, competition to enter the civil service is incredibly tough as more and more individuals attempt to secure a job within the government. However, limited opportunities mean that the majority are rejected and left unemployed.

On top of the factors listed above, some other determinants of unemployment in Nepal are health, interest rate, inflation rate and political conflict. Education, health, population growth, and inflation are inversely related to the employment of agricultural sectors. Health and political conflict positively affected employment whereas interest rate and level of education affected it negatively. 

In the case of the service sector, employment, education, health, population growth and inflation impacted positively but political conflict impacted negatively. The planners and policymakers in the country seem to be indifferent to this problem as they are satisfied merely with the growth of remittance from migrant workers. This pathetic situation worked as a safety valve for those in power who carelessly failed to create employment opportunities for youths. The botched privatisation process in which state-run profit-making industries were sold to the private sector, led to the loss of jobs for Nepalis.

Transferring labour from agriculture and industry to the service sectors is in demand currently. Expanding education in the country seems the most promising way. This could be done by allocating a substantial amount to the education sector. Effective implementation of 'Education for All' programmes is a must. 

The opening of vocational education centres should be given priority so that skilled and highly skilled manpower could contribute domestically. Likewise, an increase in employment in non-agricultural sectors is given a greater priority, and human capital investment in health seems highly desirable. By increasing access to health services for poorer and disadvantaged groups of people through the expansion of health networks, the goal of higher life expectancy can be achieved. Population growth and inflation positively increase service sector employment. 

Monetary policy

The government could use inflationary monetary policy to boost service sector employment. Decreasing the interest rate could be a good policy to increase the service sector employment. Further investment in the industrial sector furnishes well the better employment opportunity. For a long time, the exchange rate between India and Nepal currencies remained fixed on the open border policy. Implementing this policy, Nepal is facing numerous difficulties regarding the manipulation of inflation. India is too big a trading partner for Nepal for an independent monetary policy. Economists must contribute to the alternative ways to this problem, so it might be a matter of vigorous research.

It is highly necessary on the part of different levels of governments to provide easy loans and grants to entrepreneurs, unemployed youth, differently abled persons, and the recently returned migrant workers to start businesses. Prospects for employment are high in the livestock, agricultural, industrial, tourism, business and trade sectors, apart from micro, small, medium, and larger development projects in the country. But for the betterment of such a dire situation, strong political will is a necessity. Otherwise, increasing trends in muscle and brain drain continues which will ultimately deteriorate the opportunities for employment and the overall economy.

(Mainali is a former government secretary.)