Home economics

  • Generating domestic employment can lead to sustainable growth while addressing persistent poverty and inequality
- Lok Nath Bhusal
Home economics

Dec 23, 2014-

For the last two decades, Nepal has been undergoing mass unemployment, poverty, and slowing economic growth. Nepal’s 13th plan document states that despite low economic growth, the incidence of absolute poverty has decreased from 42 percent in 1995/1996 to 23 percent in 2013. This seems impressive at a glance, but this achievement still leaves about a quarter of Nepal’s population (about seven million people) below the narrowly-defined absolute poverty line.

Temporary solution

It has been argued that remittances from abroad have been one of the main factors behind this significant reduction in absolute poverty. In the absence of adequate job opportunities at home, most of the unemployed labour force needs to pursue foreign employment to earn their livelihood and keep their families from falling into absolute poverty. Data from the Department of Foreign Employment reveal that there are about 3.54 million Nepali migrant labourers working abroad. While their contributions to the domestic economy equal about 25 percent of the GDP, this income is not only unsustainable but also comes with huge social costs. It is equally important to consider the other side of remittances when celebrating the massive inflow of incomes.

This is obviously because of a mismatch between growth in employment and growth in labour force. Widespread unproductive employment and poverty are intertwined, meaning that most of the poor are working poor. They work only for a few hours and mostly in the informal economy. Hence, they earn less than what is required to earn a non-poor living standard. According to the draft National Employment Policy, to boost domestic economic growth as well as avoid the unsustainability of remittances from abroad, Nepal urgently needs to create about 500,000 productive domestic employment opportunities annually. The Economy Survey report had earlier stated that a similar number of labour force joins the labour market every year. Productive jobs in the formal economy at home provide not only income but also dignity, social protection, and mobility. They also help overcome a host of negative outcomes arising from foreign employment. It is noteworthy to mention here that Nepal’s Interim Constitution has provisioned employment as a fundamental right.  

Agriculture and industry

Although various efforts are undergoing to create more and better jobs within the country, concrete and accelerated actions are required by various key stakeholders to intensify these efforts. The International Labour Organisation’s recent study, ‘Nepal: Addressing the Employment Challenge through the Sectoral Pattern of Growth’, provides an excellent, comprehensive analysis along with suggestions for tackling persistent unemployment and unproductive employment. The drafting of the National Employ-ment Policy is a landmark in implementing the recommendations offered by this important study.

Data reveal that almost three-quarters of the Nepali labour force is engaged in agriculture. Earnings from agriculture are not only subsistence but also largely informal. In terms of contribution to the GDP, the share of agriculture was 35.3 percent in 2013/14, down from 37.1 percent in 2001/02. Furthermore, while the share of the services sector to the GDP has been increasing, the share of industry has been declining. This premature deindustrialisation is having serious impacts on domestic job creation. One clear imbalance can be observed between output and employment. While output has increased in the tertiary sector, the bulk of the labour force is still engaged in the primary sector.

It appears that bulk of our attention has been geared towards exporting our labour power for foreign employment. But simply spending the entire capital budget allocated by the government is likely to induce job-rich economic growth. Therefore, there is a need on the part of politicians, public officials, private and civil society leaders, and media organisations to realise the challenges of generating productive domestic employment. Indeed, the aim of graduating to developing country status by 2022 will remain elusive without creating sufficient employment at home.

Stakeholders need to be aware of the fact that productive employment is a powerful tool for breaking the vicious circle of unemployment, poverty, inequality, and slow economic growth. Recognising employment creation in the formal sector as an important cross-cutting issue, the draft National Employment Policy has also envisioned the importance of employment generation for inducing prosperity and reducing poverty.

On the economic agenda

In this context, it is crucial to raise awareness on the need for domestic employment generation. The employment agenda must become an important component of our economic agenda for the upcoming 15-years’ National Vision and 14th Seven-year Development Plan. It is also equally important to identify gaps in and the effectiveness of current efforts to promote domestic employment and identify best practices for employment generation.

The pattern of mismatch between education and employment must end to overcome the ongoing wastage of investment in education. Concerns have been raised from different quarters regarding the prioritising of foreign employment over domestic job creation. However, as claimed by the Finance Minister, recent landmark agreements signed with India and commitments from other development partners for power sector development have enormous potential to create a large number of jobs at home.

Crucial studies and interactions also need to be conducted to propose means for effective actions for domestic employment creation as a powerful option for meaningful poverty reduction and the promotion of inclusive economic growth. Job-rich growth should become the national route to address persistent poverty and inequality. Furthermore, we need to inspire key stakeholders to create more and better jobs within the country. Adequate job opportunities at home not only expedite domestic economic growth, they also promote national cohesion and can significantly contribute to faster graduation from least developed country status.

Bhusal is affiliated with the National Planning Commission Secretariat

Published: 24-12-2014 09:30

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