Pandemic destabilises job market

Kathmandu, Aug. 8

The job market in the country is likely to experience a severe shock in the post-lockdown period, as indicated by a recent study of the central bank about the impact of COVID-19 on the national economy.

The study has revealed that about 26.4 per cent of the enterprises are mulling about staff lay-off or cuts in salary and wages as an austerity measure.

This finding combined with the massive lay-off of the temporary workers, and lower payment to permanent staff would create rupture in the economy with a large number of jobless people.

According to the Nepal Rastra Bank study, the businesses dismissed 22.5 per cent workers and staff during the lockdown. Staff hired on contract-basis were the first to be sent home while the largest number of employees were curtailed in the hotel and restaurant sector.

Likewise, the salary of the workers and staff was already cut by 18.2 per cent before June end while the lockdown continued till July 21. Entrepreneurs said that the businesses were further weakened as most of them remained out of operation due to various challenges even though the government had facilitated them with a guideline to run the industries and businesses.

The online survey participated in by 674 enterprises from micro enterprises/trading to large industries found that about 80 per cent businesses had considered obtaining loan from the banks and financial institutions for financial mobilisation in the post-pandemic scenario.

Other options thought about by the entrepreneurs are obtaining loan from cooperatives, of finding new investment partner/s. A small portion, 6.5 per cent, of them said that they had not thought about any alternatives.

As the study found out about 4 per cent enterprises of all levels are unable to continue offering employments even after obtaining the concessional loan at 5 per cent interest.

Similarly, jobs are also going to be affected as the entrepreneurs are going to sell or close their enterprises. At least 2.8 per cent entrepreneurs said that they would shut their business and 5.4 per cent are considering to sell it while 5 per cent are planning to start a new business, and 4.5 per cent are planning to downsize.

About 82.3 per cent enterprises are set to continue with their current businesses.

Published in The Rising Nepal daily on 9 July 2020.