Kathmandu, Aug. 23
In 2017, there were approximately 20.7
million people of working age, of whom 7.1 million were employed, while 908,000
(11.4 per cent) were unemployed, according to data from the Nepal Labour Force
Survey (NLFS) Report 2017/18. The NLFS considers citizens aged 15 and above as
part of the labour force.
However, the National Census 2021 reported
that of the 23.958 million economically active population (aged 10 years and
above), 37.46 per cent remained without any work. According to the census
conducted by the National Statistics Office (NSO), 40.99 per cent reported
working for more than six months, 11.40 per cent worked for a period of 3–6
months, while 10.14 per cent worked for less than three months. Even if the 12
per cent share of the 11–15 year age group in the population is taken into
account, the share of the unemployed population remains quite high.
Meanwhile, the Fourth Nepal Living
Standards Survey (NLSS) 2022/23 reported that the headcount rate of the
unemployed population stood at 24.73 per cent, while 20.96 per cent were
inactive.
As the various surveys and censuses apply
different methods and parameters, they produce different, and often
contradicting, data sets on employment and unemployment.
Although the NSO and economists maintain
that the final say on employment status should be made by the NLFS, they agree
that it may not provide a comprehensive analysis of the ground realities in a
country where one-quarter of the national economy relies on agriculture, yet
nearly three-fifths of the economically active population is engaged in it.
Estimates from the national accounts for
the Fiscal Year 2024/25 show that Nepal's agriculture sector contributed about
25.6 per cent to the country's Gross Domestic Product (GDP), while the share of
industry and services stands at 12.4 per cent and 62 per cent, respectively. In
contrast, the NLFS 2017/18 reported that one in every five people employed in
Nepal worked in agriculture, the largest employing industry.
The NLSS defines persons in employment as
individuals of working age who, during a short reference period (7 days), were
engaged in any activity to produce goods or provide services for pay or profit.
It includes those 'at work' (i.e., having worked for at least one hour in a
week) or 'not at work' (due to temporary absence from a job). According to this
definition, the unemployment rate measures the proportion of the labour force
that is actively seeking work.
Data not portraying actual scenario
Nepal uses the method prescribed by the
International Labour Organisation (ILO) for the NLFS, which is globally
recognised. However, in an economy like Nepal’s, where informality is high and
the largest share of the population is engaged in low-paid or unpaid
agricultural work, the unemployment statistics are unlikely to reflect the
actual scenario.
Lok Bahadur Khatri, Information Officer of
the NSO, explained that support workers, who help even in commercial
establishments and agriculture, are considered employed if they work for about
14 hours per week. Since many of these workers are non-wage earners, their
contribution to the national economy is not calculated, making their
'employment status' misleading.
The unemployment data from the NLFS 2017/18
reflects only those actively seeking work and does not include those who are
idle and not engaged in any work.
Suman Raj Aryal, Secretary of the National
Planning Commission (NPC), said that although current statistics may not
accurately reflect the actual unemployment status in the country, they were
collected and analysed using internationally prescribed methods by the
International Conference of Labour Statisticians (ICLS). He stressed that the
frequency of data collection should be increased to ensure statistics that
better reflect reality.
"Having accurate statistics allows for
the development of effective and impactful plans for development. If we have
disaggregated data on unemployment, the government can develop targeted
policies and programmes to address the needs and bring the concerned
stakeholders together," said Aryal.
Formalisation is solution
Aryal added that while the informal sector
exists in all economies, Nepal has an exceptionally high rate of informality.
According to the Economic Census 2018, of the 923,356 business institutions in
operation at the time, 49.9 per cent were operating without being registered
with any government authority.
The informality of jobs is especially high
in agriculture and the Micro, Cottage and Small Enterprises (MCSEs) sector,
which also employs a large number of workers. Economist and former NPC member,
Dr. Ramesh Paudel, acknowledged the reliability of the NSO’s statistics but
said that the unemployment data does not reflect the ground realities.
He argued that the most appropriate way to
obtain reliable data is by formalising economic activities. "Although the
existing data shows that 40-50 per cent of the economy is informal, more than
60 per cent of economic activities in the country occur informally," said
Dr. Paudel, adding that in such a situation, generating reliable data is highly
challenging.
Both Secretary Aryal and Economist Dr.
Paudel opined that there needs to be a robust data recording system. They also
agreed that increasing the frequency of data collection, or making it
real-time, could address many of the issues.
500,000 labour force enter market
The country largely relies on estimates
regarding the labour force. According to government estimates, more than
500,000 people enter the labour market every year, while only about 100,000
jobs are created in the public and private sectors. The government annually
announces initiatives to employ large numbers of youth, such as the Prime
Minister Employment Programme (PMEP), but such initiatives have had limited
effectiveness as they often provide seasonal or short-term work.
For instance, the government announced the
employment of 200,000 individuals under the PMEP for 2024/25 and the creation
of jobs for 100,000 youths under various programmes of the Ministry of Youth
and Sports. In 2023/24, the government targeted the creation of over 250,000
jobs, while the target for 2022/23 was around 200,000.
As such short-term work cannot serve as an
alternative for sustainable income, youths are less inclined to engage with
such initiatives.
MoLESS installing system for reliable data
Meanwhile, the Ministry of Labour,
Employment and Social Security (MoLESS) is in the process of installing a
nationwide system to collect real-time data on labour and employment. Krishna
Prasad Sapkota, Joint Secretary and Chief of the Internal Employment Management
Division at the Ministry, said that the system has already been installed and
is operational in 691 local bodies. Within a couple of months, it will be
expanded to all 753 local units.
"Following the operation of the
system, we will have reliable data on employment and unemployment. It will also
provide disaggregated data by sector," he said.
According to Sapkota, the web-based
platform will also maintain data on employers, educational institutions,
training providers, and partial employment. Since this system will integrate
all systems and applications implemented by MoLESS and various departments
under the Ministry, it is expected to address the existing weaknesses.
Currently, all local bodies have labour and
employment centres, with one employment coordinator employed at each centre.
Informal sector dominates
According to the NLFS 2017/18, the trade
industry had the second-largest share of employment (17.5 per cent), followed
by construction (13.8 per cent). The informal sector accounted for a larger
share of 62.2 per cent. Close to a quarter of all employed individuals (23.8
per cent) were employed in service and sales occupations, followed by
elementary occupations, which accounted for just over 20 per cent.
In terms of gender, females reported a
higher unemployment rate of 13.1 per cent, which is 2.8 percentage points
higher than the male unemployment rate. There are significant disparities in
other labour market indicators between females and males. For example, the
female employment-to-population ratio (EPR) is 22.9 per cent, which is 25.4
percentage points lower than the male EPR.
The female labour force participation rate
(LFPR) was 26.3 per cent, compared to the male LFPR of 53.8 per cent. There
were also geographical disparities in labour market outcomes, with Bagmati
reporting the lowest unemployment rate (7 per cent) and Madhes reporting the
highest (20.1 per cent).
According to the survey, the most common
method for job seekers in Nepal was seeking help from relatives and friends,
with at least 57 per cent of those looking for work doing so by contacting
their relatives and friends.
Published in The Rising Nepal daily on 24 August 2025.
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