Few jobs created by Nepal employment drive

Almost exactly two years ago, Prime Minister Oli launched an ambitious employment creation scheme, which was widely considered at the time as a potentially significant contribution to the reduction in unemployment within the country.

In the budget for 2018-19, the government had allocated Rs3.1 billion for an employment ‘drive’. Two years later, the ambitious program had not provided the promised jobs, even as the need grew for employment for the many migrant workers who returned, mainly from India, last year.

The scheme would provide guaranteed public sector employment for 100 days to those currently unemployed, across a dozen different sectors, including irrigation, commercial agriculture, drinking water, river control, forestry, tourism, transport infrastructure and other public works across the country.

The Plan

The plan was to was to be delivered through Employment Service Centres (ESCs) to be set up in the 753 local administrative units to those registered as unemployed. Already, 2,259 candidates had been shortlisted to run the ESCs.

Unemployed persons between 18 and 51 would be covered under this scheme, which would assign them jobs according to their qualifications and interest areas. Additionally, they will also receive vocational and skill-oriented training.

With the implementation of the new program, each unemployed person would get a paid job for a minimum of 100 days in a fiscal year, along with a subsistence allowance worth 50 days of work. The then Minister for Labour, Employment and Social Security, Gokarna Bista, promised that the program would be instrumental in bringing down the massive outflow of the country’s youth to foreign lands.

The scheme reminded some of a similar project introduced in India under the Mahatma Gandhi National Rural Employment Guarantee Act, whereby India also aimed to guarantee 100 days of paid work annually.

That program was fraught with corruption and malpractice, and although the proposal made by Oli was generally welcomed in Nepal by economists, journalists and other commentators, it was recognised that much depended on successful implementation – not something for which the government of Nepal was considered to be particularly effective.

Also Arjun Kharel, researcher on labour and migration at the Centre for the Study of Labour and Mobility warned that much depended on the successful implementation of the programme and also reminded policy makers of the importance of remittances from migrants working abroad for the national economy.

As regards the former warning, even PM Oli himself recognised the enormity of the task ahead. He was quoted by the media as saying: “We all need to come together for its effective implementation to ensure that there is no poverty and no unemployment in Nepal.”

But he clearly had high hopes for its realisation. When he formally inaugurated the scheme at the beginning of June 2019, he promised “no Nepali will now have to go abroad looking for work as the government would provide employment to all within the country itself”.

He described the Prime Minister Self-employment Programme as an illustration of the broader campaign of nation building on which he and his government was now embarked.  “Now, no one will face problems, as the government has conducted a campaign of life security for all, from children to the senior citizens ... this is a new beginning, a new campaign. Among many problems of the country, unemployment is the major one, which is directly linked with poverty. This program aims to resolve both,” Prime Minister Oli added.

The Minister for Labour, Employment and Social Security Gokarna Bista, said that the government had initiated the Prime Minister Self-employment Programme with a goal of making the unemployed youth self-employed.

He added that, although this program had been implemented only partially in the current fiscal year, it would be expanded throughout the country with the goal of providing jobs to at least 500,000 unemployed youths from the coming fiscal year. He said the government had designed an employment programme for both educated and uneducated people.

Lawmaker and former Minister for Industry, Mahesh Basnet, said that the government had provided Rs24.6 million for the employment program in four municipalities of Bhaktapur, and added that the municipalities would mobilise the unemployed youths at the ward level in work from 16 June 2019.

“The government should set up an Employment Bank and provide employment to the unemployed youth based on their qualification as per the data of unemployed youths,” he said, predicting that “employment can be given to 1.2 million youths in the agriculture sector alone, while more than 700,000 youths can be given work in the construction industry.”

He reported that, already, around 750 unemployed young people in Bhaktapur had found work under this program, and that some 1,500 youths had enlisted their names in the unemployed youth list.

Meantime, in April 2019 the British development agency DfID had launched a complementary four-year Skills for Employment Programme (SEP) which was intended ‘to support the generation of new employment by working with government, employers in the private sector, training and education institutions, and youth to carry out innovative employment interventions, including skills training and job placement which provides higher wages for the individuals and increases the productivity of firms in growth sectors’.

It was anticipated that some 100,000 young people would be involved, and there would be a focus on women and other disadvantaged groups. The SEP would concentrate on information and communication technology, commercial agriculture, construction (hydropower), light manufacturing sectors through market-led interventions that enable job creation, increase in incomes and migration optimization.

It was recognised that ‘the majority of Nepalis will remain dependent on the informal sector and migration for a long time to come, so the project will also contribute to increasing jobs, productivity and incomes in the informal sector and migrant work’.

The program would, ‘harness the benefits of migration for Nepal’s work force and economic development by demonstrating several cost-effective models to increase migrants’ skills; lower financing and other costs of travelling abroad; and increase savings and investment of remittances’.

The Reality

What has happened since these program were announced? Labour Minister Bista was sacked, Basnet has been busy defending Prime Minister Oli from internal rivals within the ruling Nepal Communist Party (NCP). Oli himself has been engrossed in internal fire-fighting.

Prime Minister Oli dissolved the Lower House on 20 December, the Supreme Court reinstated it, but another court decision annulled the unification of the NCP on 7 March. Lurching from one crisis to another, the government has had little time to concentrate on governance, job-creation and addressing the economic and public health impact of the Covid-19 crisis.

There has not been any systematic evaluation of the effectiveness of the roll-out and implementation of the two employment generation programs, or any assessment of the extent to which they have achieved their ambitions.

The Dfid SEP did set up a Facebook site, which is still running and reporting on employment initiatives under this program. But there is no overall evaluation of its achievements and its impact on employment.

In June, there were media reports that a task force formed to study the impact of Covid-19 on employment and the economy has said that the country needs to create 1.5 million jobs, more than double the target set by the government, to avoid an imminent unemployment crisis. With the Covid-19 pandemic affecting the global workforce, tens of thousands of Nepali migrant workers based in various labour destination countries were expected to return home while many people within the country were thought to be likely to be put out of their jobs

The government had announced plans to create 700,000 jobs in the fiscal year 2020-21. But the government’s own task force now suggested that this – even if implemented -- would not be enough to employ the workforce at home and those expected to return from abroad.

“Our estimate is that we need to create 1.5 million jobs to accommodate the new workforce that joins the labour market every year, those who were planning to go abroad for jobs but were unable to because of the pandemic, and the people who lost their jobs at home and abroad,” said Ram Kumar Phuyal, coordinator of the task force and also a member of the National Planning Commission.

According to the task force, around 700,000 Nepali migrant workers were estimated to return from abroad over the next year. Phuyal said 300,000 people were estimated to arrive from India and the remaining from other key labour destinations.

The task force estimated that around 225,000 people were likely to return in the immediate future (June to August 2020). It noted that the government plans to create employment through various existing programs, like the Prime Minister Employment Programme, as well as new ones.

It estimated that this, if implemented, could provide as many as 700,000 jobs, but there was no indication at that point that the scheme was being effectively implemented, or indeed, implemented at all. Shankar Sharma, former vice-chairman of the National Planning Commission, commented that the government would struggle to create 700,000 new jobs in a year, let alone 1.5 million.

In fact, by all accounts some 300,000 to 400,000 Nepalis previously working abroad, mainly in India, returned home during 2020 as the Covid-19 pandemic swept across India and the economy was effectively locked down.

According to the World Bank, the Nepal Unemployment Rate, which was 2.85% in December 2019 (and had averaged 1.84% over the previous decade), had risen by December 2020 to 4.44%. Even as early as September-October 2020, finding insufficient and inadequate economic opportunities in Nepal on their return, tens of thousands of former migrant workers began to return to India in search of employment or other livelihoods.

There is no indication that the employment programs launched in 2019 had provided anything like what was needed in the way of jobs to prevent a dramatic rise in unemployment and the return of many migrant workers to India towards the end of 2020.

David Seddon has undertaken research and consultancy on development issues in Nepal over several decades.