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Blog » Nepal’s Jobs are Improving, but Women are Losing Out, by Elizabeth Ruppert Bulmer

Nepal’s Jobs are Improving, but Women are Losing Out, by Elizabeth Ruppert Bulmer

Created Jul 13 2020, 11:21 PM by Teuta Gashi

Nepal’s jobs are improving, but women are losing out

by Elizabeth Ruppert Bulmer

Nepal’s economy is making great strides towards better work opportunities for its labor force. But not all job-seekers are able to access good-quality jobs…especially women.

In the past 10 years, wage jobs are increasingly available, particularly in urban centers. Kathmandu and its environs have experienced a population boom, as workers from other districts and provinces seek the more diverse and better paying jobs that cities provide. Wage jobs increased from 17% to 24% of total employment between 2008 and 2018, contributing to higher household incomes and lower poverty rates.

Despite important gains, there are not enough wage jobs to absorb all job seekers. Only one-quarter of jobs in Nepal are wage jobs. This shortfall leads many – mostly men – to seek work abroad. By 2018, there were 3.8 million wage jobs in Nepal, while another 2.8 million Nepalese were employed in wage jobs in other countries, and send back remittances equivalent to 30% of Nepal’s GDP.

Six in ten jobs within Nepal are unpaid, and these are disproportionately held by women.  Nepal remains a highly rural economy where subsistence farming is the main economic activity for women. This means that most working women use their productive capacity to feed their families. Yes, this is an important use of women’s time; but it generates no income for them and underutilizes their human capital. As a result, Nepal’s economy is losing out on much of the production potential of women, and women have limited agency.

Things are changing, but fundamental change takes time. Production is steadily shifting away from agriculture to industry and especially to services. Four million jobs were created over the last decade,  across a mix of low-productivity and high-productivity sectors.

  • The wholesale and retail sector – Nepal’s largest employer after agriculture – added the most non-wage non-subsistence jobs, but these are still of relatively low quality, and are concentrated in micro-sized family firms.
  • The construction sector generated 635,000 wage jobs, providing well-paid work especially for unskilled men.
  • The manufacturing and finance and business services sectors also added significant wage jobs, but here, too, men benefitted disproportionately.

Wage jobs accounted for three-quarters of the new jobs taken up by men since 2008, compared to only one-quarter of the new jobs taken up by women.

Real wages increased in all sectors, and there are more jobs of higher quality today compared to 10 years ago. These gains translate into improved worker welfare on average. But faster progress is needed to absorb underutilized workers into better-quality and well-paid jobs.

What would faster progress look like? More permanent wage jobs; more jobs within firms, especially in small and medium-sized enterprises (SMEs) with relatively high productivity; a dynamic and competitive SME sector; higher levels of domestically-added value in goods and services that are competitive on the global stage.  

Evidence from a combination of data sources – labor force surveys, a 2018 census of firms, and a 2019 survey of 900 small and medium-sized enterprises across 6 districts – points to the following key impediments to achieving better labor market outcomes in Nepal.

  1. Nepal’s dramatic topography makes it hard for many workers to access wage jobs and costly for producers to transport goods and connect to consumers.
  2. Gendered social norms limit female labor mobility and work opportunities, and subsistence activities remain prevalent.  
  3. Most firms are micro-sized with 1-2 employees, and have low productivity.
  4. Most firms target small local markets rather than exporting or connecting to global value chains.
  5. Workers’ skills are generally low, despite tremendous gains in educational attainment; the average worker has less than a completed secondary education.
  6. Firms report a high cost of doing business associated with onerous regulations, taxes and bureaucratic inefficiencies.
  7. Employers struggle to access financing and recruit higher-level skills needed to increase their product quality, expand operations and create more jobs.  

Effective policies for improving job outcomes in Nepal should focus on (a) fostering SME productivity and growth; (b) improving the business environment and labor market policies; (c) increasing the individual, family and economy-wide benefits of international migration; and (d) preparing and connecting women and youth to better job options including entrepreneurship.