This week, Nepal’s first election since the declaration of a new constitution is drawing to a close. A new government should be in place by the new year and, after years of political turmoil, stability is finally in sight. The country has high hopes of achieving economic development – including reaching lower-middle-income country status by 2030 – and this will need to be a priority for the incoming government. To be successful, Nepal will need to create more ‘good’ jobs and address the exodus of young people that are migrating abroad for employment.
While most developing countries are facing a 'youth bulge' and a consequent surplus of labour (one billion young people aged 15-29 are expected to enter the world-wide labour market in the next ten years), Nepal is facing a labour shortage – which is equally concerning.
Driven by the cultural stigma of remaining in their own villages, and the social status of working abroad, 80% of the 500,000 young people entering the labour market each year are reportedly leaving the country. The new government must act not only to create jobs (a priority which already features in party manifestos) but also to address the expectations that young people have about work. The government must encourage them to contribute to Nepal’s growth by working in their home country.
High remittances are masking a stagnant economy
Recent studies by the International Labour Organisation (ILO) have found that, in Nepal, education and skills among young people have been improving, making them the ‘most educated generation ever’. Yet a new survey carried out by ODI’s Supporting Economic Transformation Programme (SET) has found many employers are struggling to find skilled workers, or losing them to jobs abroad.
This is problematic. Money earned abroad and sent back home is often used only for short-term consumption and the multiplier effect, of a large productive domestic workforce contributing to a thriving economy, is missing. Recent high gross domestic product (GDP) growth rates – of between 3% and 7% in the past seven years – have been driven by remittances which amount to approximately 30% of GDP. This vulnerable source of income, on which Nepal has become increasingly dependent, masks a stagnating domestic economy.
A cultural shift is required to keep young workers in Nepal
It is a well-known social norm in Nepal that, due to various cultural factors, working abroad is considered more prestigious than working at home. This is a common rural-urban issue in development (with urban-based jobs being preferred to rural village-based ones) but in Nepal, this kind of preference for foreign employment and education is reported across all socio-economic backgrounds.
Young people in Nepal are also better educated and more globally-connected than ever, and during fieldwork for a study of job creation in four sectors, ODI researchers heard several reports of young people migrating abroad for jobs, even when they were employed in ‘good’ skilled jobs in Nepal (interestingly, this was often for lower-skilled jobs in the Middle East, such as construction or domestic work).
Whilst currently under-researched, the significance of this trend must not be underestimated by the new government, especially as it could present an opportunity; a large youthful workforce was an asset to South East Asian countries during periods of fast growth. With richer countries offering ample and easily accessible high-paid employment opportunities, Nepal must address the consequences of neglecting young people’s expectations.
Young people would benefit from inclusive job creation
For an individual, a good job offers more than purely economic benefits; it is positively linked to their sense of identity, status, and overall satisfaction with life. Consequently, inclusive job creation is, increasingly, a focus of development efforts.
In Nepal, the debate around the inclusivity of jobs has often focused on women or those from marginalised castes such as the Dalits. Young people are not usually considered a marginalised group – because in this context they are not – and consequently discussion relating to their participation in the labour force is often limited. Yet, Nepal’s unusual position of reported shortages in labour coupled with increasing migration of young people for low-skilled employment shows their needs should be included in this debate.
High hopes for economic transformation
Nepal is at a political crossroads and at SET’s recent inclusive job creation event – with government and local business – there were high hopes that the new government will deliver fast economic success. Manifesto promises are perhaps overly optimistic, and the government should prioritise promising sectors and coordinate ministries, to try to deliver them.
Elections have, so far, been peaceful and the successful party should look to transform the economy in a way that considers the expectations of young people, creates more jobs in appealing (and productive) sectors like tourism and information technology, and puts measures in place to control out-migration. The bigger challenge will be shifting the nation’s cultural view of working or studying abroad as a sign of ‘success’, and increasing the prestige of working in Nepal.
A robust labour force is essential to rapid development, and the new Nepalese government must create more inclusive, productive and appealing jobs, to deliver the dynamic economic growth that the country is hoping for.