Youth Unemployment: Nepal's Unfulfilled Potential

By Neeti Pradhan
November 28, 2016

Young people are the future of any country, but in Nepal their potential remains largely unfulfilled as result of unemployment. A total of 40.3 percent of Nepal’s population of 28 million falls within the age category of 15-40 years based on the definition of youth of the National Youth Policy (2010). Using the United Nations criteria for youth (aged 15–29 years), the National Population and Housing Census 2011 shows that young people constitute around 28 per cent of the total population of Nepal. Among young people, men are significantly underrepresented with 46 percent compared to women as a result of labor migration.

Labor force participation among youth stands at 47.7 percent according to the ILO School to Work Transition Survey (SWTS) 2014.The agricultural sector has traditionally been the largest employer of young people, employing around 45 percent of Nepali youths. However, as a result of higher education levels and given its long hours and little income, many young people are not interested working in agricultural sector anymore. In the absence of alternative livelihood opportunities, many young people migrate to the urban centers in search of jobs in other sectors such as services sector and industry. Many end up disillusioned, as they are unable to find employment in the formal sector. As a result, according to the SWTS survey, 9 in 10 young workers (92.2 percent) in Nepal work in the informal sector, which offers few benefits and no social protection. A significant portion of 58.9 percent of youth are self-employed, but mainly work as unpaid workers in family businesses. However, a majority of young people in particular from the rural areas decide to go for foreign employment with more than 1500 youths migrating abroad daily.

Unemployment among youth is very high in Nepal with 19.2 percent compared to the national unemployment rate of 2.7 percent. Interestingly, with 26.1 percent, unemployment among university graduates is more than three times higher compared to 8.2 percent of youth without schooling. There are various reasons for unemployment among the young population of Nepal. Firstly, the labor market is not able to absorb young people due to a lack of available jobs in Nepal’s declining industrial sector and in the services sector. Secondly, there is a skills miss-match between job seekers and employers. Many young people do not have the skill-set required by employers, because they lack technical and vocational education and training (TVET) or because they have degrees for which there is no demand. In our society, there is a perception TVET is of a lesser status than obtaining a degree at a college or university, so many young people who actually do not have the qualifications for an academic degree end up pursuing one instead. Thirdly, another related cause of unemployment is the fact that educated youth do not want to work in semi-skilled jobs. There is still a traditional thinking in Nepali society that if you’re educated then you’re supposed to have a proper job in a proper company and not something which is under equivalent to their educational attainment. Young people prefer stay at home jobless rather than being involved in a low paying job. Furthermore, in many rural parts of Nepal, there is a lot of social pressure for young people to go abroad for foreign employment, as it is seen as having a higher status than working in a low-skilled job back home.

Unemployment is not only a harm or a drawback in the personal lives of young people, but it has greater negative effects on our whole nation as well. It is sad to think of all those unemployed young people, who if they would have had a job would have been able to contribute to Nepal’s economic development. While remittances account for almost 30% of Gross Domestic Product (GDP) and have contributed significantly to poverty reduction, they are an unreliable source of national income as they vulnerable to external factors in destination countries. In the long term, a country cannot only rely on them to sustain its economy and there needs to be shift towards GDP led growth based on employment in Nepal. The government’s policy seems to be focused mainly on sending people abroad, but instead it should focus more on creating opportunities for employment of young people in our countryThe national employment policy 2015 prioritizes the creation of employment opportunities for young people, but implementation has been weak till date. Similarly, the national youth policy 2010, which identifies high growth sectors and the need for skills development, remains mainly a guiding document without any specific budget allocated for implementation. While there are several youth employment programs, some of them are inactive, whereas the more successful ones do have sufficient reach to cover the entire young population.

Apart for general policies, the government needs to focus more on implementation of sectoral policies such as the National Agricultural Policy 2004 and the Industrial Policies 2011. Given the importance of the agricultural sector still for employment, government policy should focus more on intensification of the low productivity agricultural sector, providing more support for young people in terms of entrepreneurship, providing access to credit and skills training opportunities. In addition, Nepal needs to invest more in revitalizing its industry, particularly manufacturing, energy, and infrastructure development and in creating an enabling environment for private sector growth. At the same time, young people in Nepal should also take responsibility. In my opinion, we need to change our mindset, whereby we look down on TVET and focus only on getting a job in a well-established organization, preferring to stay at home and not work than taking on a job that would not earn as much but would provide necessary work experience. Unless, action is taken on both fronts, the potential of Nepal’s young generation will indeed remain unrealized.

Neeti Pradhan

Kathmandu University School of Arts

BA in Media Studies

The views and opinions expressed in this blog are those of the author and do not represent the views of Bikas Udhyami.