Causes of Unemployment in Nepal

Regarding employment, Nepal, a developing country in South Asia, faces many challenges. According to the Nepal Labour Force Survey 2018, the country’s unemployment rate was 11.4%. Women had a higher unemployment rate (15.7%) than men (10.5%). The age groups with the highest unemployment rates were 20-24 years (19.2%) and 25-29 years (16.4%). The following are some of the causes of unemployment in Nepal:

Limited Economic Growth: The Nepalese economy has been growing slowly, resulting in a lack of job opportunities. According to the World Bank, Nepal’s GDP growth rate was 0.2% in 2020, mainly due to the COVID-19 pandemic’s impact. So, this has led to unemployment in Nepal.
Low Industrialization: Nepal’s industrial sector is underdeveloped and does not offer enough job opportunities. Most of the population is involved in agriculture, which is insufficient to employ everyone. According to the Nepal Labour Force Survey, only 7% of the employed population worked in the industrial sector in 2018.
Lack of Education and Skills: Many Nepalese do not have the education or skills needed to get a job in today’s economy. The Nepal Labour Force Survey found that in 2018, about 37% of people aged 15 and older had not finished primary school.
Migration: Migration is another major cause of unemployment in Nepal. Many Nepalese move to other countries to find work, which leaves a hole in the local job market. According to the Department of Foreign Employment, more than 6 million Nepalese worked abroad in 2020.
Political Uncertainty: Political unpredictability and conflict have hurt Nepal’s economy and job market. In 2019, Nepal ranked 113th out of 190 countries in the World Bank’s Ease of Doing Business report.
Gender Inequality: There is a lot of inequality between men and women in Nepal, and it is hard for women to get an education or a job. According to the Nepal Labour Force Survey, the female labor force participation rate was only 40% in 2018.
Population Growth: Nepal’s population has been growing steadily, which has put pressure on the job market. According to the Central Bureau of Statistics, Nepal’s population was around 29.5 million in 2021, an increase of 1.34% from the previous year. This is another major cause of unemployment in Nepal.
Lack of Investment: The Nepalese government has not put enough money into building infrastructure and creating jobs. Private sector investment has also been limited, which has affected the job market. According to the World Bank, Nepal’s gross capital formation was 22.5% of GDP in 2019, which is lower than the average for South Asia.
Natural Disasters: Nepal is prone to natural disasters such as earthquakes, floods, and landslides, which can damage infrastructure and affect the job market. For example, the 2015 earthquake in Nepal greatly affected the economy and jobs there.
Informal Sector: Many Nepalese people work in the informal sector, which has jobs that don’t pay well and aren’t safe. According to the Nepal Labour Force Survey, in 2018, about 73% of the people who worked did so in the informal sector.
Lack of Entrepreneurship: Entrepreneurship is essential for job creation, but there is a lack of entrepreneurship in Nepal. According to the Global Entrepreneurship Monitor, Nepal’s entrepreneurship rate was only 12.7% in 2020, which is lower than the average for South Asia.
Corruption: Corruption is a big problem in Nepal, which makes it harder to invest and create jobs. Nepal ranked 117th out of 180 countries in the Transparency International Corruption Perceptions Index 2020. Hence, it is also a prime cause of unemployment in Nepal.
Unequal Distribution of Land: In Nepal, land ownership is highly unequal, with a small percentage of the population owning the majority of the land. Because of this, many people, especially those from marginalized groups, don’t have access to land and farming resources. Because of how the land is divided, poverty and unemployment are more common in some places, especially in rural areas.
Seasonal Agriculture: Nepal’s economy is heavily dependent on agriculture, but much of it is seasonal, leaving farmers unemployed for much of the year. This makes it hard to make a steady income and keep a job, especially for people who work in subsistence agriculture. This lack of a steady income and jobs in agriculture has made it hard for people to get by in rural areas, where poverty and unemployment are common.
Slow Pace of Industrial Development: Nepal’s industrial development has been slow, with only a few sectors experiencing growth. Because of this, there aren’t enough jobs in the industrial sector, especially in manufacturing, which could give many jobs to people with low skills. Nepal has also had trouble diversifying its economy, which could have led to more jobs in different fields because it hasn’t put enough money into its industries.

These factors have significantly contributed to Nepal’s high levels of unemployment. To address these issues, the government, private sector, and civil society must work together to address the root causes of unemployment and create more opportunities for Nepalese workers. Land reform, investment in infrastructure and industries, and skill development programs could all help Nepal create more jobs and reduce poverty and inequality.