Prime Minister Oli said last week that his government laid the foundation for prosperity in Nepal during its first year in power. This claim has very little foundation. The economy has not performed well in the last year, and even he is said to be frustrated by the lack of progress.
There has been limited movement in hydropower, transmission lines, roads, irrigation. The trade deficit has grown alarmingly as imports soar while exports stagnate. The balance of payments is covered year after year largely by remittances sent back from abroad by Nepali men and women who should be contributing to investment, entrepreneurial activity, income generation and production back home.
Mind the Gap, Editorial
Nepal’s great income divide, Ramesh Kumar
Some are more equal than others, Anil Chitrakar
It’s a rich man’s world, Ramesh Kumar
Every year, more than 300,000 young Nepalis enter the labour market, but the supply of jobs is much smaller than the demand, so many seek opportunities abroad. Others are forced to take low paid jobs with limited security, and nearly a third of the work-age population remains unemployed or underemployed.
Banks are reluctant to lend, even to established enterprises and much less so to entrepreneurs hoping to invest in start-ups. Those with substantial resources of their own prefer to invest in sectors providing more reliable returns, such as real estate, hotels and restaurants in urban areas, commerce and trade.
Where larger investments are made for the longer-term, for example in infrastructure or aviation, it is usually only when lucrative government contracts are involved, providing direct or indirect benefits of various kinds (including illegitimate arrangements).
Nepal remains a largely rentier capitalist economy, rather than one in which capital investment in production generates real and sustainable growth, promoting and encouraging enterprise and creating jobs.
The government and the state could assist by better regulation and also by cutting red tape, effective control of rampant corruption (even inside an anti-corruption watchdog like the CIAA) and by the promotion of investment in medium and long-term productive activity.
One way this can be done is through effective public works programs. These have been successful in many countries and have also proved their worth in Nepal. They could be adopted on a much larger scale by both federal and provincial governments seeking rapid development and job creation.
The construction of ‘green roads’ using labour rather than capital-intensive machinery by the Rural Access Programme (RAP) among others, has shown to effectively contribute to infrastructure development while creating employment.
Recently, Prime Minister Oli launched a new Employment Program ensuring a minimum of 100 days of wage-employment a year to those registered in the scheme. Registered persons will be entitled to 100 days in paid employment, and if this cannot be delivered they can get a subsistence allowance worth half of the amount to be paid to those employed under the scheme.
An Employment Service Centre (ESC) will be established in each of the 753 local authorities and employment coordinators will be deployed at all centres, to record, through an Employment Management Information System, all those who are unemployed and seeking a job. These will act as ‘job centres’ at the level of the urban or rural municipality and will indicate employment opportunities within the locality as well as providing 100 days employment or subsistence.
The Ministry of Labour and Social Security has identified 13 categories, but there is no reason why the jobs available should be limited to those areas. The proposed scheme appears to be confined to ‘government projects’, but the ESC should be able to gather information on all employment opportunities in the private and public sectors and provide this information in real time to job-seekers and prospective employees.
In this way it could contribute not only to employment but also to social security for the unemployed and their families, and to local development. It is a scheme to be welcomed as a bold initiative, long overdue.
Of course, this remains a scheme in theory, yet to be put into practice. And if it is like so many other paper schemes proposed by successive governments over the years, it will be yet another deception perpetrated on the Nepali people.
One problem is deploying and supporting the human and technical resources required for the scheme. Will local authorities be able to fund the ESC and the personnel needed to staff it and operate it effectively? Will the IT required to establish and maintain a data base on both job opportunities and job seekers be made available and will it be properly serviced?
Identifying and verifying candidates for the scheme also cannot be another gravy train for local party cadres and their families or for local elites, otherwise it will not help the jobless and the poor. A significant proportion of Nepal’s population remains below the poverty line, and they should benefit from this scheme.
We should welcome this proposal for a pioneering scheme, which has the potential to benefit not only the unemployed, but also the wider local population, and if it takes off, the economy of Nepal at local, provincial and national levels.
David Seddon is Director of Critical Faculty, author and co-author of many publications on Nepal, and currently writing a three-part book on ‘Nepal and the Great War’.