Nepal needs to create some 658 jobs every day, according to a World Bank report published today.
Every month, the working age population increases by 35,000 people and Nepal must create 240,000 jobs a year to maintain its employment rate, the twice-a-year South Asia Economic Focus (SAEF) report reveals.
However, Nepal has secured the top spot in job creation in South Asia, with employment rate hovering around 68 per cent, the World Bank report, 'Jobless Growth', further reads, adding that it means 32 per cent of the country’s working-age population – people aged 15 to 64 – is either unemployed or voluntarily inactive, which is the lowest in South Asia.
"It has made Nepal an exception, as its employment rate is higher than that of many other countries with a similar income level," it adds.
But the domestic labour market sees entry of at least 512,000 youths annually, according to the Economic Survey published by the Finance Ministry.
Due to lack of employment opportunities back home, most of the youths are forced to find the 'dirty, difficult and dangerous' jobs in Malaysia and Gulf countries, though the outflow of Nepali migrant workers has started to drop since last two fiscal years forcing the country to create more jobs back home.
South Asian countries, including Nepal, offers an opportunity for faster economic growth, because there would be more working people, the World Bank report adds. "But to reap the benefits of this ‘demographic dividend’, sufficient new jobs need to be created."
In the short term, growth can boost employment rates as greater labour demand pulls people out of unemployment and inactivity. Growth can also lead to better jobs, for example when farm employment is replaced by work in factories and offices.
The report also argues that growth alone will not be enough to attain the higher employment rates enjoyed by other developing countries, especially among women.
In Nepal, one percentage point of economic growth increases the employment rate by roughly 0.045 percentage points, which is pretty low compared to other countries, the report reads, adding that growth, however, may not always lead to job creation. "In the long term, growth could reduce employment rates. As countries become richer and living standards improve, families can afford to keep their children longer in school, the ill and the disabled can stay home, and women may withdraw from the labour force."
"More than 1.8 million young people will reach working age every month in South Asia through 2025 and the good news is that economic growth is creating jobs in the region,” said the World Bank South Asia Region chief economist Martin Rama. "But providing opportunities to these young entrants while attracting more women into the labour market will require generating even more jobs for every point of economic growth."
While the number of working age people is increasing, the fraction of working-age people, who are at work has declined in most countries in South Asia based on employment data analysed from 2005 to 2015, the report reads, adding that some decline was to be expected as higher incomes allow households to prioritise education, health and other commitments. "But the fall in employment rates in South Asia has been much faster than in East Asia and it has been particularly strong in India, Bhutan and Sri Lanka, especially for women, the report shows. With declining employment rates, the region is foregoing some of its potential demographic dividend."
To arrest further declines in employment rates, South Asian countries would need to create 11.7 million jobs a year, which is feasible if the current growth momentum of the region is sustained, it suggests. But if South Asia wants to increase employment rates to the levels seen in other regions with similar income levels, it would need to create many more jobs. The focus should also be on better jobs, as regular wage employment remains the exception more than the norm.
Likewise, the report has also estimated economic growth lower than the Asian Development Bank (ADB) and of course Nepal government. The ADB had last week revised the economic growth to 4.9 per cent for the current fiscal year from earlier estimation of 4.7 percent, whereas the government had – in the mid-term budgetary review – revised the economic growth rate downwards to 6 per cent from the earlier projection of 6.5 per cent.
Nepal has seen an economic recovery after disruptions from earthquakes and a trade blockade but growth is expected to slow from 7.5 per cent in fiscal year 2016-17 to 4.6 per cent in 2017-18 due to the heaviest floods in decades combined with slow recovery of exports, slowdown in remittances, and an increase in lending rates, the report reads, adding that Nepal is the second country from bottom in terms of low economic growth in the region.
However, South Asia has regained its lead as the fastest growing region in the world, supported by recovery in India. With the right mix of policies and reforms, growth is expected to accelerate to 6.9 per cent in 2018 and 7.1 per cent next year.
"Growth is important, but even very high growth will alone not be enough to increase South Asia’s employment rate”, the report author Robert Beyer said, adding that policies and actions are needed to make growth more labour-intensive, and especially to create the kinds of jobs that can encourage greater labour force participation by women.
Every month, the working age population increases by 35,000 people and Nepal must create 240,000 jobs a year to maintain its employment rate, the twice-a-year South Asia Economic Focus (SAEF) report reveals.
However, Nepal has secured the top spot in job creation in South Asia, with employment rate hovering around 68 per cent, the World Bank report, 'Jobless Growth', further reads, adding that it means 32 per cent of the country’s working-age population – people aged 15 to 64 – is either unemployed or voluntarily inactive, which is the lowest in South Asia.
"It has made Nepal an exception, as its employment rate is higher than that of many other countries with a similar income level," it adds.
But the domestic labour market sees entry of at least 512,000 youths annually, according to the Economic Survey published by the Finance Ministry.
Due to lack of employment opportunities back home, most of the youths are forced to find the 'dirty, difficult and dangerous' jobs in Malaysia and Gulf countries, though the outflow of Nepali migrant workers has started to drop since last two fiscal years forcing the country to create more jobs back home.
South Asian countries, including Nepal, offers an opportunity for faster economic growth, because there would be more working people, the World Bank report adds. "But to reap the benefits of this ‘demographic dividend’, sufficient new jobs need to be created."
In the short term, growth can boost employment rates as greater labour demand pulls people out of unemployment and inactivity. Growth can also lead to better jobs, for example when farm employment is replaced by work in factories and offices.
The report also argues that growth alone will not be enough to attain the higher employment rates enjoyed by other developing countries, especially among women.
In Nepal, one percentage point of economic growth increases the employment rate by roughly 0.045 percentage points, which is pretty low compared to other countries, the report reads, adding that growth, however, may not always lead to job creation. "In the long term, growth could reduce employment rates. As countries become richer and living standards improve, families can afford to keep their children longer in school, the ill and the disabled can stay home, and women may withdraw from the labour force."
"More than 1.8 million young people will reach working age every month in South Asia through 2025 and the good news is that economic growth is creating jobs in the region,” said the World Bank South Asia Region chief economist Martin Rama. "But providing opportunities to these young entrants while attracting more women into the labour market will require generating even more jobs for every point of economic growth."
While the number of working age people is increasing, the fraction of working-age people, who are at work has declined in most countries in South Asia based on employment data analysed from 2005 to 2015, the report reads, adding that some decline was to be expected as higher incomes allow households to prioritise education, health and other commitments. "But the fall in employment rates in South Asia has been much faster than in East Asia and it has been particularly strong in India, Bhutan and Sri Lanka, especially for women, the report shows. With declining employment rates, the region is foregoing some of its potential demographic dividend."
To arrest further declines in employment rates, South Asian countries would need to create 11.7 million jobs a year, which is feasible if the current growth momentum of the region is sustained, it suggests. But if South Asia wants to increase employment rates to the levels seen in other regions with similar income levels, it would need to create many more jobs. The focus should also be on better jobs, as regular wage employment remains the exception more than the norm.
Likewise, the report has also estimated economic growth lower than the Asian Development Bank (ADB) and of course Nepal government. The ADB had last week revised the economic growth to 4.9 per cent for the current fiscal year from earlier estimation of 4.7 percent, whereas the government had – in the mid-term budgetary review – revised the economic growth rate downwards to 6 per cent from the earlier projection of 6.5 per cent.
Nepal has seen an economic recovery after disruptions from earthquakes and a trade blockade but growth is expected to slow from 7.5 per cent in fiscal year 2016-17 to 4.6 per cent in 2017-18 due to the heaviest floods in decades combined with slow recovery of exports, slowdown in remittances, and an increase in lending rates, the report reads, adding that Nepal is the second country from bottom in terms of low economic growth in the region.
However, South Asia has regained its lead as the fastest growing region in the world, supported by recovery in India. With the right mix of policies and reforms, growth is expected to accelerate to 6.9 per cent in 2018 and 7.1 per cent next year.
"Growth is important, but even very high growth will alone not be enough to increase South Asia’s employment rate”, the report author Robert Beyer said, adding that policies and actions are needed to make growth more labour-intensive, and especially to create the kinds of jobs that can encourage greater labour force participation by women.
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