Nepal | December 02, 2020

‘Impact of pandemic will push millions of workers below the poverty line worldwide, including in Nepal’


The Himalayan Times
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The coronavirus pandemic has had a severe impact on Nepalis in terms of unemployment rates, hours worked and labour force participation. While uncertainty still looms large regarding how long the crisis will last, it is becoming increasingly clear that the post-pandemic labour market will likely be very different from the earlier scenario. In this regard, Richard Howard, country director of International Labour Organisation-Nepal, shared his insights with The Himalayan Times on the current labour market situation in the country and the challenges ahead, among other issues. Excerpts:

This undated image shows Richard Howard, country director of International Labour Organisation-Nepal. Photo Courtesy: ILO Nepal

What is your analysis of the current labour market and employment situation in Nepal?

A survey conducted by Nepal Rastra Bank after four months of nationwide lockdown revealed that the pandemic forced 61 per cent of businesses to close down completely, causing a dire effect on the economy by making tens of thousands of workers jobless and disrupting the production and supply chain. According to the survey, businesses laid off 22.5 per cent of employees on an average, whereas the hotel and restaurant sector laid off 40 per cent of staff, followed by small and medium scale enterprises with 30.5 per cent of employees laid off. Likewise, businesses deducted 18.2 per cent of employee payroll on an average during that period, however, hotels and restaurants cut their employees’ salaries by 36.4 per cent, the highest among the different sectors, followed by transport sector with 31.2 per cent. Similarly, it revealed that more than 77 per cent of business firms did not have enough cash flow to pay employee salaries, rental fee and bank’s loan interest.

Based on the ILO’s estimate between 1.6 to two million jobs are likely to be disrupted in Nepal due to the pandemic, either with complete job loss or reduced working hours and wages. In total, 631,000 female jobs are estimated as at risk in the higher impact scenario, compared to 1.3 million jobs for men. Based on the higher-impact scenario, the jobs disrupted includes nearly 780,000 workers in wholesale and retail trade, 446,000 in manufacturing, 404,000 in construction, 211,000 in transport and 62,000 in accommodation and food service activities and 83,000 in other services, real estate and administrative activities.

Approximately 5.7 million or 80.8 per cent of workers in Nepal have informal jobs and they are the most at risk workers together with around 1.4 million homebased workers, mostly women.

These workers lack the basic benefits usually provided by a formal job, including social protection coverage. Disruption in their work due to economic downturn, sickness, or quarantine, they have no other options for livelihood as they are also out from the state-funded safety net.

Another major category of workers impacted by the pandemic are around 3.5 million migrant workers working in different destinations, including in India.

The reverse flow of Nepali workers towards India in recent months clearly indicates lack of employment and income opportunities in Nepal forcing them to return to India for survival. However, workers from other destinations are gradually coming back to Nepal and that seems to be increasing with ease in travel. Around half a million migrant workers are expected to return from other countries, except India.

Is there any particular labour group or sector that you think is not getting the attention it deserves from the government and non-government sectors?

The workers in informal sectors, including home-based, are the ones requiring more attention from state and other actors. Migrant workers are the other category of workers who are not getting adequate attention and support from the government, particularly for their repatriation and reintegration. Women workers, as a whole, are another very vulnerable group of workers, irrespective of their sector of employment and they are also not getting proper attention.

There is no due attention on the issues of differently-abled workers.

The reverse migration due to the coronavirus pandemic is a growing apprehension. What is your take on this?

It was estimated at the beginning of the pandemic that between one to 1.5 million migrant workers, including from India, will return. It was estimated that by the end of the nationwide lockdown period, over half a million workers returned from India. The migrant workers returning from other destinations has now reached around 140,000 and is expected to increase in days to come. The significant economic impact of this reverse migration for Nepal will be on the foreign currency earning as remittance is the major source for this. Remittance will become even more important for Nepal as other sources of foreign currency earning, mainly tourism and export of goods are also severely disrupted. Obviously, families dependent on remittance will be suffering more at the household level, particularly in the absence of alternative income opportunities.

As the internal labour market is already suffering from the pandemic, laying off large number of workers internally employed, the flow of migrant workers obviously increases pressure on the internal labour market. The recent flow of Nepali workers again migrating to India amidst the high risk of COV- ID-19 is a clear indication that the internal labour market has no space for these migrant workers.

This also indicates lack of proper and adequate interventions to create an income and employment opportunities for these workers. Those returning from other destinations may not have easy option for some time as of those going to India traditionally.

As the labour market in the major destinations have also been hit hard there will be less opportunities for these workers to re-migrate sooner.

Advocates also fear that the pandemic threatens to roll back decades of gains as more women are likely to continue working from home post-pandemic. Do you think this is a legitimate concern?

Yes, it is for sure that the impact of pandemic will be pushing millions of workers below the poverty line worldwide and Nepal will not be an exception to this and vulnerability of women workers to the situation is even more grave.

As we know quite well that women workers’ participation in informal economy for income is much higher compared to their male counterpart and women workers are more dominant in homebased work, they are highly impacted by the pandemic. Many anecdotal evidences are proving that the pandemic is making women more vulnerable to domestic violence and loss of income or employment will be aggravating the situation to further worsen. Women workers losing employment or income will not only affect them individually but affect the whole family, primarily the children and elderly whom they are traditionally responsible to take care of. On top of their physical burden, they will face more physiological burden for managing their families as women are more responsible towards the family than their male counterpart.

What is your analysis on the policy response of government in order to minimise impacts of the pandemic?

The government of Nepal had proactively introduced scores of policies and programmes in order to minimise the impacts of the pandemic on the overall socio-economic elements. It has announced stimulus package for the revival of enterprises affected by the pandemic and also announced to create around 700,000 jobs in this fiscal year through Prime Minister Employment Programme, vocational skills training, self-employment, Youth and Small Entrepreneur Self Employment Fund, etcetera. The government has also taken different measures for the repatriation of migrant workers and plans for their economic reintegration.

However, the problem has been seen in the effective implementation of those policies and programmes and often blamed for the slow response and ineffective implementation. Major gap in those policies and programmes is lack of proper integration of local governments and private sector actors. Definitely private sector should be the main engine for creating sustainable employment opportunities but it is hard hit by the pandemic and not likely to create additional employment opportunities in the short run. So, there is a need for a proper support system; first to keep the enterprises surviving then to expand their potential. And for the time being until the private sector is ready to run in a full-fledged manner, local governments are the only alternates that can create employment opportunities for its citizens through various development work and promotion of income generation. This is where the policies and programmes of the government is lacking and the impact has been already seen with the flow of Nepali workers returning to India. This is also right time for the government to initiate large-scale development projects which have been in the pipeline for many years as those could really create thousands of employment for diverse skills category of workers returning from destinations and those available in domestic labour market.

What is ILO doing to mitigate the challenges brought about by COVID-19?

ILO always works together with the government and provides technical assistance to create an enabling environment for decent employment and income for all workers. We work together with the federal government (Ministry of Labour, Employment and Social Security) on various issues, including employment creation, social protection and skills recognition through various technical assistance initiatives.

We are planning together with other development partners to support provincial and local governments in designing and implementing different programmes for creating job opportunities, extending skills recognition opportunities and in bringing all the workers, including migrant workers under social protection umbrella.

We are also supporting in the safe repatriation of Nepali migrant workers from major countries by collaborating with concerned Nepali missions and Nepali diaspora organisations and this support is also directed towards linking Nepali migrant workers with new employment in the countries of destination itself wherever such opportunities are available.

A version of this article appears in print on November 19, 2020 of The Himalayan Times.

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