‘Invest in human capital development to unleash Nepal’s growth potential’

Bangkok, November 25

Nepal needs to increase investment in human capital development to unleash the growth potential of the country, according to a labour expert.

The International Labour Organisation (ILO) has cited low investment in human capital as the major obstacle for the country to leap forward. Outmigration of youths is rampant as the country has been unable to generate jobs for around 500,000 youths that enter the job market every year and only 20 per cent of them are absorbed in the domestic labour market. More worryingly, only around seven per cent of the workforce is in the organised sector.

Against this backdrop, the country has started facing shortage of skilled labour force that has been witnessed in tourism (hotel, hospitality), reconstruction, plumbing, electrician and other semi-skilled jobs, as per the government sources.

ILO — the United Nations’ specialised agency dedicated to improving labour conditions and living standards throughout the world — has said that Nepal will miss the opportunity to move towards prosperity if the government and private sector do not take immediate action to scale up the skills of the human resources.

Developed countries have been facing a challenge of high number of ageing population, dwindling job openings along with technological advancement, automation and digitalisation. However, for a country like Nepal, there is tremendous opportunity to take advantage of high working age population for next 15 to 20 years, as per Lawrence Jeff Johnson, deputy director of Research Department at ILO.

“Nepal needs to enhance the skills of its youth for particular sectors, where the country has comparative and competitive advantage, like, tourism, hydropower, among others.”

Nepal has a high number of working age population. As per the World Bank, population in the age group of 15 to 64 in the country stands at 62 per cent. Technological advancement and some sort of ‘technological determinism’ has become a concern for the developed economies as the number of available jobs for humans is rapidly declining. At the national level, countries are working to ensure decent jobs for their citizens as the ‘world of work’ has been rapidly changing and the governance (regulation) of the work has become complex, especially in the platform-based economies. A large number of population in the developed countries has been working for organisations, companies and for individuals in their own countries and also outside of the country.

Youth unemployment is expected to rise by a further 200,000 in 2018 as compared to 70.9 million jobless people in 2017 after global economic crisis of 2008-09, as per ILO’s recently released Global Employment Trends for Youth 2017 report. Likewise, outsourcing and part-time jobs have increased in small and medium enterprises.

However, technological advancement could provide great opportunity for a country like Nepal to create job opportunities for their youth before they enter into the ageing society, according to Johnson.

“It took over 50 years for Europe to be developed, however, China and other ASEAN countries (Association of Southeast Asian Nations) have done it within two decades owing to technological advancement. Likewise, Nepal and other least developed countries may transform themselves in a shorter period,” as per Johnson.

He flagged Nepal’s over-reliance on remittance as ‘it is not the long-term solution for the economy’.

Stating that saturation of job generation in Middle East and other countries could trigger a problem in Nepal, he added, “The best way for the remittance-driven economies like Nepal, is to focus on massive investment in human capital development based on the potential sectors which absorb more human resources in their own country.”