KATHMANDU, MARCH 17
A new assessment by the International Labour Organization (ILO) has warned that Nepal's graduation from Least Developed Country (LDC) status could reduce exports in key sectors and pose employment risks, particularly for women and informal workers.
The Employment Impact Assessment on Nepal's LDC Graduation, launched jointly by the ILO Nepal and the National Planning Commission (NPC), analyses potential economic and labour market impacts between 2026 and 2030 as Nepal prepares to graduate from the LDC category in November 2026.
According to the report, the loss of trade preferences after graduation may expose export-oriented sectors-particularly apparel and textiles-to higher tariffs, stricter compliance requirements and increased global competition.
Using economy-wide modelling and stakeholder consultations, the study projects that Nepal's export losses could range from 2.5 to 4.3 percent of total exports following graduation. Products such as vegetable goods and cereals may also face higher tariffs in international markets.
The report notes that the transition may disproportionately affect women and informal workers, who are heavily concentrated in vulnerable sectors of the economy.
Speaking at the report launch, ILO Country Director for Nepal Numan Özcan said LDC graduation represents a transition to a more competitive environment with fewer international support measures.
"Graduation is not an end. It is a transition into a more competitive environment with higher expectations. The real test is how Nepal can translate graduation into better jobs, stronger enterprises and greater economic security," he said.
The assessment also highlights that the transition could serve as an opportunity for economic transformation if supported by strategic policy actions. Measures in trade facilitation, tourism and information and communication technology (ICT) could help mitigate adverse impacts, strengthen competitiveness and generate new jobs.
The study calls for urgent efforts to address structural challenges such as high production costs, limited access to capital and a fragile manufacturing base, while improving productivity, upgrading workforce skills and strengthening value chains.
Speaking at the event, NPC Vice-Chairperson Dr Prakash Kumar Shrestha said the report is aligned with Nepal's 16th Plan, which prioritizes employment creation.
He said the study would help policymakers understand possible export losses and strengthen domestic employment as the country approaches a historic milestone.
The report stresses the need for tripartite collaboration among the government, employers and workers' organizations to manage the transition effectively.
Officials from the Ministry of Labour, Employment and Social Security (MoLESS), trade unions and the private sector also called for coordinated efforts to safeguard jobs and support enterprises during the transition period.
The ILO said it will continue supporting the Government of Nepal in developing policies and strategies to ensure that LDC graduation leads to resilient labour markets, sustainable growth and decent work opportunities.