Nepal | June 16, 2019

Unemployment woes: Effective measures required

Girish P Pant

In Nepal, the persistence of unemployment is ascribed to various determinants. Ample action research is imperative in the areas of type and magnitude of employment difficulties so as to commence policy measures which can combat unemployment

Illustration: Ratna Sagar Shrestha/THT

Unemployment is a major problem of Least Developed Countries (LDCs) since its impact is adversely felt on some of the most pressing social and economic factors. It has a direct correlation with the distribution of wealth and rural-urban migration, leading to higher social costs.

Unemployment can be divided into different categories:  structural, involuntary, frictional, cyclical and voluntary. And there are three of its salient forms: underemployment, unemployment and disguised unemployment.

An unemployed person is one who has no income-generating job for a substantial term. Likewise, underemployed attributes to ventures of one or more occupations, without being invariably employed. And disguised unemployment denotes securing a job where the output is unaltered even if the typical worker is truncated. In LDCs, this form of unemployment not only prevails but virtually perpetuates in the agricultural sector.

There is large scale unemployment and underemployment in the LDCs, mainly of unskilled labour force. This is not because these people shirk from work but because there are shortfalls of cooperating factors of production to function. The paucity of other components such as land, capital, technical and entrepreneurial talents further exacerbates this predicament.

The paramount challenge is how to furnish a copious entry into the labour force annually, besides engrossing the existing unemployment. If the people in question were hired and paid wages, either more consumer goods would have to be generated to match the extra demand generated by the additional purchasing power, or there would be excess demand for a given supply of consumer goods, with inflationary repercussions. From this count, it is not only the technological specification of the production process that is the constraint to employment, but, more vitally, the availability of consumer and other related commodities that will be demanded if more people are hired with the existing or more wages. However, it can be debated that more people may not be integrated in a specific production locus because the technology may not endorse an augmentation in employment.

Hence, it is the consumption limit that determines the immediate constraints to employment expansion and the contribution of technology to employment operates through it. When it can slacken that constraint instantly, it hoists the employment potential directly.  However, it is possible that its repercussion is delayed depending on the time lags in production and distribution and on the nature of the commodities.

In Nepal, the persistence of unemployment is ascribed to various determinants such as the immensity of the population, the gradual vanishing of handicraft and small agro-industries and a scheme of education primarily unrelated to employment prospects. The fundamental cause, however, is poverty, particularly in the rural sector.

Between 2001 and 2016, the yearly accretion of the labour force was more than one million. Since the non-agricultural sector faced limits in concocting effective jobs, the outcome was that the agricultural sector composed 83 per cent of the total labour force and the non-agricultural sector 17 per cent.

For curtailing rural unemployment in developing countries in general, and Nepal in particular, a slew of measures are proposed.

First, the agricultural sector should be restructured to create more employment avenues. Endeavours should be directed to dissuade mechanised farming, and priority should be placed on labour-intensive methods. Second, during off-season, the underemployed persons pose a surplus labour. To mollify this problem, employment-generating activities that operate during the off-season period should be developed. Third, agricultural technology (biological, chemical and mechanical) could deliver feasible employment opportunities. Fourth, irrigation facilities are capable of inducing farmers to adopt double or triple cropping in lieu of single cropping scheme, thus pruning underemployment in this sector. In the end, agricultural programmes namely infrastructure development, resettlement, integrated rural development and food for work should be launched on the groundwork of geographical divisions so that there is an equitable distribution of employment opportunities.

In the urban region, different measures can be adopted to create viable jobs. First, the enterprise or company in question should utilise a reasonably large number of employees so that there is an immediate action when the machinery exhausts. Second, due to limited domestic market, focus should be on the development of small industries. Third, foreign trade policies could also create employment by concentrating on export-promoting manufacturing activities and labour-oriented commodities. Finally, since educated unemployment in the cities is becoming a problem, vocational and technical education should be the priority.

If the employment targets are met through effective utilisation of the existing manpower, a quantum leap can be made in alleviating unemployment and underemployment. Needless to state, only paperwork will lead to seething frustration and dissatisfaction among the concerned stakeholders.


A version of this article appears in print on April 12, 2018 of The Himalayan Times.

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