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When the Central Bureau of Statistics (CBS) first published its latest census report on manufacturing establishments, there was a furor over the decline reported in the number of such establishments. Decline in the number was taken to mean decline in employment opportunities. Some critics blamed the Moist insurgency for such decline, while others were of the view that the liberal economic policies were the culprit.

But in deeper analysis, it can be found that (as revealed by the data in the report and which are presented in summary form along with this write up) the situation is not that alarming. What the data reveal is that though there has been a decline in the absolute number of manufacturing units and also in the employment figure to some extent, it is rather a reflection of the readjustments taking place in the country’s manufacturing sector.

Take for example, the employment figure. Though the number employed has gone down to 182,000 in 2001-02 census from 187,000 in 1996-97, the number of employees per unit has increased from 52.66 to 56.62. When it is compared also with the 1991-92 figure, the trend is clearer.

Similar indications are visible also when one looks at the wages and salaries distributed. The total wage bill of the manufacturing sector has steadily increased during the decade. While the wages per employee was Rs. 21.66 in 1996-97, it has jumped up to Rs. 35.12 in 2001-02. The figure at the beginning of the decade was only Rs. 20.80. Obviously the labour productivity has increased in Nepali manufacturing sector. It is another story that some critics have been citing these very data to prove that the wage increment is lagging far behind the productivity increment.

Another indicator about the employment and manufacturing units is the number of units employing certain number of people. It is found that the number of units employing people between 100 and 199 has increased between the latest two censuses while that of those employing over 200 has remained almost the same.

That means, Nepali manufacturing units are going for more capital intensive technique requiring more skilled labour in average. The reason may be the competition in the market that compels the manufacturers to match the product quality and price with those of the imports. But equally important reason may be the labour law which discourages the manufacturers from going for labour intensive technology. Similarly, it is also possible that there is a gradual shift to service sector from manufacturing as Nepal’s competitiveness in manufacturing artificially and unsustainably bolstered in the past by state support has eroded due to liberal economic policy of the past one decade.

Manufacturing Units by Districts (2001-02)
District	No. of Main Types	Units
Taplejung	4	All handmade paper
Panchthar	5	All tea estates
Illam	12	10 in tea industry
Jhapa	136	Tea, grain mills, wooden furniture, bricks
Morang	302
Sunsari	223
Dhankuta	6
Tehrathum	13	8 dhaka textile
Sankhuwasabha	2	One handmade paper, one furniture, handmade paper
Khotang	7	3 handmade paper
Udaypur	24	Grain mills, bakeries, furniture
Saptari	84	Grain mills, bricks and tiles, raw mills
Siraha	49	Grain mills, bricks and tiles
Dhanusha	75	Grain mills, bricks and tiles
Mahottari	33	Bricks and tiles
Sarlahi	36	Bricks and tiles
Sindhuli	1	Ice cream
Dolakha	12	5 dairy, 7 handmade paper
Sindhupalchok	6	5 handmade paper
Kavre	30
Lalitpur	240
Bhaktapur	97
Kathmandu	549
Nuwakot	9
Rasuwa	6
Dhading	11
Makwanpur	58
Rautahat	34
Bara	128
Parsa	167
Chitwan	90
Gorkha	11	7 brick kilns
Lamjung	4
Tanahu	17
Syangja	10
Kaski	122
Myagdi	5
Parbat	6
Baglung	5
Gulmi	6	4 furniture
Palpa	24	Textile, mainly Dhaka
Nawalparasi	81
Rupandehi	237
Kapilbastu	54
Argakhanchi	5	3 furniture
Pyuthan	2	Both furniture
Rukum	2
Salyan	2
Dang	33
Banke	97
Bardia	10	6 bricks
Surkhet	9
Dailekh	6
Jajarkot	2	Both handmade paper
Jumla	1	Furniture
Bajura	3	All handmade paper
Bajhang	1	Handmade paper
Achham	1	Copperware
Doti	2
Kailali	98
Kanchanpur	82
Total	3394

NB: This table includes also those units that were not in operation during when the census was being conducted.