Youths of Nepal and the Employment Scenario in a Civil Society

Prem R. Uprety
Professor of Modern History and Diplomacy, Tribhuvan University Nepal

Nepal always had a surplus of young people, which she channelised in to two directions. First, to serve as a partners and porters in the Trans-Himalayan trade, which was a very lucrative sources of income for Nepal from the ancient period to the first decade of the twentieth century. Second, to serve as mercenaries in foreign armies particularly the Punjab and British India, which led to the evolution of the "Lahure" culture in the hills of Nepal.

During the two world wars that shook this planet during the first half of the twentieth century the Nepali youths were seen fighting form France to Flanders, from Tripoli to Turkey and from Fiji to the Philippines. Nepal supplied 200,000 recruits for the British Gurkha army and 8,000 of her regular troops were sent for the general service in India, during the World War I, though at that time the total population of Nepal did not exceed 5600,000. The same act was replayed during the World War II.

Both the wars brought horrors, dismay and disillusionment in the Nepali society. It is to be remembered that during the World War I 24,000 Nepali youths were killed or missing in action. A little over the same number perished in the World War II. Then the scene of the arrival of thousands of crippled and maimed Nepali youths arriving from the different theaters of the war was pathetic and soul searching. The Nepali youths were fighting the wars, whose causes they never really understood. One thing for sure: the German were neither their eternal enemies nor the English their permanent friends. How naive were the Nepalese to the causes of this war is indicated by the statement of a Gorkha soldier in the front. When a Gorkha soldier was asked by his British officer, Ian Hamilon, as to the cause of the war his simple reply was "the German King has been rude to the British King."

The Nepali youths did play an important role in the anti-Rana movement in the first half of the twentieth century, which did burst in to the revolution of 1950. The post –1950 Nepal was never the same as pre-1950 Nepal. A new democratic culture was on making both in the political and the social arena. The overall was result that there was a rapid growth of political parties and social organizations like Paropakar Sangha, Driver’s Association, Kathmandu, Khel Mandal, and a countless number of centers of Physical Exercises, which had elected officer bearers, and constitutions to guide their future course activities .It was the youths of Nepal who were primarily responsible for the revolution of 1990, which dismantled the highly centralized and arbitrary Panchyati system that was in vogue for the past 30 years. Since 1990 many student leaders contested parliamentary elections and became cabinet ministers in different governments during the past twelve-years.

However, in spite of this silver horizon the overall frustration of the Nepali youths has remained unabated. This is due to two factors. First, since 1990s the society has been deeply polarized in to monarchist and non- monarchist, supporters of Hindu state and the secular state, the advocates of unitary state and federal state, and the believers of a secular national anthem to the supporters of the present one. All this brought deep fissures within the society. Second, in Nepal about half the population of Nepal is under the age of 20 and sizable section of them have taken up arms against the government, for the Maoist causes. This very young population may be less wed to traditional institution including the monarchy, than their predecessors. The addressing of all these issues would require an extraordinary social engineering.

Demographic Profile of Youth Population

The estimate made by the Central Bureau of Statistics (CBS) has shown that Nepal had a population of 21.13 million in 1996 with a growth rate of 2.7 percent per annum (CBS1994).

Table: 1: Distribution of Population by Various Categories, Nepal :1981-1996

Table 1 shows that in 1991 the youth population aged 15 to 24 comprised of 3.4 million which is 18.4 percent of the total population; and that it reached almost 4 million in 1996 and its share was estimated to be 18.8 percent of the total population .The population with 10 to 14 age group in 1991 was 11.8 percent and within 25 to 29 years was 7.2 percent. The total population belonging to the age group 10 to 29 accounted to 6.9 million, which is 38 percent of the total population of 1991.

The youth population is the most sensitive group in Nepal and can even be volatile and aggressive when they are unemployed .The Nepali youth today are prone to anti-systemic views, which has emanated from socio-economic grievances, lack of good governance, and radical and even subversive political indoctrination .The working of the multi –party system during the last decade further questioned the ability of our political leaders to plan, to administer and to progress. All this in totality further alienated our youth population from the present political process. The current negative growth in the Nepali economy with the closure of many of her factories and the sinking of her tourist industry to its lowest ebb has had a significant impact in the employment of the youth in the formal and the informal sector.

Employment Scenario

Creating employment for the rapidly increasing population is a major problem a small under-developed country like Nepal. The grater majority of her population is still self –employed in the agricultural sector. The employment in other sectors is not very promising Nepal is currently facing the problem of mass-poverty with at least 42 percent of her total population living below the poverty line, which is mainly due to unemployment. Employment is provided both in the formal and the informal sectors.

The formal sector of the Nepali economy is poorly developed. The formal sector of the Nepali economy is mostly provided by the government agencies, state owned undertakings, state supported institutions like schools and campuses and private institutions formed in agriculture, trade, tourism, banking and other industries. However, only 10 percent of the total work force is employed in the formal sector and the increase in employment in this sector in future is very bleak. The manufacturing sector was able to provide employment to only 2.72 percent of the economically active population in 1997. Most of the state owned undertakings are performing poorly and overstaffing is universal in the government and the semi – government enterprises.

The informal sector plays a dominant role in the Nepali economy. Agriculture, which provides employment for the majority of the Nepali people, is mostly organized in an informal way with the predominance of the pesant proprietorship. The non-agricultural activities like trading, services and cottage industries are organized in an informal way. Due to low capability of creating employment in the formal sector a culture to work in the formal sector in the form of self-employment is slowly developing. Many educated people have started to enter into the informal sector to earn their livelihood. Livestock, poultry, fisheries, vegetable and fruit production have been initiated in the informal sector. In many rural areas informal finance has also come up in the form of credit groups and chit funds (dhikuti). However, in the present context, where the activities of the informal sector is not registered it is different to come out with the exact statistics to quantify the population employed in the informal sector.

In Nepal the data on unemployment and underemployment is not regularly updated. However based upon studies available the rate of unemployment in these studies varies from 3.1 to 8.2 percent (see table 2).

Table: 2: Rate of Unemployment in Nepal (in percentage)

Due to different in assumption made in the various studies there is wide variation in the percentage of unemployed population. However, in the view of the some experts the unemployment rate is 14 percent.

Policy Setting for Youth Employment

The Ninth Plan considers the youth population, consisting of 27 percent of the total population, to be a significant component both qualitatively and quantatively. Thus, the Ninth plan focuses on the youths of Nepal with distinct policies and objective. It accepts the fact that the major challenges confronted by the youths of Nepal are the limited access to education and the employment sectors. The Ninth plan therefore focuses on generating employment opportunities for the youth by providing them the necessary and relevant technical and skill building education. In Nepal the data on youth unemployment is not available. The Ninth Plan identifies a distinct correlation between poverty and unemployment and sets the target of reducing unemployment at the rate three percent and unemployment by ten percent by the end of the year 2016 A. D.

International Migration and youth Employment

The history of international migration dates back to 1816 when nearly 3,000 Nepalis were recruited in the British Indian Gurkha regiments. Since then movements of people between Nepal and India for economic activities have been taking place. The 1991 population census reports that out of 658, 337 who left Nepal 8.92 percent went to India and among them 66.1 percent went for employment.

However, with the drastic cut in the British and Indian Military recruitment and the opening of new job opportunities in overseas countries after 1973 young Nepalis started migrating to the Middle East, and other countries. Initially the Nepalis migrated through Indian labor exporting agencies; but now a day they are canalized through authorized and unauthorized agencies in Nepal. The government of Nepal sees this as a blessing in disguise for it not only absorbs the rising youth population of Nepal but also brings the badly needed foreign currency to the country. Thus, since 1995 the government has initiated specific programs to facilitate foreign employment to Nepali labor. In the budget of 1996 / 97 a target searching for 41,000 international jobs for 200 persons in each of the election constituency was set for the Nepali youth. However, the target set could not be met primarily because of the piecemeal programs introduced by the government to address the issues. Currently the Ministry labor has also establish a cell to facilitate movement of Nepali workers overseas.

The Role of Supply Side Factors

The supply side factors related to youth employment can be labeled as the dynamics of population. The youth population between the age of 15 to 14 is increasing annually in greater number than the national overage which is 3.5 percent. Assuming that the youth growth rate is 3.5 percent the youth population will double in 20 years. As the youth population grows the following implication can be foreseen.

Need to create more jobs, which would demand high growth in the economy.

Need for more investments in the social sector, that is more schools, colleges, medi-care centers, water supply and sanitation facilities.

Adequate basic infrastructures like transport, power and communication.

The growing urbanization has be to properly managed with quality and quantity services.

Rising youth unemployment wood breed insecurity, instability, crime, terrorism and anti establishments, demanding for justice, equality within the civil society.

Conclusions

The government or a civil society that cannot manage its youth population is in deep trouble. This is clearly manifested in the analysis of the Nepali society and economy. For a small developing country like Nepal with poor infrastructures and physical resources the employment of youths both in the formal and the informal sectors poses a huge problem. The budget of the government for the fiscal year 1999/ 2000 made a provision for self-employment exploration allowance for two months and also concessional loans for the trained youths in this program. But all this program made little headway than paper work. Thus, the government in desperation started to focus its attention in generating employment for the Nepalese in foreign countries. This sudden shift in thrust from generating employment within the country to overseas besides being humiliating for the country has an adverse effect in the Nepali society. The big exodus of the youth of Nepal to foreign countries left the hills of Nepal only under the care and protection of children and the elderly. This not only brought the agricultural economy of the hills to a virtual standstill but also opened the labor market of Nepal to a flood of skilled and semi-skilled Indians. Thus, Nepal has been more dependent upon India for goods and services than ever before.

Nepal: Economic and Social Survey of Asia and Pacific-2004

Growth performance

The Nepalese Economy recovered in fiscal 2003 to grow by 2.4 per cent, following the marginal contraction in the previous year. The ceasefire and the return of some degree of normalcy in agriculture, industry, transport and services befitted growth.

GDP growth is projected to accelerate sharply to 3.5 per cent in fiscal 2004 and 4.5 per cent in fiscal 2005, given progress in the peace talks, higher productivity in agriculture, a rebound in exports and manufacturing production and a revival in tourism. Construction, gas, electricity and water will all benefit from higher donor assistance and infrastructure spending.

Inflation

The rate of consumer price inflation accelerated sharply in fiscal 2003 to reach 5 per cent in fiscal 2003 as a result of increased wholesale prices, supply short falls particularly of agricultural items, and administrative price increases for education and petroleum products.

Inflation is expected to moderate slightly in fiscal 2004 along with diminished follow-on effects from earlier price increases and lower international and domestic fuel prices.

Trade Performance

Merchandise exports continued to decrease in the first half of fiscal 2003, falling 9.7 per cent after a fall of 18.8 per cent in fiscal 2002. Although exports in India declined, earnings from garment and jewelry exports increased. Merchandise imports expanded 8.2 per cent in the first two quarters of fiscal 2003, after falling 10.7 per cent the preceding year, fuelled by sustained import demand for both capital and consumer goods. Imports from India, in particular, expanded sharply and the trade deficit with that country doubled. The current account deficit as a percentage of GDP is likely to have widened from the 4.6 per cent recorded in fiscal 2002.

Capital flows, exchange rates and external debt

Inward remittances from migrant workers exceeded the amount of external aid into 2003, as the latter fell short of budgetary targets. Gross international reserves are estimated at dollar 1 Billion. External debt, mostly concessional, is in excess of 48 per cent GDP. The Nepalese Rupee has appreciated less than the Indian Rupee against the US Dollar since mid-2002, despite the official exchange rate of 1.6 NRs to the IRs.

Fiscal Developments

Nepal’s tax revenue and external financing targets, as well as total expenditure, in the budget for fiscal 2003 were revised down wards at the mid-term review. Several options are under considerations in Nepal to increase tax revenues. Additionally, the prioritization of development spending to achieve poverty reduction goals needs to to be done within the context of a medium-term expenditure frame work. Lower domestic borrowing should help to maintain fiscal sustainability in view of potentially large contingent liabilities and reduced security spending together with increased privatization will help to strengthen the fiscal position.

Money and Finance

A key monetary policy objective in Nepal is to support the exchange rate peg to the India rupee and to this end the expansion of reserved money, the money supply and the private sector credit is to be limited to around 10 per cent. Progress has be made on reforms to create a level playing field in the financial sector, increase the autonomy of the central bank and strengthen its supervisory and regulatory functions.

Policy Issues and responses

Poverty reduction, through durable economic growth and equitable access to government services, needs to be addressed over the medium term through the implementation of structural reforms in the financial and public sectors and more effective targeting of policies towards the poor, among other things. To enhance service delivery Nepal has placed greater emphasis on decentralization, a process that is to be accompanied by improved public sector governance and greater capacity building at the local level.

Given limited job opportunities at home many persons from least developed countries seek employment oversees. Estimates suggest that around 10 per cent of the population of Nepal has migrated to other countries in search of work. Those workers are now contributing more to capital inflows to Nepal than external aid.

(Brief Notes on Nepal: Launch of Economic and Social Survey of Asia and the Pacific, 2004)

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