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Nepal: Addressing the Employment Challenge through the Sectoral Pattern of Growth
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The economy of Nepal attained reasonable, though modest, growth during the period of mid-1980s to mid-1990s. The decline in growth started thereafter and continued during the 2000s. While the decline in growth was sharp for industries, agriculture and service sectors continued to attain moderate growth.The macroeconomic situation of the economy has remained quite stable in terms of inflation rate and the budgetary situation. Inflation remained within tolerable levels till prices of food grains rose sharply in 2008. Budget defcit remained within fve per cent of GDP throughout the period of 2000s. It thus seems that the economy would have the fiscal space needed for undertaking at least some of the necessary changes in polices (e.g. providing subsidy on fertilizers which has already been re-instituted).The employment challenge in a developing country like Nepal may manifest itself in several forms. First,
there is a quantitative dimension in that employment growth may fall short of labour force growth-giving rise to open unemployment.But in a developing country like Nepal, this may not be a major issue because when poverty is acute and unemployment benefits are absent, very few can afford to remain without employment. Even in the absence of proper employment, one generally tries to find some work to eke out a living. Of course,an estimate of the quantitative dimension of the employment challenge should be the first step in an exercise on understanding the employment challenge.Second, and perhaps more important, is low productivity and earnings associated with a sizable segment of the employed population. An associated phenomenon is predominance of employment in the informal segments of the economy where productivity and earnings are low and conditions of work are poor. This, in turn, is manifested in large numbers being employed and yet poor-the so-called working poor. And an important part of the employment challenge is to raise the productivity and earnings of
workers through a change in the structure of employment towards sectors with high productivity and raising productivity of workers in sectors characterized by low productivity.The above brings one to the third dimension of the employment challenge, viz., attaining a shift in the sector composition of employment. The experience of the present day developed countries (e.g., U.K., USA, France, Germany, etc.) as well as that of some of the late developers who have been successful in their development effort (e.g., Republic of Korea, Malaysia, Taiwan, China) shows a common pattern of structural change in their economies - the share of agriculture in both GDP and total employment declining and that of non-agricultural sectors increasing. Within non-agriculture, the share of manufacturing increased first and then the share of
service sector rose at a later stage of development. Such a pattern of structural change enabled the labour force to move from agriculture (where labour productivity is usually lower than in industry and services)to sectors
with higher productivity. Alongside such moves, productivity in agriculture also increased, due both to decline in numbers remaining there and to the adoption of productivity enhancing technology and inputs.
ILO ,   (2014 )
Type / Script:
Publication in English
Thematic Group:
 ILO : International Labor & Labor
12.01.00  -  Employment Promotion And Planning
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