Labour Market Profile 2019 Danish Trade Union Development Agency, Analytical Unit NEPAL Danish Trade Union Development Agency Nepal Labour Market Profile 2019 PREFACE The LMPs are reporting on several key indicators within the framework of the DWA and the Sustainable The Danish Trade Union Development Agency (DTDA) Development Goals on labour market issues, and is the international development organization of the address a number of aspects of labour market Danish trade union movement. It was established in 1987 development such as the trade union membership by the two largest Danish confederations, the Danish evolution, social dialogue and bi-/tri-partite mechanisms, Federation of Trade Unions (Danish acronym: LO) and policy development and legal reforms, status vis-à-vis the Danish Confederation of Professionals (Danish ILO conventions and labour standards, etc. acronym: FTF). As of January 2019, the LO and the FTF merged to become the Danish Trade Union Main sources of data and information for the LMPs are: Confederation (Danish acronym: FH). The outset for the work of the Danish Trade Union National partner organisations provide data in their Development Agency (former known as the LO/FTF annual narrative progress reports, including Council) is the International Labour Organization’s (ILO) information on labour market developments. Decent Work Agenda (DWA) with the four Decent Work Furthermore, specific types of data and information Pillars: Creating decent jobs, guaranteeing rights at relating to key indicators are collected by use of a work, extending social protection and promoting social unique data-collection tool. This data collection is dialogue. done and elaborated upon in collaboration between the DTDA Sub-Regional Offices (SRO) and The overall development objective of the DTDA’s the partner organizations. interventions in the South is “to eradicate poverty and support the development of just and democratic societies, National statistical institutions and internatinal by furthering the DWA. DTDA works in partnership databanks are used as source for collection of collaboration with trade union organizations in Africa, general (statistical) data and information. This Asia, Latin America end the Middle East. The immediate includes the ILOSTAT and NATLEX, World Bank objective of the program collaboration is to assist the Open Data, ITUC Survey of violations of Trade partner organizations to become change agents in their Union Rights, the U.S. Department of State as well own national and/or regional labour market context, as other labour related global indexes. capable of achieving tangible improvements in the national DWA conditions. Academia and media sources (e.g. LabourStart, national news, etc.) are also used in the general Support for development of strong, independent and research on labour market issues. democratic trade union organizations as well as well- functioning and sustainable labour markets and Through the compilation of information and data from framework conditions conducive for business and the different sources, the DTDA aims at providing easy economic growth contributes towards the creation of access to core labour market data from a wide range of inclusive growth with due respect of human (labour) national and internatioanl sources while adding relevant rights, thus towards the achievement of the UN data and information obtained from partner Sustainable Development Goals (SDGs) in labour organisations and from being present in terms of having marked related issues. staff and offices (SROs) in the countries/regions mentioned. The Labour Market Profiles (LMP) provide a comprehensive overview of the labour market situation in Labour Market Profiles for more than 30 countries are the individual countries of engagement. The LMPs aim at available on theDanish Trade Union Development giving a picture of structures, developments and Agency website: challenges in the labour markets portrayed. They are http://www.ulandssekretariatet.dk/content/landeanaly divided into ten thematic sections describing trade unions, ser). employers’ organizations, tripartite fora and institutions, national labour legislation, violations of trade union rights, wages and working conditions, status of the workforce, education, social protection, and economy. Page i Danish Trade Union Development Agency Nepal Labour Market Profile 2019 ACKNOWLEDGMENT This Labour Market Profile was prepared by the Danish Should you have questions about the profiles, you can Trade Union Development Agency, Analytical Unit, in contact Kasper Andersen ([email protected]), Manager of Copenhagen. It could not compile information and data the Analytical Unit and Peter Lunding ([email protected]), collection on key labour market indicators without the Head of Manila Office. support from the DTDA Asia Sub-Regional Office and the International Trade Union Confederation (Nepal Address: Affiliated Council) (ITUC-NAC), and its unions. Ulandssekretariatet Islands Brygge 32D The front page photo illustrates Nepalese construction DK-2300 Copenhagen S workers and it is photographed by Carsten Snejbjerg. Denmark Telefon: +45 33 73 74 40 http://www.ulandssekretariatet.dk Page ii Danish Trade Union Development Agency Nepal Labour Market Profile 2019 EXECUTIVE SUMMARY he labour market’s landscape in Nepal is changing The unemployment rate is projected low in Nepal at T from a rigid system to new structures that takes 1.3% in 2019. It is shadowing the fact that around 45% important steps to improve industrial relations and of the workforce is inactive on the labour market, high workplace cooperation. Central legal reforms are out-migration rate, and informal workers are often either reshuffling the country’s governance framework, and under- or over-employed. A youth unemployment "time major revision of the Labour Law and the social bomb” is looming since many Nepali youths enter the protection system create new development. labour market without marketable skills, and almost one out of four (23%) young persons are no longer in the Economic growth has been solid during the last decade, education system, not working or training for work. except a recession hit hard due to the 2015 earthquake. Although the extremely working poor (<US$1.9 per day) A massive out-migration of Nepalese men workers has is declining and projected at 6.3% in 2020 and a made women stepping in and now dominating the middle-class is rising, the country is still situated among agricultural sector. Not to mention, women have the poorest in the world. These changes are driven by confronted governmental bans and regulations that relatively high wages and foreign personal remittance forbade them to emigrate as workers. Gender inequality that has boosted investments in services. As a contrast, is similarly illustrated in deep gender wage gap. creation of new formal skilled wage-earning jobs is slender, the labour productivity is stocked very low and Children have a relatively high enrolment in primary and the export sector is declining. secondary school level in Nepal, but one-half in employment have not completed their basic education, There are observations of the labour legislation which is especially among girls. This situation is due to concerning the international standards of the workers’ deep-rooted and systemic problems such as low teacher right to organize, the right to collective bargaining, and morale, mismatch of skills in the formal labour market the right to strike. Regular violation of trade union rights and a high child labour rate, all tailed by ethnic, cultural, is present, and workers often lack the guarantee of rights and gender inequalities. in practice. Social protection has suffered from low coverage among Social dialogue among stakeholders on the labour the population due to no legal provision for social market has taken new steps. For example, tripartite insurance and stayed privileged for only formal public technical working groups have contributed on several employees. Social protection is being reshaped, e.g. key policy reforms in 2018 as well as the collective opening up for enrolment of employees from the private bargaining system opened up of Collective Bargaining sector was initiated in the end of 2018 along with Agreements (CBAs) on enterprises level and expanding regulation provision for medical insurance for every sector-wise (Industrial). Coverage of CBAs is on a rise but worker, which includes informal workers. As an example, has been challenged by political infighting, dominated relatively fast-growing social health insurance coverage by informal micro- and small enterprises, and lack of is in progress. Despite rising tax revenue, the public knowledge or incentives of labour regulations. welfare system’s financial sustainability is challenged. The nation is furthermore under demographic changes Trade unions and employers’ organizations are working due to a declining fertility rate and growing urbanization to ensure their representation in social dialogue bodies rate. Although many Southern Asia countries have at local level and the new provincial level. Unionism is on experienced employment structural changes, the an upsurge: as an example, the three main trade union projections based on the country’s latest statistics from organizations are collaborating in the International 2008 suggested it has stalled: vast majority operate in Trade Union Confederation – Nepal Affiliate Council informal vulnerable employment, and dominated by the (ITUC-NAC) and demonstrated an