The share of wage employment increased from 17% in 2008 to 24% in 2018.
Despite moist conflicts, political upheaval, the deadliest 2015 earthquake, and economic stagnation, Nepal’s economy has added over four million wage jobs in the last decade.
According to the World Bank’s Nepal Jobs Diagnostic Report, around 3.8 million wage jobs were added to Nepal’s economy between 2008 and 2018.
The share of wage employment in total employment in Nepal increased significantly from 17% in 2008 to 24% in 2018. Simultaneously, the portion of unpaid workers and self-employed farmers declined drastically, especially among men.
Though Nepal had slower GDP growth than many South Asian countries, the nation witnessed faster job growth during the last decade. On average, Nepal’s total employment growth increased by 3% per year. Meanwhile, wage employment increased at 7% per year, compared to 2% of non-wage jobs.
The employment growth can be primarily attributed to the gradual shift in Nepal’s economy from a largely subsistence agricultural sector to modern industry and services.
In the last decade, agriculture’s share of employment and domestic output has declined, while the industry has witnessed steady growth, now accounting for over half of total domestic production.
During the review period, many men have started working in construction, manufacturing, commerce, and transportation. Even though most of these jobs are informal or temporary wage jobs, they are more productive and significantly improved livelihoods than farm work.
Sectoral Shares of Employment
Sectoral Shares of Value Added
In addition to the four million wage jobs in Nepal, around 2.8 million Nepalis were engaged in foreign employment. Most of these foreign migrants are men, 75% are under age 35, and 85% have less than secondary education. However, despite the mostly unskilled nature of the work, the foreign migrants earn much higher wages than those employed at home.
Wage Employment in Nepal and Abroad
Other Notable Statistics Revealed by the Report
- Extreme poverty dropped from 46% in 1996 to 15% in 2011
- Over 50% of employment is in subsistence activities, and 60 % is in unpaid work
- Only 7% of employment is in formal wage jobs
“The shift towards wage employment signals a fundamental change in Nepal’s economic development and is similar to patterns seen worldwide. As economies diversify their production activities and increase scale economies, employment becomes more specialized and more productive, and jobs are increasingly based in firms rather than self-employment and pay more,” said Elizabeth Ruppert Bulmer, the main author of the report.