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In a Pandemic-Hit Economy, State Offers Little Hope For Creating Jobs
The budget for the upcoming fiscal year aims to create around 350,000 new jobs whereas 500,000 youths enter the labour market every year, by the government’s own estimates.
Chandan Kumar Mandal
The Kathmandu Post
31 may 2021
At a time when the Covid-19 pandemic has badly affected the income prospects of the general public and disrupted employment opportunities, the government has cut down its target for jobs creation for the fiscal year 2021-22.
The budget for the upcoming fiscal year, presented by Finance Minister Bishnu Prasad Paudel on Saturday, aims to create less than 350,000 new jobs in 2021-22 through its employment-related schemes and plans.
Not only is the target down by half than that of the ongoing fiscal year 2020-21, it is also far below the number of young people entering the job market every year—nearly 500,000, according to government estimates.
“For ensuring dignified employment to all the citizens, work and employment opportunities will be created in coordination and cooperation with the government, private, cooperative and non-governmental sectors,” said Minister Paudel reading out the budget.
The government, on Saturday, presented a budget of Rs1.64 trillion through an ordinance. With some focus on fighting the Covid-19 pandemic, the financial plan of the government carries lofty promises which many said were aimed at the midterm elections, which are still uncertain.
This is the reason, employment generation could not be a priority for the government, according to Jeevan Baniya, an expert on labour migration and employment.
“Creating jobs does not seem to be in priority of the government because the budget revolves around distributive and populist schemes targeting the upcoming elections,” said Baniya, who is an assistant director of the Centre for the Study of Labour and Mobility at Social Science Baha, a Kathmandu-based think tank. “The government is more interested in offering tangible schemes so that it could create a favourable environment in the view of the upcoming elections.”
“Studies by the government itself have shown that around 500,00o new jobs need to be created every year to absorb new entrants. And this number might be even higher now because thousands of youths have not been able to fly abroad for foreign jobs due to the pandemic,” said Baniya, adding, “The target is way below the current level of unemployment.”
The budget for the current fiscal year aimed at generating more than 700,000 jobs through various programmes to provide relief to the economy hit by the first wave of the pandemic.
Dipak Kafle, a joint secretary at the Ministry of Labour, Employment and Social Security, agrees that the government has set a lower target for the new fiscal year.
“It is true that the targeted job numbers for the new fiscal year appear lower,” Kafle, who is also the spokesperson for the Labour Ministry, told the Post. “But we should not forget that more job opportunities are created indirectly in other sectors. The government coordinates with the private sector and other stakeholders for creating jobs.”
In the upcoming fiscal year, the government is once again pinning its hopes on the Prime Minister Employment Programme, the wage-employment scheme that aims to provide a minimum of 100-days of work to registered unemployed citizens in their respective local levels.
Just like in the current fiscal year, the government plans to provide jobs to 200,000 people through the Programme and has allocated Rs12 billion—up from Rs11.6 billion in 2020-21—for it.
Likewise, the government has allocated Rs400 million for providing various technical and skills training to youths joining the labour force, returning migrant workers and those who have lost their jobs at home. The government estimates this scheme will benefit nearly 100,000 people.
An additional Rs1 billion has been set aside for providing on-the-job training to trainee workers employed in the production and service sectors. This scheme will be implemented in coordination with the private sector. For this, the government has announced a subsidy equivalent to three months of minimum salary to private firms and businesses that hire state-trained workers for two years after the completion of the training.
Through this scheme, the government aims to employ 25,000 people. Last year, the government had planned to employ 50,000 people in the private sector by investing Rs 1 billion.
“Meeting the jobs creation target is not easy as the government alone cannot do that because the government creates fewer jobs and a substantial number of job opportunities are created by the private sector,” said Baniya. “The government should bring new policies to facilitate the private sector to create new jobs. But there hasn’t been a concerted effort by the government towards this end.”
Since the first wave of the pandemic last year, Nepali workers both at home and abroad have faced adversities.
Many of them lost jobs and are struggling to make their ends meet and take care of their families as the pandemic is already in its second year. Thousands of Nepali migrant workers returned home after suffering job loss abroad.
Back home in Nepal, a UNDP survey published in May last year showed that three in five employees lost their jobs due to Covid-19 and most of them were youngsters.
Nepali migrant workers’ prospects of taking up overseas jobs have been badly affected once again with the ongoing flights and travel restrictions.
With the second wave of the pandemic causing another economic shutdown, even meeting the reduced target of jobs creation would be challenging, according to stakeholders.
“The government has just presented its plans for job creation for the new fiscal year. Depending upon the situation, revisions can be made later. So it is too early to say whether the target is achievable or not,” said Kafle, the labour ministry official. “If the Covid-19 crisis worsens then achieving the target will be difficult.”
The doubt over the government’s plan of job creation stems from the fact that more than half of the employment opportunities the government wants to create in the next year will be generated through the The Prime Minister Employment Programme.
The track record of the much-talked and billion rupees programme, however, has been disappointing.
The Programme, which is in its third year, has proven to be a let-down as it has failed to provide 100-days of work even at one local unit so far.
Experts have been saying the temporary jobs programme would not be enough to provide enough relief to unemployed citizens.
“The programme has not achieved its target in the past years. Without clarity on how it will create employment opportunities at the local level, it cannot be effective,” said Baniya. “Local units have not been able to spend the budget provided by the central government let alone creating new employment opportunities.”
In its first year of the Programme, the government had aimed to provide temporary jobs to more than 100,000 registered jobless citizens for 30-days. But at the end of the fiscal year, the Programme could only provide 13 days of work on average to a total of 175,909 applicants in 2018-19. The programme could not do any better in the last fiscal year either.
Despite the programme achieving the target of providing employment opportunities to 60,000 people in the last fiscal year 2019-2020, it could only provide 16 days of work on average to 103,501 applicants.
With just a month and a half remaining for the current fiscal year, when the Programme aimed to provide a minimum 100 days of work to 200,000 citizens, the reality is just over 100,000 people have received employment for 21 days on average so far.
Besides regular job creation programmes, the government has also tried to promote youth entrepreneurship and self-employment by promising soft loans to youths. In the new budget, the government has announced that youths can access subsidized loans of upto Rs 2.5 million against their academic certificates as collateral.
Likewise, there is also a plan to provide technical and vocational skills as well as subsidized loans through the Youth and Small Entrepreneur Self Employment Fund for employing 12,000 youths in the next fiscal year.
However, such schemes of providing seed money to returnee migrants and entrepreneurs have turned out to be ineffective due to red-tapism despite encouraging initial response from the target groups.
“The government announces subsidized loans, but the banks which are supposed to lend the money have been creating obstacles,” said Baniya. “We saw this also during the earthquake reconstruction process when hardly anyone received the government-promised subsidised loan for rebuilding homes.”
“Whether the elections are conducted or not, these targets are unlikely to be achieved anyway because of the political instability,” said Baniya.