Most working people in Nepal are employed in the agriculture sector. In 2013, agriculture accounted for 71 percent of total employment, down from 75 percent in 2000. Of the 71 percent, 61 percent are self-employed and the rest are earning their wages from agriculture. The labor productivity in agriculture is low (US $794/unit of agricultural labor) as compared with other sectors of the economy. This has resulted in labor gradually moving from agriculture to non-agriculture sectors, such as manufacturing and services. The growth in agriculture labor force is declining, from 2.5 percent (1988-98) to 2.1 percent (1998-2008), and is forecasted at 1.7 percent for 2010-2020.
The number of young people of working age in Nepal is currently increasing by 550,000 a year, and by 2020 it will climb to 633,000 a year, according to a new United Nations Conference on Trade and Development (UNCTAD) report. The government should, therefore, rethink its economic growth strategy to ensure that it creates employment opportunities for the young—currently largely under-employed, or trapped in vulnerable, low-paid jobs in foreign countries—to improve the growth prospects of the economy. In the past, only eighth and 10th five-year plans gave high priority to job creation.
Organic agro farm in operation
The Least Developed Countries’ Report shows that from 2000 to 2012, employment growth in Nepal was 2.7 percent per annum—a rate that surpasses the average population growth of 1.7 percent, but well below Nepal’s average GDP growth of four percent in the period. Like other LDCs, Nepal saw more than a decade of what economists call “jobless growth”.
Agriculture is and will continue to be the dominant sector of employment for most young people over the next few decades. It is because high demand for agricultural products regionally and globally creates good job opportunities in the sector. Further, high birth rates will create a growing pool of young people to work on farmsteads and in villages of their birth. Significant incremental growth can be achieved by improving productivity of both land and labor without displacing labor. Modest increases in mechanization can increase labor productivity.
With improved seed, fertilizer, plant protection agents, and timely advice, yields and profitability can increase enough to allow households to reduce area devoted to staple crops consumed at home and expand into more lucrative crops and livestock products. And with higher profitability, the machinery and additional inputs become affordable. The availability of underutilized land in many places and substantial gaps in yields relative to their potential offer opportunities to raise labor productivity and absorb additional workers in agriculture. Commercialization of livestock, fruits, vegetables, beekeeping, herbs and timber products can create rural employment and improve balance in trade. So the government should prioritize agriculture and agro-based industries, focusing programs on job creation.
There are employment options for young entrants to labor market, but they require a different mix of capital, land, and skills. Policymakers seeking job creation while raising productivity will need to adjust current agricultural programs so that large numbers of young people are attracted. Improving access to land for young people could be one of the ways. At the same time, they will need skills to manage higher-valued agriculture and some capital to run the business. A shift to higher-valued and commercial products, and aggregation of household labor at peak periods could allow small farms to absorb young adults.
Higher-valued agriculture will use services more intensively, creating employment opportunities. Demand for transport, plant protection, veterinary services, mechanized field operations, and advice can be met by young people with skills and necessary capital (or leased machinery) to start small businesses.
Most of the landless people will take formal or informal wage work on large commercial farms, in the processing and service sectors, or seasonally on small farms during peak periods. Wage work varies from low-skilled and low-paid day labor to jobs in primary production and processing that require and reward higher skills.
Another group of young farmers, who are returnee migrants, have limited budget and skills. These farmers need land, capital, security and technical advice. There will be a paradigm shift from traditional to commercial agriculture if their needs are addressed.
Although self-help groups, savings and credit cooperatives, micro-finance institutions, rural and community banks, and multi-purpose cooperatives have been established to improve access to credit for small farmers, it is still a problem. However, providing credit at low interest without collateral, allowing alternative forms of collateral, such as future harvests, linking agricultural credit to extension services have improved access to agricultural credit.
Matching grants are used in many programs supported by governmental and nongovernmental organizations to promote improved technologies, empower farmers to hire service providers and build linkages with private firms through productive partnerships. Similarly, bundling credit with insurance may force farmers to purchase more insurance. Pre-financing of inputs and developing assured marketing channels can also attract youth in agriculture. The agriculture that attracts young people will have to be profitable, competitive, and dynamic.
Furthermore, modern agriculture requires a wide range of specific skills. The rapid spread of mobile phones, and other information and communication technologies demand educated farmers. To equip young Nepali farmers with modern farming techniques, schools must do a better job of teaching them basic skills. Foremost among these are basic literacy elements such as reading, writing, numeracy, and the ability to use digital technology.
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