Showing posts with label Unemployment. Show all posts

Aug 1, 2021

Reframing Our Youth Employment Problem

August 01, 2021 Surath Giri— min read

As the nation grapples with the second wave of the COVID-19 pandemic, its ramifications go beyond its immediate public health impact. Health restrictions inevitable to mitigate the spread of COVID-19 have been detrimental to the economy, and are likely to have exacerbated Nepal’s seemingly perennial youth employment problem.

Youth account for about 40 percent of the 20.7 million working age population, and have an unemployment rate higher than the national average of 11.4 percent. Unpacking segments within youth shows us that the 15-24 segment faces specific problems, with the highest rate of unemployment, and informal employment compared to other groups. Perhaps more worryingly, 35.3 percent of 15–24-year-olds were at the risk of social exclusion. The picture changes slightly as we move out from 15-24 to the 25-39 age bracket, which reports one of the highest underemployment rates across segments. This is not surprising given that majority of jobs created over the last decade (2008-2018) were casual or short term work. The ongoing youth employment challenges have led to outcomes including, among others things, labour migration out of the country. According to the Department of Foreign Employment, labour approvals in FY 2019/19 stood at 236,208, with the volume to India conservatively expected a few times more than this number.

The COVID-19 pandemic is expected to make things worse. Around 1.6 million jobs were disrupted in just the first phase of the pandemic, with the young casual and informal workers predominately bearing the brunt of the unemployment impact. The crux of the COVID-19 employment impact lies in underemployment, which globally has contributed more to estimated job losses (in work hours) than unemployment and whose impact is potentially longer term. Given our pre-existing problem of underemployment, especially among youth in the 25-39 age group, this represents an unprecedented employment challenge considering that we are right in the middle of our demographic dividend. The current challenge will unlikely be overcome by our economy in its current state, as we know businesses even in May 2021 were still not operating at pre-COVID-19 levels with important sectors like tourism and hospitality not expected to return to normalcy anytime soon.

Government response to the youth employment challenge has largely been programmatic in the years leading up to and during the COVID-19 pandemic. The Youth Self-Employment Fund, for instance, has been able to create around 78,000 self-employed youths in its total 12 years of existence (around 6,500 annually). While commendable, it barely makes a dent when an estimated 400,000 enter the labor force each year. In any case, programs like these, although beneficial, are not an adequate response to a youth employment challenge that has been exacerbated by COVID-19.

With this impending crisis in mind, it is imperative that we start to address structural barriers to improve the enabling environment for decent job creation. Systemic change is a difficult matter with various components that need to be addressed in parallel, however in our view the following two areas might offer a good starting point.

First of all, there is no comparable alternative to entrepreneurship for job creation and economic growth. Encouraging entrepreneurship has been a government priority with commendable measures even in the recent budget, for example, to promote startups. The gap lies in the approach, which has largely been piecemeal, rather we need a coherent holistic approach for enterprise promotion if we are to achieve systems change for domestic youth employment that we desire.

A holistic approach entails allowing the conceptual space for innovative firms and business models to develop, and grow. A case in point are ride-sharing businesses whose development in Nepal was hampered by regulatory hurdles, and who remain in limbo even after years. However, policy incentives and entrepreneurship support must be delivered in a manner that employment created is ‘decent’. Without this, it seems likely that the predominance of casual employment, and its resultant decent work deficits, will continue onwards into the next decade as well.

Linked to the idea of holistic approach is the need for mindset change. The prevalent narrative seems to equate entrepreneurship largely with youth. However, in a job supply starved economy like ours, we should aim to promote entrepreneurship from every segment of the population. Globally, successful youth entrepreneurs seem to be an exception rather than the norm, with the average age of successful entrepreneurs being 45. That does not mean that we undermine the importance of youth entrepreneurship, especially given their accepted importance in building startups that fuel innovation. What it does entail is promoting entrepreneurship from all ages as an important source of wage employment creation, which can then chip away at our overall youth employment challenge.

Secondly, an issue that almost always comes up with any discussions of the private sector or the policymakers on employment is the mismatch between the available labor and the employment opportunities. Youth often complain about the lack of employment opportunities, while employers often complain that they are unable to find the right employees for vacant jobs. Large scale regularly updated labour market data is the key to better linking labour demand to supply.

Public agencies are an ideal mechanism to collect this data, which has actually been envisioned but not yet put into practice by the Prime Minister’s Employment Programme (PMEP). Once the data starts to flow in, big data analysis can allow for matching demand and supply at the granular level. What this means is that we can go deeper to say look at what specific competencies offered by job seekers are in higher demand among employers across Nepal. This in turn can help better identify targeted measures for particular segments, for example women and youth from disadvantaged groups that suffer additional barriers to formal employment.

The following regular projections on new employment opportunities and remuneration levels can then be used to help students and the academia better plan for entry into the labour market. It can be used to also make vocational training more demand oriented, which could in turn ease school to work transition and movement to formal employment for the 15-24 age group.

These suggested ideas ultimately require a sustained national commitment to establishing a technically competent public employment system. This can further be supported by the coherent integrated policy measures we have talked about above, especially if we are to incentivize our youth to move from their existing concentration on low skilled segments to the demand of medium and higher skilled segments.

The COVID-19 pandemic has given us an opportunity to rethink our perennial problem and make significant strides towards solving it. It would be a precious opportunity wasted if we consider it business as usual.

-Surath Giri & Saurabh Shah

The authors are associated with Global Shapers Kathmandu Hub, a part of Global Shapers Community initiated by the World Economic Forum.

(Originally published on Republica daily on July 15, 2021)

The unemployment myth and the Right to Employment

January 23, 2012 Surath Giri— min read

When Nepal Airlines Corporation announced a vacancy for 119 positions last month, it received an astounding 23,000 applications . As in the past, the state of affairs was touted as another instance of the severity of unemployment problem in Nepal. The scenario is not unique to the case of Nepal Airlines Corporation , any government vacancies announcement is overwhelmed with applications and there is hue and cry about the unemployment scenario in the country. Unemployment problem gets highlighted time and again in the political discourse of Nepal and right to employment is even considered to be a fundamental right to be guaranteed in the constitution. However, the ratio of applications to vacant posts in a government agency is a poor , in fact, a very misleading way of ascertaining the unemployment status of Nepal and listing out employment as a fundamental right in the constitution is more likely to exacerbate than solve the unemployment problem.

The real scenario and the lure of government job

The exact figure of unemployment rates of Nepal is yet uncertain. The range of unemployment rates ranges from as low as single digit to as high as almost half of the population. Underemployment rather than unemployment remains the major issue plaguing Nepalese economy. The astounding number of applications has more to do with the lure of government jobs than high unemployment rates. The private sector has never held any charm as a career for majority of the populace as private sector is in its nascent stage and Nepal is just taking its first steps towards industrialization. With the declining industrial sector and anti-entrepreneurship forces in dominance everywhere, private sector and entrepreneurship has further lost its attractiveness to job seekers. Finding skillful and competent people is among the top concerns for Nepal's private sector.

Government jobs on the other hand provide anyone with an opportunity to not only get a secure job for life regardless of performance but also myriads of opportunities to get rich through less visible and less legitimate means. Besides these, a government job also shields the job seeker from the competition and the urgency to remain updated and skilled in one's own vocation to accommodate the new innovations and changes in an industry. It would be no surprise that if customs were to announce vacancy for 100 seats we would have more than a million applicants. Would that be any good measure to judge the unemployment scenario of Nepal?

So what's the harm in it ?

Writing Right to Employment in the constitution (as a fundamental right) may sound as a brilliant way of solving the unemployment problem of Nepal but it would be as effective as writing “Right to a vehicle” and expecting everyone to have an automobile. It may seem mere addition of another line in the constitution but its implications can be disastrous. Any 'right' written in the constitution entails other fundamental questions “How?” and “By whom?”. If we were to have right to employment as a fundamental right in the constitution, who is to provide the jobs and how is that to be done. If the government is to be provide the jobs, how is it supposed to do it: though increasing the number of public enterprises which are a kick in the face of any financial prudence, or over-staffing the already ailing current public enterprises or coming up with populist, self-aggrandizing schemes such as youth self-employment fund or increasing the already bloated bureaucracy?

Making state responsible for providing jobs is nothing more than creating extra avenues for politicians to interfere more with the economy and lives of general citizens. Besides this, the harm in asking government to create jobs means attracting even more people towards bureaucracy. Nothing could be more detrimental to economic health of a country than having its best and the brightest people, , busy with the dead end , unproductive, paper-pushing jobs in the government bureaucracy and many a times, working to hinder other productive people through various regulations and controls rather than being engaged in wealth creation. It is a very depressing scenario that many Nepalese youth would want to work for a highly mismanaged, corruption infused organization like Nepal Airlines Corporation (or any other government run entity for that matter) , than aspire to work for an innovative and profitable company or dream of creating their own company. Hence, the astounding number of applications attracted by vacancies in government agencies are not an indicator of how severe the unemployment problem is but how distorted the incentives are for Nepalese youth to build a career in.

Since economic well-being of any economy depends on the level of productivity of its citizens, it is imperative that our policies and actions align towards encouraging people to be engaged in more productive jobs. It is necessary to understand that employment is not an end in itself but rather a means to achieving the end of creating wealth. Jobs created in government sector or even jobs created by spoon-feeding schemes by the government may employ people but ultimately they fail in meeting their end objective. i . e. to engage citizens in wealth creation.

(Published in The Reporter Weekly on January 23, 2012)

Youth Employment: Prospects in Nepali Scenario

November 12, 2011 Surath Giri— min read

Yesterday, I presented a paper on "Youth Employment: Prospects in Nepali Scenario" in a program organized by YUWA. Below is the abstract of the paper and the download link to the PDF file.

ABSTRACT

Like every other developing countries of the world, high youth unemployment rates pose a serious threat to stability and economic growth of Nepal. Underemployment is more severe a problem than unemployment in Nepal’s scenario. Due to lack of growth in the country, majority of youth are seeking foreign employment opportunities which has resulted in a significant reduction of absolute poverty rates of the nation and a major source of foreign exchange. The trend, although beneficial in the short run poses a serious threat to long term development of Nepal. Agriculture, tourism, small and cottage industries, information technology and outsourcing and foreign employment itself are the major sectors that have potential to solve the youth unemployment problem. This paper highlights the present situation of these sectors and highlights the growth potential of these sectors to absorb the unemployed mass of youth. The paper concludes by arguing that, if we are serious about solving youth unemployment problem of Nepal, we should focus more on the major sectors of the economy and their growth rather than trying to solve youth unemployment problem through direct government intervention.

Download link: http://bit.ly/vLFq0R

Do let me know if you have any feedback and comments!