Adults expect to earn at least enough to cover their basic cost of living. The expectation, however, is unmet for the majority of working people in poor countries like Nepal. Their income, even without factoring in inflation, is inadequate to meet their basic expenses. And with the annual rate of inflation now in double figures, according to Nepal Rastra Bank, people in the private sector—the largest employer in the country—haven't seen their real pay rise in a long time. This is also accentuating the gap between the haves and haves-not.The minimum wage in Nepal is around Rs 10,000 a month for a full-time worker. Is this fair? Is it enough to meet basic expenses of workers? The average rent of a two-room flat with a kitchen in Kathmandu is around Rs 10,000, excluding water, electricity and waste costs, which together make for another Rs 1,000. When you include expenses like food, travel and clothing the expenses easily adds up to Rs. 25,000 a month. The figure further rises when there are children in the family. Buying a land and building a home will cost much more.
Several surveys have reported that the majority of job holders in private sector earn between Rs 8,000 and Rs 15,000 a month. The middle-income earners get around Rs 25,000 on average. There are only a few who are employed as bank managers, engineers, lawyers, medical doctors and senior government officials with higher incomes. They make anywhere between Rs 50,000 to Rs 200,000 a month.
Around 70 percent Nepalis put agriculture as their main occupation. With the widespread prevalence of subsistence agriculture, we can easily assume that most Nepali farmers fall into either low or middle income categories.
According to the Central Bureau of Statistics less than 3 percent people in Nepal are unemployed. This is far better as compared to the US or European countries. But according to the Asian Development Bank (ADB, 2015), 25.2 percent of Nepalis still live below the poverty line. So the present gap between (low) official unemployment figure and (high) poverty rate reflects the massive out-migration of Nepalis.
Again, although agriculture occupies 70 percent of Nepalis, it contributes only 33 percent to national GDP. This is not surprising considering low investment in commercial agriculture, insufficient research, lack of resource centers for seeds, primitive technologies and irrigation problems. Hence, despite the involvement of a large fraction of the national population, output from agriculture remains dismal.
Manufacturing and service sectors have their own constrains. Power shortage, frequent strikes, unappealing investment climate, weak rule of law, poor regulations, political instability and weak infrastructure haven't helped. Furthermore, the availability of a large number of jobs seekers in the country has given the employers freedom to recruit on their terms. The employers deny the accusation that they pay less to their workers. They point that the workers are paid as much as their businesses can afford.
But this doesn't change the fact that the employees are underpaid and even struggle to meet their fundamental needs. This is not good, either for the working people (with poor living standards) or for the employers (with low worker morale and frequent employee turnover).
No wonder more and more youths are going abroad to improve their living standards, even as businesses are lack skills and innovations that they desperately need in this globalizing world. Youth drain will be a major challenge going forward: a country cannot prosper without its most productive workforce. It is about time we started addressing this worrying gap between the needs of the Nepali job market and people's preference to head out the first chance they get.
The author is a Lecturer at Capital College and Research Center, Kathmandu
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