Instant fix

Published On: September 15, 2016 12:45 AM NPT By: Republica  | @RepublicaNepal


Unemployment benefits 
Article 33 of the new constitution ensures the right to employment for all Nepali citizens. But whatever the supreme law of the land says, it is nigh impossible for any country, let alone an LDC like Nepal, to guarantee employment for all its citizens. This is why in many countries, those who cannot find jobs are given unemployment allowances. But there is big disagreement among economists whether such allowances are beneficial to the society. According to its advocates, there is nothing wrong in providing basic allowances to those who cannot find jobs or those who can’t work for various reasons.

After all, it is the state’s responsibility to look after the wellbeing of all its citizens, not just the well-to-do with well-paying jobs. Moreover, when the unemployed folks eventually spend this money on consumable goods, as they must, the economy as a whole gets a boost. But the critics of unemployment benefits argue that unearned income makes people lazy and even those who would otherwise be working will choose to go on the dole. So a middle-way solution that satisfies both the supporters and critics of unemployment benefits is to spend the money to help the unemployed find work. 

That could be one option for Nepal. The other would be to start a program like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which guarantees 100 days of wage employment for each household whose adult members volunteer for unskilled manual work. This kind of government-guaranteed work is a far better option for countries like Nepal and India where it is difficult to ascertain who is really poor and unemployed. The rich countries do this based on people’s past banking and credit card records. But in a country like Nepal, where less than half the adult population has bank accounts, such records are simply unavailable. As a result, any scheme of direct cash transfers tend to be abused, gamed by a handful who know how to work the system to their benefit. This is why we are unsure about a recent bill that has been tabled in the parliament by the Ministry of Women, Children and Social Welfare. The bill provisions for unemployment allowance for “any Nepali citizen who has completed 18 years of age and is below 60, is not enrolled in any academic institution and is unable to find any employment”. 

Without computerized employment and academic records, it will be hard to prove who is not enrolled in an academic institution and who is also unable to find work. The other problem is with the sums involved. The bill proposes providing an unemployed citizen an amount equal to one-fourth of the minimum wage for four months in a year. Since the government has fixed Rs 10,800 as the minimum monthly labor wage, a certified unemployed will be entitled to four tranches of Rs 2,700 in a year, which comes to Rs 900 a month, a pittance any way you look at it. It would be a much better idea to guarantee a few months of better paying jobs, say, in the major infrastructure projects or post-quake reconstruction, if the idea is to benefit the poor and the needy. Part of the money could also be spent in helping the unemployed find decent jobs, for instance through job centers that match academic qualifications with the jobs in the market. Unemployment allowances are a short-term fix. We fear it could distract us from the bigger, more important task of reviving the moribund economy, so that more good jobs are created. This is also the only long-term solution of this problem. 

 


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