Plights of Nepali informal workers worsened by the pandemic

Published On: April 8, 2021 09:30 AM NPT By: Shradha Khadka

The already existing challenges faced by the informal workers are now unambiguously exposed by the pandemic and further aggravated by sudden demands for COVID- 19 testing, quarantine measures, sanitizing equipment, medical visitations, healthy and immune boosting diet etc. 

For the Nepali informal workers, each day spent staying indoors with the fear of COVID-19 means losing the day’s meal. The dilemma is all too real for many Nepali informal workers who are hit the hardest by the crippling effects of the COVID-19 pandemic. From domestic workers to street vendors, rickshaw pullers to construction workers, the ones involved in informal jobs are often unregistered and undocumented; many making the bare minimum and living just above the poverty line. Since they remain unregulated by the government and avoid formal standards, informal workers are often considered “shady” or illegal, but many are simply trying to earn an honest living (WEIGO n.d.). 

In response to the ongoing global pandemic, measures that called for health and security emergencies, full or partial lockdowns and enforced travel restrictions and sudden stoppage in economic activities have pushed workers around the world to unemployment and underemployment but informal sector workers in the developing nations share a disproportionate burden and face an even greater threat.  

Reported by the Central Bureau of Statistics (CBS 2019), more than 62.2 percent of the total work force- around 4.4 million Nepalis are engaged in the informal sector in Nepal. High levels of informality in a nation’s economy often signals widespread tax avoidance, irregular market prices, compromised quality of goods and services and unregulated transactions that are largely cash-based. However, at the same time, it states that a significant number of workers are significantly vulnerable to low and fluctuating income, low social standing, difficult working conditions, hostile social environment and deprivation of fundamental rights and legal protection. 

The already existing challenges faced by the informal workers are now unambiguously exposed by the pandemic and further aggravated by sudden demands for COVID- 19 testing, quarantine measures, sanitizing equipment, medical visitations, healthy and immune boosting diet etc.  

Estimated by the International Labor Organization (ILO 2020), between 1.6 to 2 million jobs have been disrupted in Nepal by the COVID-19 crisis with job loss, pay cut or reduced working hours. Among the most-affected are the ones in informal sectors who are neither taxed nor regulated by any form of government and are hence “invisible” to any crisis relief or security measures.With predictions that the effect of COVID-19 may push more people out of formal to informal line of jobs, understanding their needs becomes crucial than ever.  

Policy measures 

Stated by the Ministry of Finance (MoF), in response to the pandemic, Nepal’s national budget had announced a relief package of Rs 70 billion to be mobilized among business owners, taxpayers and poor households (MoF 2020). This included subsidies in loan interests, tax and utility pay extensions and discounts. Even though an increased national budget of Rs 90.69 billion from Rs 68.78 billion as of May 2020 was allocated to Ministry of Health and Population to combat the impacts of COVID- 19 (MoF 2020), due to haphazard and ill implementation of the relief plans, the conditions of the neediest of the groups remain deeply affected. 

The in-kind and cash relief packages not specified to informal sector workers rather relied on poverty thresholds. Even efforts in preserving livelihoods through employment retention for example, Prime Minister Employment Program (PMEP) are depleting in their purpose due to poor implementation and wide discrepancies in pay, the imbalance of benefits and partial policies and regulations between formal and informal sectors continue to exist. The government in this matter must identify where support is needed the most.

The principal policies of Nepal that ensure right to employment for every Nepali citizen for example Labor Act, National Employment Policy, Right to Employment Act undisputedly have the potential to influence the informal economy of the country. Nepal’s Labor Act (Labour Act 2017), Trade Union Act (Trade Union Act 1992), social security schemes, the national strategies and the pandemic relief measures widely recognize employers and employee’s well-being. However, these policies fail to address the fact that Nepal’s economy is not entirely based on formal employments. The informal economy being the least protected section of the national economy, workers in the sector lack the safety of economic and social security that formal workers have. The transforming and uncertain political scenario of Nepal is additionally promoting the grasp of informal economy and emphasizing its growth, worsening the vulnerabilities of informal workers.

Moving forward 

As of January 2021, Nepal has reported over 261,000 COVID- 19 cases (UNDP 2020). As the secondary impact of the pandemic continues to take a serious toll on global economy, Nepal continues to rely heavily on remittances and informal labor (UNDP 2020). The COVID- 19 crisis has undoubtedly worsened the fragile livelihood structure of informal sector workers but at the same time, it has provided opportunities to address the existing inequalities in access to health and basic services, to ensure basic rights and to widen economic safety nets through policy resolutions.  

Current government tactics that have either attempted to uproot and demolish the informal sector or turned a blind eye to their existence need to recognize that changing the course of informal sector is a complex process where more than one dimension is attached to it. The existing policies encourage formalization of the informal economy, but they undermine its magnitude and net implications on the national economy.

What informal workers need is the provision of platforms for a sustainable livelihood, effective social dialogues, stronger labor governance institutions, collective representation of their needs, efficient social protection schemes that recognize and ensure them with equitable access and support - a safe space to share their grievances at the very least.

While the launch of COVID- 19 vaccination has cultivated some hope among the Nepali citizens, the country’s informal workers face dire uncertainties as to when or if at all the vaccines will reach them. Policy measures, governance crisis mechanisms and trade unions must recognize that immediate relief to the most-affected groups is urgent but a long-term recovery plan for their socio- economic status and welfare is equally necessary.  

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