Social inclusion in the Nepali labour market

Nepal’s labour market status is divided into formal and informal economy. While the formal sector holds benefits such as formalised paid leave and social security, generated and guided by labour market regulations, the informal sector lacks these benefits.

As the International Labour Organization (ILO) points out, more than 70 percent of the economically active population in Nepal is engaged in the informal economy. It can therefore be inferred that most of the working class is susceptible to vulnerability due to a lack of safety nets (Nepal Labour Market Profile 2019). And as the informal sector is huge in Nepal, its contribution to the country’s economy is also relatively huge. Therefore, this sector requires meticulous examination as challenges persist in areas such as creating better jobs with safety nets, engaging the vulnerable and needy population, investing in technologies and workers’ skills, and creating an enabling environment at work places (ILO 2016).

In the recent (as of 2018) revision of labour legislation, informal workers have been partially recognised for obtaining benefits like those of formal workers. Five programmes have been included for both formal and informal sector workers, including medical care, health and safe motherhood, accident and disability security, dependent family security and old age security (DTUDA 2019).

However, as this provision is relatively new, and with Nepal’s entry into federalism (which is in its infancy), the practice and its effect have been less noticeable. This has prevented workers in precarious conditions from taking a further step towards their prosperity.

Moreover, the gender and social inclusion aspects of these informal workers have not been fully taken into account. It can be inferred that this will take time and, in the meantime, exploitation in the informal sector will continue to disenfranchise many workers, particularly women and marginalised groups (ILO 2016).

The ILO’s 2019 key labour market indicators of 2019 show that 90 percent of women workers are in vulnerable employment situations, compared to 67 percent of men. Factors such as wage discrimination, education, preference of men over women for work, workload of women with children and their responsibilities in fulfilling paid and unpaid work, and the lack of gender- and social difference-specific provisions in the informal sector contribute to this situation (DTUDA 2019).

Although the caste system in Nepal was abolished in the 1960s, the practice is still widespread and pervasive. The upper castes (Brahmins, Chhetris) dominate the lower castes (Vaisya and Sudras). The most vulnerable are the Sudras or those labelled as Dalits, who represent about 15 percent of the country’s population.

Being Dalit and aspiring to better basic services (food, education, water, health services) and economic conditions in Nepal is still a dream rather than reality, because Dalits are automatically ostracised due to their caste. Moreover, for Dalit women, the impact of vulnerability is much greater. They suffer violence as well as sexual and other forms of abuse, are not allowed into households despite having skills (domestic work), are asked to work outside the home (doing chores like gardening or cleaning) and are mostly paid less. These women are not able to negotiate out of fear of losing their jobs. In practice, we find that many of these women claim to be from another caste to work as domestic help so they can survive on the lowest wages. Hence, their vulnerability further increases.

This shows that Nepal’s social structure requires greater consideration and strict tailoring and monitoring from a grassroots level, which would encourage vulnerable people to speak up when they face discrimination (ILO 2016).

Politically, the government and the Constitution of Nepal guarantee the rights of Dalits and of Dalit women in particular. The legal provision that came in 2017 states that in each ward (settlement) across the country, one of four members must be a Dalit woman. There are currently 6000 Dalit women representatives at the ward level (International Dalit Solidarity Network 2017).

While this is a positive sign, as having Dalit women representatives will help voice social justice concerns and address inequalities, the conventional practice of untouchability remains a concern that has not been strictly voiced. Moreover, merely having Dalit representatives to comply with the quota system might not be considered a positive change, as it requires stricter action and monitoring. The social structure that has been a pillar for many years has not been properly dismantled, pushing many informal workers, especially those with no education and from lower spectrums, into a pit of vulnerability (ILO 2016).

Additionally, the Sustainable Development Goals (SDGs) include the informal sector as an element of concern to promote decent job creation for the vulnerable population. However, Nepal is said to be struggling to meet the SDG targets (DTUDA, 2019).


International Dalit Solidarity Network – Dalit women in Nepal enter local government in record numbers. Available from: https://idsn.org/dalit-women-nepal-enter-local-government-record-numbers/

Danish Trade Union Development Agency (DTUDA). Nepal Labour Market Profile. 2019. Denmark: Copenhagen.

International Labour Organization (ILO). 2016. The Future of Work in Nepal. Nepal Country Study. Available from: https://www.ilo.org/wcmsp5/groups/public/—asia/—ro-bangkok/—ilo-kathmandu/documents/meetingdocument/wcms_541336.pdf