Social Protection and Jobs in Nepal Jasmine Rajbhandary Senior Social Protection Specialist World Bank September 5, 2018
Outline 1. Framework and context 2. Status in Nepal 3. Policy priorities linked to federalism 4. Risks and challenges in implementing policies 5. Implementation of successful reforms
Frame works and concepts Social Protection and Jobs
Core framework of SPJ
What is social protection Public interventions to assist individuals, households and communities to manage risk better and that provide support to the critically poor. Social protection systems help individuals and families especially the poor and vulnerable cope with crises and shocks, find jobs, invest in the health and education of their children, and protect the aging population.
Investing in SP Social protection provides: insurance against risks, protection against poverty and access to economic opportunities and human capital development
Research shows that a job is the most important pathway out of poverty
What is a job A Job is defined as activities that generate actual income, monetary or in kind, and that do not violate fundamental rights and principles at work (WDR 2013). A job is often associated with formal wage employment. Yet, other types of jobs including informal wage employment, farm-related work or own account work are prevalent in middle and low-income countries.
Challenge- creating more and better jobs JOB FACTS 200 million unemployed Over 620 million idle young people, neither working nor studying About 600 million jobs will need to be added by 2020 to keep up with population growth JOBS CHALLENGE To increase the Quantity of jobs and their productivity To increase the Quality of jobs To increase Access of jobs
Key Jobs outcomes
Social Protection and Jobs in Nepal
Nepal faces the opportunity of reaping its demographic dividend, but this requires jobs for the large number of new entrants to the workforce Fast fertility reduction (Nepal halved the fertility rate from 5.1 in 1991 to 2.6 in 2011) contributed to poverty reduction, enables higher levels of investment in children and higher formal female labor force participation. It offers the potential for a demographic dividend. Or a large body of discontented youth and low female participation in the work-force, if job aspirations not met. (age group) 100+ 90-94 80-84 70-74 60-64 50-54 Male Female 201 5 (age group) 100+ 90-94 80-84 70-74 60-64 50-54 Male Female 2050 40-44 40-44 30-34 30-34 20-24 20-24 10-14 10-14 0-4 0-4 2,000 1,500 1,000 500 0 500 1,000 1,500 2,000 (thousand) 2,000 1,500 1,000 500 0 500 1,000 1,500 2,000 (thousand)
India South Asia Bangladesh Lao Ethiopia Nepal Low income Poor infrastructure and political instability have resulted in low levels of private investment limiting productivity growth and job creation Private investment as percent of GDP Firms citing political instability as a constraint Average level of private investment, 2007-2015 (percent of GDP) 30 25 25 24 22 21 21 (percent of total) Very Severe Obstacle Major Obstacle Moderate Obstacle Minor Obstacle 20 15 18 16 Small firms 70 10 5 Medium firms 63 0 Large firms 50 0 10 20 30 40 50 60 70 80 90 100 Prolonged political turmoil: 22 governments in 26 years.
Unemployment and underemployment are generally low Female Male 16-25 26-35 36-55 16-25 26-35 36-55 (1) (2) (3) (4) (5) (6) Not employed, not in school 36% 43% 40% 15% 20% 17% Unemployment 1% 1% 0% 3% 2% 1% Unemployment (relaxed def.) 3% 2% 1% 5% 3% 2% Underemployment, 35 hours or less per week 3% 2% 2% 7% 4% 3% Underemployment, 35 hours or less (relaxed def.) 9% 8% 7% 13% 9% 8% Underemployment, 15 hours or less per week 2% 2% 1% 3% 2% 2% Underemployment, 15 hours or less (relaxed def.) 5% 5% 4% 6% 4% 5% 17
Main employment type, sector for youth
High rates of migration reflect a dearth of good jobs in Nepal Lack of domestic jobs is the primary reason for seeking employment abroad While good domestic jobs are hard to find. (percent of potential migrants, seeking migration because of ) 50 (percent) 100 Unemployed youth Employed youth 40 80 30 60 40 20 20 10 0 Unavailability of jobs Source: IOM, 2016 Low income Unavailability of jobs at skill level Other 0 Insufficient job opportunities is main problem in finding employment At least somewhat satisfied with employment Desire a change in employment Nepal Bangladesh Cambodia Vietnam Source: World Bank. 2017. Nepal Youth Labor ESW using school to work transition surveys
Migration increases skills of migrants but without more productive opportunities in Nepal these will not be fully harnessed Agriculture sector worker Unemployed Construction sector Driver Service sector worker Manufacturing/factory worker Wholesale and retail trade worker 0 5 10 15 20 25 30 35 40 (percent of migrants) Work prior to migration Work during migration Source: IOM, 2016
Training and impact Training is extensive in Nepal 8% for women; 11% for men Main trades: computing (men and women); dressmaking, tailoring (women); construction (men); driving (men); healthcare (women) Training associated with higher rates of employment, wage employment, and nonag. employment for women In general, average wage earnings do not differ between trained and comparable untrained women training not positively associated with LM outcomes for men High desire for training For computing (men) and dressmaking, tailoring (women), but also for agriculture (men and women) Higher desire by poorer families, by employed women, by self-employed men in agriculture, in all regions relative to Kathmandu valley
Evolution of SP programs Scholarship to Dalit Students Senior Citizen, Single Women, & Disability allowance RCIW Mid day meals (WFP) Prior to 1990s Food for Education SEP & KEP Credit for migrant labor Senior Citizen Health Care Program Scholarship to all Dalits and 50% girls Aama Surakshya program Mid -1990s 2000-06 Khokana Leprosy home (1857) & Pashupati Old age home (1882) Employee Provident Fund (1962) Scholarship to girls (1971) Nepal food corporation (1975) Civil Service Pensions Citizens Investment Trust (1991) 2008-09 Poor citizens medical treatment fund Health insurance pilot 2013 Endangered Ethnicity Grant Child Grant Youth Self-employment Fund SSRP midday meals Various categorical scholarships Cash relief to conflict-affected 23
Key SP Programs Social Insurance Social Assistance Civil Servants Pension & other benefits Employee Provident Fund Social Security Fund Social Security Allowances (Old age, single women and widows, disability, child grant and endangered ethnicity allowance) Public Works (Rural Community Infrastructure Works & Karnali Employment Program) Scholarships and mid-day meals Cash relief to earthquake and conflict affected Safe motherhood/aama program incentives for delivery at health institutions Other health care: Emergency referral program for pregnant women and other target population; Senior Citizen Health Care, Leprosy control Labor Market Social Welfare: Old age home and child welfare centers; Social welfare program for disabled and senior citizens Subsidized food distribution (Transportation subsidy on essential food (rice, lentils, etc.) in 30 remote districts Youth Self-employment Program (YSEF) Skills training EVENT, SDP 24
SP Expenditure
% of Population % of population Coverage and incidence of SP programs (NLSS III) 18 16 14 12 10 8 6 4 7 Social insurance 6.0 3.0 8.0 17.0 Social insurance: Largest expenditure item in SP (1.5% of GDP in 2011/12) Incidence is regressive 2 1.0 0 Total Q1 Q2 Q3 Q4 Q5 Social Assistance 45 40 35 30 25 20 35.3 Social Assistance 42.0 41.0 38.0 33.0 25.0 Expenditure: 0.9% of GDP in 2011/12 Slightly pro-poor but less than 50% of the first quintile is covered 15 10 5 0 Total Q1 Q2 Q3 Q4 Q5 26
Social assistance and insurance have a limited impact on reducing poverty and inequality, and livelihoods are vulnerable to shocks 35 30 25 20 15 10 5 0 Social assistance has an almost unnoticeable effect on poverty and inequality Current In absence of scholarship programs In absence of cash transfer programs In absence of social assistance programs In absence of social insurance programs 4 out of every 5 workers are in selfemployment or the informal sector with no insurance Self-employment in agriculture (61.3 percent) and very little agricultural insurance. Self-employment in non-farm activities (12.7 percent). Daily wage laborers, predominantly in construction and low skilled services (6.3 percent). Poverty Rate Gini Coefficient Source: A vision for Nepal Vol. II: Policy notes for the Government
Incidence of shocks: One in four households experienced at least one shock in 2017 No. of Shocks Number of shocks reported by household and year (% of HH) 2014-15 2015-16 2016-17 0 56.6 46.6 66.4 1 37.7 36.5 24.9 2 3.7 10.3 7.4 3 1.2 4.5 1.1 4 0.6 1.5 0.2 5 0.2 0.4 0.1 6+ 0.1 0.1 0 Earthquake Flood or landslide Incidence of shocks by type and year Drought Fire, Hail, or Lightning Pests/Diseases/Harvest loss Livestock loss Riots/Blockade Death in the family Disease or injury in the family Personal economic shocks 0% 5% 10% 15% 20% 25% 30% 35% 40% 2014-15 2015-16 2016-17
Poverty, risk and vulnerability Poverty headcount in 2010: 25.2% (NLSS III) Vulnerability: a significant share of the population remains at risk of falling back into poverty Between 2003 and 2010, 6 in 10 poor households moved out of poverty, but almost 3 in 10 non-poor households fell into poverty
Policy priorities
SP Policy priorities (i) Develop and align National strategies Align national level policies such as SP Framework and Social Security Bill and Labor Act Clarify and align ministerial responsibilities Establish a national coordination and monitoring mechanism Consider both contributory and non contributory sp schemes under a single vision Consolidation/integration of programs and systems Establish a single beneficiary database Initiate joint data collection Allow interoperable systems Review program objectives and scope to explore consolidation Policy vision to guide consolidation
SP Policy priorities (ii) Modernize and strengthen Systems Establishment of a unique beneficiary identification system Digitization of beneficiaries Interoperability of a databases (across ministries) Shifting to payment through electronic systems (banks) Improved verification of payment recipients Increasing coverage and impact Extend communications &outreach Simplify processes Mobilize local stakeholders and IT Rigorous review of program impacts Revise targeting modalities
Jobs policy priorities Explore need for a jobs strategy or focused jobs program Support business environment related strategies to raise labor demand Support expansion of job search and intermediation services/matching services for workers including women, migrants) Support strategies to further orient/enhance training provision for specific groups
SPJ policy priorities Clarification of roles SP in constitution is under concurrent functions, need to detail out Capacity building of implementing agencies
Implementation Risks and Challenges
Key implementation risks and challenges Challenges Few champions willing to taking lead Low accountability of implementers Frequent changes of staff in implementing teams Low technical capacity (some cases) Limited process planning or monitoring(time) Siloed implementation- difficult to work across agencies Risks Slow implementation Results/services delayed Partial delivery Subjective decisions of implementers Wasted investments
Additional new SPJ challenges Constitution provides right to social protection and job Which is leading to some discussion of employment guarantee programs SP is a concurrent responsibility- little clarity and lots of struggles between local and national egbenefit amounts post mayor elections SP program expansion led by politics In all party manifestos Expansion in budget speeches regular Federalism may lead to large budget for civil servants pensions Fiscal sustainability
Implementation of successful reforms
RCIW-success at different stages Public works program under MOFAGA since 1995 Expanded to almost 30 districts (at one point) Program changed activities from road construction to agriculture and livelihoods oriented activities such as fishing ponds, irrigation canal, river bank construction, plantations 2011 Global good practices Graduation agenda Adaptive SP agenda Program changed from distribution of food to cash 2012 Global good practices Beneficiary empowerment Local economy growth Limited dependence on rice
Enhanced Vocational Education and Training Project- performance based contracts Project started 2011 MOE moved to performance based contracts for training providers Contracted training providers only paid based on achieving Payment installment 1 st -10% (start of training) 2 nd -40% (completion of training and skill test) 3 rd -25% (after 3 month employment verification) 4 th - 25% ( 6 month income verification) About 70% placement of trainees in employment Nepal- Rs 4600, India- Rs 7200, Overseas- Rs15000 per month
SSA-modernization of systems Digitization of beneficiaries Started 2014 Over 2.2 million beneficiaries data digitized Reduces payment to wrong/ineligible/double beneficiaries Facilitates improved planning and monitoring Bank through payment distribution being phased in Piloted in 5 districts Improves assurances of right amount, to right person at right time
Thank you