Ageing without Prosperity

Nepal’s bulge youth population getting old without attaining prosperity

the HRM
Nepal’s current demography is considered as a comparative strength due to the high number of youth bulge or the working age population (15-60 years). However, the country is entering a club of ageing countries by 2028 while observing the population pyramid based on the data availed from the national population census of 2021. While coming to 2024, Nepal has a window of another 30 years to become an aged society. By 2054, Nepal will be an aged society, exactly like Japan nowadays, which means the number of dependent populations will be high. In that scenario, the family will have less income as the working age population in the family is low as compared to the dependents.

Experts warn that Nepal’s current youth bulge will get old without making the country developed and prosperous. High number of working age population in the country means, the country’s pace to grow could be faster provided there was efficient workforce management. However, lack of opportunities and mass migration signal the country may not be able to utilise the demographic dividend for its prosperity and will fall into the middle-income trap.

The mass migration of people seeking opportunities abroad is their own effort to come out from the vicious cycle of poverty. It has characterised the famous quote of Bill Gates, founder of Microsoft Corporation. Gates once said, “If you are born poor it’s not your mistake, but if you die poor it’s your mistake”. No one wants to dye in poverty, everyone wishes to come out from poverty and live a decent life. When the country lacks opportunities, people migrate to fulfil their dreams.
The recent fourth series of Nepal Living Standards Survey 2022-23 shows 20.27% of the population in Nepal lives below the new poverty line. “The incidence of poverty is higher in rural areas (24.66%) than in urban areas (18.34%).” The average poverty rate in 2010/11 stood 25.16%.

The new poverty line has been set at Rs. 72,908 per person per year, or an individual whose annual consumption expenditure is less than NRs. 72,908 is categorised as poor. The previous poverty line set in 2011 was Rs. 19,261 per person per year, which when adjusted for inflation over 2011-2023 period stands at Rs. 42,845 per person per year.

The poverty rate is highest in Sudurpashchim province (34.16%) and lowest in Gandaki province (11.88 per cent). If considering poverty is rural phenomenon, Gandaki Province is an outlier due to its hidden poverty in the urban areas. An estimated 10.27% of the population in rural parts of Gandaki lives below the poverty line. The poverty rate in urban parts of Gandaki stands at 12.63%. The poverty rate in the urban areas of the Kathmandu valley stood at 7.38%.

The Labour Force Survey of 2017/18 had also presented a glaring example of lack of opportunities in the country. “There were approximately 20.7 million people of working age and approximately 7.1 million were employed while 908,000 were unemployed. This translated into an unemployment rate of 11.4%,” according to the survey. Females reported a higher unemployment rate of 13.1%, which is 2.8 percentage points higher compared to males.

Gini coefficient that measures income/wealth inequality has slightly come down as compared to the findings of the first Nepal Living Standard Survey (NLSS) in 1996. Gini coefficient was measured at 0.322 in the first survey in 1996, which went up while coming to second survey in 2003/4 to 0.414 and in 2010/11 during the third survey Gini coefficient stood at 0.328, which was 0.300 in 2022/23 (fourth survey). While measuring Gini coefficient, a value of 0 indicates perfect equality – where everyone has the same income. A value of 1 indicates perfect inequality – where one person receives all the income and everyone else receives nothing.

Population pyramid and pace of development
The journey toward prosperity in an ageing society presents formidable hurdles, particularly for a country like Nepal, which grapples with poverty and underdevelopment. As the elderly population grows, so do the financial burdens associated with their care. Simultaneously, a shrinking workforce threatens productivity. Let us delve into these complexities. Attaining prosperity in an ageing society is a daunting task for Nepal, a nation facing the dual challenges of poverty and underdevelopment. As the number of elderly citizens increases, so does the demand for healthcare, pensions and social services tailored to their needs. Balancing these expenses against limited resources becomes a delicate endeavour. Moreover, the productivity of the workforce faces a significant slump due to the limited number of working-age individuals. The challenge lies in maintaining economic growth while accommodating an aging population. Innovative solutions are essential to engage older citizens in meaningful work and utilize their skills effectively. The government shoulders substantial liabilities related to social security. Over the years, the number of beneficiaries under social security schemes has surged, with senior citizens constituting a significant portion. Simultaneously, the opportunities for youth within the country remain limited, hindering their active participation in the production process and contribution to the nation.
In the current fiscal year (2023/24), the budget allocates 9% (approximately Rs 157.73 billion) to the social security scheme. Balancing this allocation with other essential sectors is a delicate juggling act that requires strategic planning and collective effort.

In conclusion, Nepal must navigate these challenges with foresight, compassion, and innovative solutions. Balancing the needs of the elderly, the aspirations of the youth, and the fiscal responsibilities of the government is a multifaceted endeavor that demands thoughtful consideration and collaboration.

Time neither waits anyone nor the life spent can be rewind, exactly in the life of country too; opportune time might lapse if the policy makers couldn’t craft and implement the required polices to harness its resources timely. It took years for the first world countries to attain prosperity, however, along with innovation, market, production and however, East Asian countries including China has taken a leap towards prosperity only in a less than half span of time as compared to the first world countries. The country having youth bulge can progress faster if they would be given favorable environment, availing best practices, focusing on innovation and exploiting technologies, it is said that youth can grasp, adopt things easily and deliver faster with quality.

Further, there are optimistic scenarios as well, it is said that the economic centre of gravity has been moving towards Asia from the West, which tells the prospect of Asian countries to grow and prosper immensely. Research conducted by Danny Quah, Professor of Economics at the Lee Kuan Yew School of Public Policy, National University of Singapore, on the economic centre of gravity states that Nepal will be in the centre by 2050. The rise of Nepal’s neighbouring giants – India and China – as an emerging economy and subsequently the global powers might offer spillover Nepal to grow faster and reap benefit of its youth bulge.

Another study supports the aforesaid narrative, which was carried out by the Asian Development Bank (ADB). As per the study, around three billion Asians (56.6% of the estimated 5.3 billion total inhabitants of Asia by 2050) could enjoy living standards like those in Europe by then, and the Asia region could account for over half of global output by the middle of the 21st century or 2050. Above all, 21st century is projected to be the Asian Century which is parallel to the characterisation of the 19th century as Britain’s Imperial Century, and the 20th century as the American Century.

Investing in Human Resource to accelerate prosperity
Human resource management is given prime importance in developed countries, and is treated as human talent or human capital management. For any country or company to grow and prosper they need talents to grow and prosper. Nepal has paid less attention to investing in people or managing the investment efficiently. Though the country has been investing a significant portion of its budget in education and health, the (mis)management has been affecting the output against the resources spent.

“Youth seeking opportunities outside Nepal is an ongoing national crisis. Youth are actually not leaving the country for money; they are leaving behind Apathetic Hopeless current reality,” said Yateen Gharat, International Association of Facilitators (IAF) certified facilitator, “We must work on instilling a sense of pride and shift their focus inwards to unleash huge potential they carry within.”

Along with the government, companies should have to invest in their human resources, which will ultimately benefit the country in multiple ways. Effective human resource policies address the ongoing challenges of talent drain and help in enhancing productivity.

Abha Maryada Bhatt, founder of Success India said that the human resource policies play a pivotal role in shaping a company’s sustainability and growth, particularly in regions like India and Nepal that are facing a talent drain for a variety of reasons mainly growth and financial.

“HR policies should focus on talent retention by offering career development, competitive salaries and tangible benefits to their employees. As a rule, creating positive work environments that foster employee engagement and satisfaction become crucial as also very critical in maintaining momentum as well as retention,” she said.

Against the backdrop, in consideration to the large number of foreign job seekers, who are the source of remittances, which is essential for the country’s macroeconomic stability as well as lubricating the economic activities, the government even hadn’t taken initiation for skilling them. So that Nepali migrant workers can earn better in the labour destinations.

Skilling people is equally important for the company so as the nation. Binod Prakash Singh, Secretary of the Ministry of Federal Affairs and General Administration has said that the government has also been enhancing managerial skills of the civil servants for the effective public service delivery.

Investing in the overall development of Nepalis irrespective of anywhere they work will ultimately benefit the country and Nepal having the large number of working age population must pay attention to utilise the demographic dividend for attaining prosperity and development.

‘Ensuring tangible benefits for talent retention’

Abha Maryada Bhatt, Founder, Success India

Human resource policies play a pivotal role in shaping a company’s sustainability and growth, particularly in regions like India and Nepal that are facing a talent drain for a variety of reasons mainly growth and financial. As a result, a robust HR culture becomes essential to effectively address these challenges.
To start with, HR policies mandatorily must focus on talent retention by offering career development, competitive salaries and tangible benefits to their employees. As a rule, creating positive work environments that foster employee engagement and satisfaction become crucial as also very critical in maintaining momentum as well as retention.

HR becomes the threshold of the company that should prioritise talent acquisition strategies that target skilled professionals locally and internationally, leveraging technology, networking platforms and implementing growth strategies. Introducing flexible work arrangements and initiatives to support work-life balance can enhance employee loyalty and productivity.

The key to successful HR lies in investing in continuous learning and development programs to ensures that employees remain adaptable to evolving industry trends and technologies, reducing the risk of talent drain.

Needless to mention, as part of competitive growth, fostering a culture of diversity and inclusion encourages innovation and attracts diverse talent pools.
Overall, a forward-thinking HR culture that emphasises talent retention, acquisition, and development is imperative for companies in Nepal to mitigate the effects of talent drain and sustain long-term growth in a competitive global market.

‘HR policies should fulfil strategic objectives’

Jonathan Low, Founder, Global Success Learning Academy

Human Resource policies are becoming more important and pivotal in steering a company’s sustainability and growth.

These policies will provide the foundation for a productive, engaged workforce by ensuring fair treatment, equal opportunities, and a safe working environment. Effective HR policies can attract, retain top talent and reduce turnover, directly contributing to a stable and skilled workforce. They will also be able to foster a culture of continuous learning and innovation, vital for long-term sustainability and competitiveness.

In addition, by prioritising diversity and inclusion, HR policies can enhance creativity and problem-solving, leading to better business outcomes. Equally important, ethical HR practices strengthen a company’s reputation, making it more attractive to customers, investors, and potential employees.
In essence, well-crafted HR policies are not just about compliance and management; they are a strategic asset that drives a company’s growth and sustainability by building a resilient, innovative, and committed workforce.

In many countries these days, including Malaysia, the impact of HR policies on company sustainability and growth is increasingly viewed through the lens of Environmental, Social, and Governance (ESG) principles, reflecting on a broader understanding of sustainability that includes not just economic growth but also social equity and environmental preservation.

‘HR’s Role in Driving Growth’

Raj Raghavan, Chief People and Culture Officer, CoreStack Inc. WA, USA

In support of organisation growth and sustainability, Chief Human Resource Officers and other leaders must reimagine the basic tenets of their organisation. CHROs play a vital role in making sure the organisation is living its purpose and values.

To enable this, we should manage talent by building an analytics capability to mine hiring data, develop, and retain our best employees. HR partners, who articulate these needs to the management, should consider themselves internal service providers that ensure high returns on human-capital investments.

Another top priority for HR is enabling employee’s workplace experience. Airbnb, for instance, rebranded the CHRO role as global head of employee experience. Amazon’s CHRO is called head of people experience and technology. PayPal focused on HR’s capability and processes to create a better experience for employees, including coaching HR professionals on measuring and understanding that experience, and using technology more effectively.

To strengthen an organisation’s identity, the following questions are key:

• Can we develop a sense of purpose that has a tangible impact on our employees?
• Can we identify key talent roles and focus them on creating value?
• Can we build a data-driven, systemic understanding of our organisational health?

These are not new, but they are approaching tipping points, placing people function at the top of the CEO agenda.

‘Adopting the best HR practices for growth and sustainability’

Dr Sanjay Muthal, CEO, Kontempore

Human resources (HR) policies play a significant role in influencing a company’s sustainability and growth in several ways:

1. Talent Acquisition and Retention: Effective HR policies attract top talent to the organisation and encourage them to stay. By offering competitive compensation packages, opportunities for growth and development, and a positive work environment, HR policies can help retain valuable employees. A stable workforce contributes to sustainability by reducing turnover costs and maintaining continuity in operations. Additionally, skilled and motivated employees are essential for driving innovation and growth.
2. Employee Engagement and Productivity: HR policies that prioritise employee well-being, work-life balance, and job satisfaction contribute to higher levels of engagement and productivity. Engaged employees are more committed to the organisation’s goals and are willing to go the extra mile to contribute to its success. By fostering a culture of engagement, HR policies can enhance performance and drive growth.
3. Training and Development: Investing in employee training and development through HR policies ensures that employees have the skills and knowledge needed to perform their jobs effectively. Continuous learning opportunities not only enhance employee capabilities but also enable the organisation to adapt to changing market conditions and technological advancements. Well-trained employees are better equipped to drive innovation, improve processes, and fuel growth.
4. Diversity and Inclusion: HR policies that promote diversity and inclusion contribute to a more innovative and resilient workforce. By attracting individuals with diverse backgrounds, perspectives and experiences, organisations can tap into a wider talent pool and foster creativity and innovation. Inclusive HR policies create a supportive environment where all employees feel valued and can contribute their best, leading to improved performance and sustainable growth.
5. Performance Management: Effective performance management policies provide clear expectations, feedback and recognition to employees. By aligning individual goals with organisational objectives, HR policies ensure that employees understand how their contributions contribute to the company’s success. Transparent and fair performance management processes motivate employees to perform at their best and drive continuous improvement, thereby supporting sustainability and growth.
6. Compliance and Risk Management: HR policies ensure compliance with labour laws, regulations, and industry standards, reducing the risk of legal issues and reputational damage. By promoting ethical behaviour and a safe work environment, HR policies mitigate risks associated with employee misconduct, discrimination, and workplace accidents. Compliance with regulations also enhances the company’s reputation and sustainability in the eyes of customers, investors, and other stakeholders.

In summary, HR policies significantly impact a company’s sustainability and growth by influencing talent acquisition and retention, employee engagement and productivity, training and development, diversity and inclusion, performance management, and compliance and risk management. By prioritising the well-being and development of employees, organisations can build a strong foundation for long-term success and resilience in a competitive business environment.

Administrators should act like management professionals to the extent they are allowed by the law

Binod Prakash Singh, the Secretary of the Ministry of Federal Affairs and General Administration, plays a pivotal role in overseeing the central personnel agency for civil servants in our country. However, despite his efforts, the efficiency and delivery of public services across all three tiers of government continue to face criticism from the common people due to subpar service quality. In an interview with HRM Nepal, Singh shed light on the government’s ongoing efforts to bolster the capacity of civil servants and ensure optimal placement of individuals in their respective roles. Excerpts:

Q. Management of civil service is one of the key elements to strengthen governance and public service delivery. What are the key principles and values adopted by the Ministry of Federal Affairs and General Administration for deploying civil servants in relation to ensuring good governance and effective service delivery?
A. The Ministry of Federal Affairs and General Administration plays a crucial role as the central personnel agency for Nepal’s civil servants. Its responsibilities encompass a range of vital functions aimed at ensuring effective governance and service delivery. The ministry conducts comprehensive Organisation and Management (O&M) surveys across all government agencies, evaluating organisational structures, processes and resource allocation.

Upon completion, the findings are submitted to higher authorities for endorsement. Actively seeking and managing human resources based on the O&M requirements, the ministry places civil servants in appropriate positions and oversees transfers and promotions. In the current context, the ministry’s primary function is to enhance service delivery by effectively managing civil servants. The guiding principle is to place the right individuals in the right roles to optimise performance. Recognising the importance of continuous improvement, the ministry arranges capacity development training for civil servants, equipping them with the necessary skills and knowledge to excel in their duties. Operating within the framework of the Constitution of Nepal and the Civil Service Act, 1993, the ministry ensures that its actions and decisions adhere to legal provisions. Recently, the Federal Civil Service Bill was introduced in parliament, aiming to enhance the prudent management of civil servants and contribute to more efficient and effective public services.

Q. Is the O&M conducted on a regular basis?
A. It actually depends. If the government has to open a new agency or new office for service delivery or needs to downsize offices and positions of the staffs, we conduct the O&M based on the government decision. In this fiscal year too, the budget has announced to reduce 10% of civil servants. We have concluded the O&M of five ministries. Very recently, the O&M of the Office of the Prime Minister and Council of Ministers (OPMCM) downsized the 60 to 65 positions of the civil servants deputed in the OPMCM. Similarly, the O&M of the ministries have also been endorsed by the concerned ministries in which we have slashed 35 positions of government staff deputed in those ministries.

Q. For the performance contract and evaluation, secretaries of the ministries sign contracts with ministers and ministers sign contracts with the prime minister. Are these contracts audited properly as the oversight agency, Office of the Auditor General, has expressed interest to audit these contracts?
A. Initially, performance evaluations were very generic. We have not been able to link performance evaluation with results and delivery. Civil servants are obtaining cent percent numbers, which has raised eyebrows regarding the process and method of evaluation. The standards we have set are not proper and need to be reviewed. It is because most of the civil servants are obtaining high and similar scores. The actual audit of the works of the civil servants is in fact judged by the people availing public services.

When we get feedback from people that the overall service delivery of an institution is poor then how will consumers/users believe that civil servants of that office obtained cent percent score during the performance evaluation. The indicators of the performance evaluation shouldn’t be isolated from delivery/results. The performance contracts that are signed with reporting authorities, divisional chiefs, secretaries, ministers and the prime minister were initiated to make them responsible and perform responsibly, however, there is no clarity on what will happen if the commitments are not achieved or what sort of ‘carrot and stick policy’ we will adopt is not clear. Further, considering the context, resource arrangements, availability of resources, achieving cent percent target is a herculean task.

Q. In the recent review meeting, Prime Minister Pushpa Kamal Dahal expressed grievances regarding service delivery despite the scores achieved by the government entities. What went wrong there in setting milestones?
A. I am reiterating that we have set a very negligible achievement as a milestone, like ‘procurement will be initiated’ or ‘publishing bid notice’ as the milestone. How can we assume such process-oriented milestones to deliver better results? Without awarding contracts or mobilising contractors, a civil servant can avail over 90% score by accomplishing the processes only, which is not scientific. The Federal Civil Service Bill registered in the parliament has focused on fact based and scientific performance target/milestones and prudent evaluation.

Q. The oversight agency – Office of the Auditor General – has also been interested in auditing the performance of civil servants/authorities. And it has said that the OAG audit will impact their promotion, transfer and other opportunities they are availing like training, higher study. As the secretary of MoFAGA, what is your take on this?
A. The OAG’s audit covers comprehensive issues like performance, process, rationale, efficiency and others. However, the issue is whether targets or results have been met or not. The issue raised by OAG is valid. If we became able to bring the performance under the purview/radar of audit by the OAG, this will support us in result delivery.

Q. There are often complaints from subnational governments that the federal government has not been deputing adequate civil servants and as a result their functions have been paralysed. Is this true?
A. This is true to some extent. If we look at the positions created six years back, there is around 35% deficit of government staff in provinces; this includes both who should be deputed through the federal government and those recruited by themselves. Delays in introducing the Federal Civil Service Act have caused a dilemma in provinces. On the other hand, civil servants like province secretaries and chief administrative officers at the local level deputed by the federal government are not entertained/accepted by subnational governments.

The federal government has not been able to assign chief administrative officers in more than 100 local levels. Some of the local levels have demonstrated anarchism; they do not allow the chief administrative officer deputed by the federal government to assume office. In addition, civil servants deputed to the subnational governments are also reluctant. Despite the delegation from the federal level, anarchy within certain local and provincial governments hinders their ability to assume office. Instead, they depend on acting secretaries or chief administrative officers to mobilise them according to the preferences of the elected representatives. Unfortunately, this situation adversely impacts the functioning and service delivery of subnational governments.

Q. Do you believe the Federal Civil Service Bill will address the aforementioned problems once it has been enacted by the parliament?
A. The new Bill has addressed these issues to a large extent. Currently, we are deputing the chief administrative officer to the local levels across the country. The new Bill has proposed to depute the required civil servants to the province and the province will depute to the local level within the province. The federal government deputes and transfers civil servants at the provincial level only. The new Bill has also clearly defined the roles and responsibilities of the civil servants deputed from the federal level and the provincial level.

Q. It is said that there are more administrators in the civil services than managers. How is the government trying to enhance managerial skills of the civil servants through capacity development trainings?
A. Personally, I do not see any distinction between administrators and managers. However, in practice what I have observed is the administrator issues orders rather than managing people or resources efficiently. In the government offices, if one staff of a certain unit is on leave, the unit cannot function and service seekers might get affected. The true administrator having managerial skill will ensure effective function of all units. So far in the civil service we have sought/recruited people who enforce the law and act as per law. We have not sought/recruited people who cannot manage service delivery or give results when dealing with challenging situations. If they would have been trained in applying creative management practices to deal with challenging situations, bringing efficiency in services, they would be more result oriented.

But in reality, there is no liberty to civil servants to apply their managerial skills for delivery, they have to follow all the processes as defined by the law. To the extent possible as allowed by the law, guidelines and standard operating practices (SOPs), they have to adopt creative management practices for effective service delivery. MoFAGA has been conducting training in capacity development, enhancing managerial skills and rewarding/recognising those who perform well by demonstrating their skills. However, the training and rewards/recognition are insufficient.

Q. Why has MoFAGA not included such management related trainings for civil servants that are conducted from the Nepal Administrative Staff College?
A. We conduct training for all civil servants through the Nepal Administrative Staff College and other institutes that offer thematic training. These programmes are tailored to accommodate the capacity (number of participants) and align with the courses provided by the training institutions. Additionally, we assess the motivation and encouragement levels of trainees, as well as the effectiveness of resource persons.

Notably, it is crucial to review the purpose and content of each training. Initially, newly appointed officers undergo a comprehensive six-month Basic Administrative Training (BAT), which was introduced a few years ago. Subsequently, civil servants pursue additional training to earn scores that contribute to their promotion. These supplementary training sessions typically span 35 days. To enhance the quality of training, we advocate for refresher courses that incorporate the latest dynamics and developments in administrative practices.

Q. The Bhutanese civil services model is often cited as the one of the best. Bhutan provides opportunity to its civil servants to study in the world’s renowned universities. The government of Nepal has also been providing an opportunity for civil servants to study in different universities abroad. How has the government been managing resources for this and what are the parameters for selecting civil servants for higher studies?
A. We have been sending civil servants for higher studies to the world’s best universities. However, the Government of Nepal has not been spending its own resources for higher studies or training programmes of aspiring civil servants. The government avails assistance from various development partners. There are prudent selection criteria after receiving applications from aspiring civil servants for higher studies or training. However, there are serious questions regarding the utilisation of knowledge and skills that civil servants garner from higher studies and training. The government needs to seriously delve into utilising the knowledge and skills, it is because those who come back to the country after completing their study or training are not posted appropriately from where they could pay back to the country.

Q. As an administrator, what are your thoughts on utilising private sector management for non-core government functions to enhance service delivery? For instance, in areas like processing driving licence applications, land revenue offices, vehicle renewal services, foreign employment-related services, and passport distribution.
A. I do personally believe in the managerial efficiency of the private sector, and we can pursue that. It is not necessarily the government staff should be involved in every work, even in offices where a large number of service seekers visit. The government should be liberal and flexible to bring in private sector management for service delivery except the core functions and secrecies of the government because private sector can do that more efficiently and timely. Subsequently, we have to digitalise the services for the convenience of the service seekers. When we visit foreign countries, we can see the private sector managing services, which are concerned with the government. In Qatar, the private sector not only manages the airport but also provides some services of the security component, which we don’t even imagine. We often discuss such practices in the government, but these are not in practice in an extensive manner.

Q. It is said that lack of effective intergovernmental coordination has also been impeding the functions of the subnational governments and sometimes creating disputes as well. How can effective communication and coordination be established?
A. The Constitution defines intergovernmental relationships and envisions corresponding mechanisms. However, challenges arise due to divergent interpretations by federal, provincial, and local governments. These interpretations often deviate from the intended provisions, leading to discomfort in execution. To facilitate effective coordination, a National Coordination Council, led by the Prime Minister and comprising chief ministers from the seven provinces and federal ministers, has been established. Additionally, minister-level mechanisms operate at both federal and provincial levels, with similar arrangements at the local level. Despite these structures, essential laws, rules, guidelines, and standard operating procedures (SOPs) remain unframed.

The Constitution delineates exclusive and concurrent rights for federal and subnational governments. Achieving a uniform understanding of these rights across various government spheres is crucial. To prevent duplication and overlap, concurrent authorities must be efficiently managed through greater coordination among different levels of government. Currently, we are diligently reviewing the unbundling of authorities to address ambiguities and overlapping responsibilities. The forthcoming unbundling report aims to clarify matters. Furthermore, the enactment of the Federal Civil Service Act will alleviate many challenges faced by subnational governments.