Shift of a large number of labour force from agriculture to other sectors is crucial for the country’s economy to leapfrog
the HRM
The involvement of a significant portion of the country’s population — 65.6% — in the agriculture sector, despite its low productivity, presents a formidable challenge for poverty alleviation. Traditionally, agriculture and forests served as major sources of employment, livelihood, and entrepreneurship. However, improving productivity in this sector necessitates mechanisation and modernisation, which entails minimising reliance on manual labour.
Unfortunately, a large number of individuals engaged in agriculture remain underemployed, and the sector’s productivity has failed to significantly boost per capita income.
The existing workforce, coupled with subsistence-level agricultural practices, results in low output. Consequently, the country faces higher employment rates driven by the agricultural sector, where hidden underemployment prevails. As a result, approximately 20.27% of the population falls below the absolute poverty line. Rural areas are particularly affected, with 24.66% of residents living in poverty, as revealed by the Nepal Living Standard Survey IV (2022-23)
People often believe that the agriculture sector can create jobs, but in reality, it offers limited opportunities for employment. The current need is to transition the workforce away from agriculture and into other sectors like manufacturing and services. To improve productivity in agriculture, modernisation and mechanisation are essential.
The challenges faced by Nepal’s agriculture sector include land fragmentation, lack of access to improved seeds, fertilisers, and extension services, inadequate irrigation facilities, limited mechanisation, and insufficient use of technology. Additionally, storage facilities and market linkages are critical areas for improvement. Climate change poses a significant threat to the sector. Despite the government’s efforts to involve the private sector in agriculture production and supply chains, commercial farming has not made substantial progress in Nepal.
The latest Nepal Labour Force Survey (2018) shows that one in every five people who had jobs in Nepal, were employed in agriculture, the biggest employing industry. Trade industry had the second largest share of employment (17.5%), followed by construction (13.8%). However, the informal sector had a bigger share of 62.2% of employment. The formal non-agriculture sector accounted for 36.5% of total employment. Informal agriculture accounted for 20.2% of total employment, where hidden unemployment is high.
World Bank data shows that the labour productivity in agriculture or the quantity of agriculture output by each individual labour, is the lowest in Nepal among the South Asian countries.
Of the total 7.1 million people who were employed, over 60% were male. The main contributor to total employment was the informal non-agriculture sector, accounting for 41% of all jobs.
As countries develop, they often transition from having a surplus of domestic farm labour to facing a shortage. To enhance productivity, it becomes crucial to shift the labour force away from agriculture and into other sectors like manufacturing and services. In Nepal, many individuals, particularly those from rural areas, have migrated abroad in search of employment. These migrant workers have significantly benefited their households through remittances.
How is the shift of labour force from agriculture to other sectors possible?
Undoubtedly, the transition of a substantial labour force from agriculture to other sectors is pivotal for the country’s economic advancement. Ghanshyam Upadhyay, Secretary of the Ministry of Labour, Employment, and Social Security (MoLESS), asserts that this shift is achievable through skill development and effective job placement. A recent MoLESS survey revealed a significant number of foreign workers, primarily from India, engaged in various non-agricultural roles such as salon work, automobile repair, plumbing, electrical work, welding, masonry, and industrial labour within different industrial corridors.
Upadhyay emphasises the need to mechanise agriculture while concurrently investing in skill development. Creating an enabling environment for investment, fostering positive labour relations, and ensuring favourable working conditions will undoubtedly contribute to a thriving atmosphere for both employees and employers. Although achieving a substantial labour force shift away from agriculture may not be feasible in the short term, prioritising job availability for nationals remains crucial.
“Over three-and-a-half million working-age individuals have migrated to Gulf countries and Malaysia in pursuit of job opportunities,” Upadhyay states. “The government and private sector must prioritise creating domestic employment opportunities and retaining our youth population to accelerate our progress.”
Many believe that Nepal has bypassed the typical cycle of economic prosperity. While most developed nations embarked on their journey toward prosperity through industrialisation and manufacturing, Nepal missed out on the peak of manufacturing sector development. Instead, it faced premature deindustrialisation due to armed conflict, inadequate infrastructure, high logistics costs, and the influx of cheaper imports. Globally, countries were fiercely competing to produce goods at competitive rates and export them worldwide.
In this context, the passport reform — initiated in 1998 with the decision to distribute passports from District Administrative Offices — provided easier pathways for Nepali citizens to seek employment opportunities abroad. Youth migration and the subsequent inflow of remittances fuelled increased imports and consumption. On the flip side, this reform also prompted policymakers to focus on governance improvements, infrastructure development, and creating an enabling environment for investment within the country, aiming to generate more employment opportunities domestically.
‘Shramadhan’ job fair: an initiative for matchmaking between employers and job seekers
As an initiative of matchmaking between employers and job seekers, the Ministry of Labour, Employment and Social Security organised the Sharamadhan (employment solution) job fair in all provinces jointly with the private sector umbrella associations — Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Confederation of Nepalese Industries (CNI), Nepal Chamber of Commerce (NCC), Federation of Nepali Cottage and Small Industries (FNCSI), Hotel Association Nepal (HAN), and Federation of Professional Training and Employment of Nepal — starting from May 30 to June 12 this year.
There are employment opportunities, however, due to lack of nationwide information employers and job seekers lack connection and Shramadhan served as a solution, according to Govinda Prasad Rijal, Spokesperson and Joint Secretary of MoLESS.
Encouraged with the positive response of the job fair, the government has announced to conduct Sharamadhan job fair every year by incorporating the programme in fiscal budget 2024/25.
Conducted in all seven provinces, a total of 17,921 applications were received in job fairs conducted in seven provinces, whereas the employers have sought 14,788 employees. Various government, non-governmental, private sector organisations and companies, among others, placed stalls during the fair; which simultaneously held various workshops, networking sessions and panel discussions. MoLESS has said that it will collaborate with concerned agencies of all three tiers of the government, private sector and development partners, among others, to organise job fairs. With prudent record keeping and continued monitoring, MoLESS will support applicants to get employed as per the requirement of jobs placed by the employers.
Strategies for enhanced agricultural productivity
Moushumi Shrestha, Executive Director, Shreenagar Agritech Industries Ltd
Skilled labour force and productive capacity enhancement go hand in hand with a positive correlation. Unfortunately, we face a severe shortage of skilled and semi-skilled labourers. By prioritising skill development, individuals not only become job-ready but can also embrace entrepreneurship, sustain their ventures, and scale successfully. The outward migration of youth seeking low-paying jobs does not provide a solution. Traditionally, boosting productivity has been associated with land, labour and capital. However, the context has changed significantly; technology now permeates every sector. We must focus on harnessing technology across the economy, creating new avenues for a substantial number of jobs.
Agritech companies like Shreenagar Agritech Industries, involved in poultry, livestock, and aquaculture, can modernise these sectors, and enhance agricultural productivity through various approaches:
- Technological Integration:
- IoT and Sensors: Implement IoT devices and sensors to monitor animal health, feed consumption, water quality, and environmental conditions. Real-time data allows for precise management and early detection of issues.
- Automation: Use automated feeding, watering and cleaning systems to improve efficiency and reduce labour requirements with more efficiency. Innovative systems can handle repetitive tasks, ensuring consistent care and maintenance.
- Data-Driven Management:
- Big Data Analytics: Analyse data collected from sensors to optimise feeding schedules, breeding programmes, and disease prevention strategies. Predictive analytics can forecast production trends and identify potential risks.
- Smart Breeding Programmes: Utilise genetic data and AI to develop advanced breeding programmes that enhance productivity, disease resistance, and growth rates.
- Sustainable Practices:
- Biosecurity Measures: Implement advanced biosecurity protocols and technologies to prevent disease outbreaks and ensure the health of livestock and aquaculture systems.
- Green Energy Solutions: Adopt renewable energy sources like biogas from animal waste, solar panels, to power operations sustainably.
- Waste Management: Use of rendering machine to recycle the waste.
Skill development of Labour Force for better output:
- Skill Development and Training:
- Upskilling Programmes: Offer training programmes to equip workers with new skills in technology, animal health management and data analysis.
- Employment Opportunities: Provide education and support for workers to transition into related fields like agri-tech development, veterinary services or agri-business entrepreneurship.
- Mechanisation and Automation:
- Labour efficiency: Implementing automation reduces manual mistakes and increases efficiency.
- Job Creation in Tech: The increased use of technology in poultry, livestock, and aquaculture creates demand for technicians, engineers and data analysts, offering new employment opportunities.
- Diversification:
- Agri-Business Ventures: Encourage workers to explore entrepreneurial opportunities in value-added products, such as processed meats, dairy products, and fish products, which can absorb labour transitioning from traditional roles.
- Promote Agro Tourism: Promote rural development initiatives that create more opportunities through farming, such as eco-tourism, rural crafts and local service industries.
Enhancing Productivity:
- Precision Farming:
- Optimised Resource Use: Precision feeding, watering and environmental control systems ensure the optimal use of resources, improving growth rates and reducing waste.
- Health Monitoring: Continuous health monitoring through sensors and data analysis allows for early intervention, reducing mortality rates and enhancing productivity.
- Improved Breeding Programmes:
- Genetic Improvement: Invest in research and development to improve genetic stock, resulting in healthier animals with better growth rates and disease resistance.
- Artificial Insemination and IVF: Use advanced reproductive technologies to enhance breeding efficiency and genetic diversity.
- Efficient Supply Chain Management:
- Cold Chain Logistics: Implement advanced logistics systems to maintain the quality and freshness of products from farm to market, reducing losses and improving profitability.
- Market Access: Utilise digital platforms to connect producers directly with consumers and markets, ensuring better pricing and reducing reliance on intermediaries.
- Financial Services:
- Access to Credit and Insurance: Facilitate access to financial products tailored to the needs of poultry, livestock and aquaculture farmers, enabling them to invest in modern technologies and mitigate risks.
- Digital Payments: Implement digital payment solutions to streamline transactions and provide financial inclusion for small-scale producers.
By leveraging these strategies, agritech companies can significantly modernise poultry, livestock and aquaculture sectors, enhance productivity, and facilitate efficiency and more productivity, contributing to overall economic development and sustainability.
Competitiveness of agriculture can be enhanced by minimising labour force participation
Pushpa Sharma, Senior Research Fellow, Institute of South Asian Studies, National University of Singapore
Traditionally, the agriculture sector was considered to provide solutions to every livelihood problem. However, this narrative lacks rationality and fails to formulate evidence-based policies to minimise overreliance on agricultural products.
To attract youth to the agriculture sector, we must increase productivity and returns per individual. Achieving higher returns per unit depends on cost-effective production, which necessitates reducing the existing labour force engaged in agriculture. By involving fewer workers in agriculture compared to the current situation, we can make the sector more competitive. Simultaneously, massive mechanisation, improved facilities (such as irrigation), better seeds, fertilisers, access to finance, and efficient supply chain management are essential for enhancing competitiveness in agriculture.
If we choose competitive ways to develop agriculture, it could displace a large number of labour force from this sector; however, competitive production and enhanced productivity in the agriculture sector could open up avenues of employment in multiple sectors.
Nepal’s agriculture is mainly subsistence level and a large number of the country’s population is employed in the agriculture sector. National Agriculture Census shows that 69% of agriculture workers themselves consume the entire production whereas 25% consume the entire production in their household use and sell a small amount. This example is sufficient to understand Nepal’s subsistence agriculture and this subsistence nature of agriculture is the major reason behind Nepal’s agriculture sector lagging behind. However, we have turned a deaf ear with regard to formulating policies for agriculture sector development.
Policy makers mainly require clarity on the role of small farmers when we talk about commercial farming by pooling the fragmented land. The role of smallholder farmers must be defined before moving ahead. Additionally, we may be interested in promoting organic farming and eco-friendly agriculture that conserves biodiversity. However, we face challenges if the import and supply of chemical fertilisers are obstructed. We should also discuss the establishment of chemical fertiliser plants.
To come out from such a dilemma, policy makers should have a clear vision on the future of agriculture that is going to be adopted.
