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A strong skills system can contribute to structural economic transformation and growth—by enhancing employability of workers, improving labor and firm productivity for enterprises and helping nations capitalize on their human capital. An estimated 54% of South Asian youth will leave school—sans relevant skills—to enter into the job market in the next decade, according to a study conducted by Global Business Coalition for Education, the Education Commission, and UNICEF. The same study also suggests that South Asia lags behind several other regions in preparing the next generation with the skill sets they will need to correspond to the evolving 21st century job roles. The data shows South Asia has the largest youth labour force in the world with nearly 100,000 young people entering the labour market on a daily basis.

The Nepal Labour Force Survey III in 2017/18 carried out by the Central Bureau of Statistics reveals that nearly one million people, 11.4% out of the total working age population, are unemployed. Out of the 20.7 million working age population, 7.1 million are employed (including 13.1% women and 10.3% men), while 908,000 people unemployed. In total, 38.1% of job seekers are young people aged between 15 and 24 years—making this the largest age group in terms of unemployment followed by the age group of 25 to 34 (31.1%). The economically active population group being dormant has a greater economic and social implication on the nation. As per the study, one in every five people who have jobs in Nepal are employed in agriculture, Nepal’s biggest employing industry. Trade industry has the second largest share of employment (17.5%), followed by construction (13.8%). The informal sector has a bigger share of 62.2%. An estimated 23.8%, close to a quarter of all employed people, are employed in service and sales occupations, followed by elementary occupations with just over 20% people. The results also show that approximately 12.3 million people aged 15 years and above are involved in production of goods at a rather subsistence level such as food for self-consumption, manufacturing of household goods, fetching water, collection of firewood and construction or major repairs of their own dwelling.

UKaid सीप’s APPROACH

UKaid सीप helps support and build on the private sectors’ efforts, catalysing partnerships and investments to train and place Nepali youth, especially women and people from disadvantaged and marginalized communities, in productive jobs in priority growth sectors of Nepal: agriculture, construction, ICT, light manufacturing, and tourism. Using a market-driven approach, the programme is working to address labor market, and firm and industry-level constraints and strengthen job-linked skilling systems, solutions, and partnerships.   

Active involvement of employers in the ecosystem can enhance employability and productivity of Nepalis human resource and reduce demand supply mismatch. The private sector in Nepal has been contributing to about 80% of the country’s gross fixed capital formation since 2016, which is equivalent to about 17% of the nation's GDP. There is potential for and interest in further private sector investments—from both domestic and foreign sources—especially in sectors of Nepal’s comparative advantage such as agriculture, hydropower, and tourism. 

The TVET or skill systems, despite decades of donor investments, has struggled to stay at the forefront of understanding the emerging needs of the job market and lack the financial, physical, human resources (trainers) and standards (curricula and qualification standards) to equip young people with job market-relevant skills they require to be employable and productive. One of the recognised market constraints is the lack of industry-institute interaction leading to a demand-supply skills mismatch. Skills development of the labour force requires an enabling environment so that the provision of skills is balanced with the provision of opportunities to use these skills. Nepali private sector themselves best know and understand what skills are needed in the labour market. Hence, a strong and institutional relationship between the TVET system and private sector is a prerequisite for a successful outcome of the TVET system. Working with private sector business and industry have many advantages which include promotion of apprenticeship, On-the-Job Training (OJT) and employment. This approach helps establish an actual labour market system, development of demand-based curriculum and research and development. 

Through its innovative Challenge Funding modability, UKaid सीप is co-funding innovative industry-driven initiatives that are expanding and improving access to quality skilling and livelihood opportunities, with special focus on the citizens of Madhesh and Lumbini Province, while also unlocking private and public funding and fostering collaborations with and between industry, academia, NGOs, and Government of Nepal--to create and strengthen employment prospects for Nepalis and productivity of firms. 

The Covid-19 pandemic has led to a global job crisis of an unprecedented magnitude. The need to create an equitable, relevant, and quality skills development system that is able to expand livelihood opportunities and address evolving job market needs has come into sharper focus. Based on the ILO’s estimate, between 1.6 and 2 million jobs are likely to be disrupted in Nepal due to the coronavirus pandemic, either with complete job loss or reduced working hours and wages. Based on the higher-impact scenario, the jobs disrupted include nearly 780,000 workers in wholesale and retail trade, 446,000 in manufacturing, 404,000 in construction, 211,000 in transport and 62,000 in accommodation and food service activities, and 83,000 in other services including real estate and administrative activities. Approximately 5.7 million, 80.8% of workers in Nepal, have informal jobs and are the most at-risk workers together with around 1.4 million home-based workers, mostly women. It has become more imperative than ever to reinvent, reskill, upskill and multi-skill the workforce in order to deal with the structural challenges in the economy and the changing employment landscape.


UKaid सीप envisions a more productive and equitable vocational skills system that improves the livelihoods of disadvantages Nepalis, especially from Madhesh and Lumbini Province, which will ultimately contribute to SDG 4.4: “By 2030, increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship” while directly and indirectly contributing to all other SDGs. At least 50% of the programme participant communities are women and 40% hail from disadvantaged groups of which 500 will be people with disabilities. 

As of July 2021, UKaid सीप has co-designed and co-funded 13 market-led partnerships, which have the potential to equip and empower over 25,000 youth, especially returnee migrants and the most vulnerable youth, by 2022. Nearly 15,000 Nepalis will have benefitted from market-aligned skills, job placements, and financial access. We have already seen many changes in the skills ecosystem that have the potential to enable employability of many Nepalis and firm growth. We have catalyzed Public Private Partnerships and industry engagement in skilling to help revive traditional industries – such as Dhaka and high-end carpets. Introduction of a unified curriculum by competing corporations in one of Nepal’s top export industries, the yarn manufacturing industries, has introduced an apprenticeship-based model--one that can be replicated widely across diverse industries.   

Since the commencement of सीप, new job roles in transformative industries such as Artificial Intelligence (AI), Cloud Computing, and Heavy Equipment Mechanics, have been introduced. Meanwhile, new job roles such as Heavy Equipment Operators, populated by male employees, are being promoted for women. We are already expediting digitization in the country through support for logistics and agribusiness platforms.

Learn more about the partnerships forged by UKaid सीप here. To download a two-page factsheet on UKaid सीप, click here. You can follow the progress, impacts, and insights -- updated regularly -- on this Insights and Impact page.