The right to employment is one of the fundamental rights guaranteed by the Constitution of Nepal. Creating jobs and employment opportunities for people leads to increased household incomes and in turn has positive impacts on multiple SDGs. Investments in SDG Target 8.5 can help accelerate poverty reduction (SDG1), reduce malnutrition (SDG2) and increase access to drinking water and sanitation facilities (SDG6). Investing more in employment creation may lead to the limited availability of development finance for renewable energy, and hence may result in slow progress in increasing the share of renewal energy in the global energy mix.

Despite efforts, employment generation for half a million youths entering the job market every year has been a major challenge. There are almost one million unemployed workers in Nepal, of which 69.1 percent are young people aged between 15 and 34 years. The lack of opportunities for decent work in Nepal leads to many youths looking for work to seek opportunities abroad as low skilled migrant workers. More than half of million youths leave the country every year. There are stark gender inequalities in the Nepali labour market. The female labour force participation rate is 26.3%, about half that of men (53.8%), which is also relatively low compared to other developing countries. When in the labour market, women are paid on average, Rs. 0.70 for each rupee earned by men for work of equal value and are more frequently in informal employment - 90.5% against 81.1% for men.

With globalization, automation, digitization, demographic changes, climate change and other environmental changes, the ‘world of work’ is being transformed which has a higher impact on those who are not educated and/or less educated and are not connected to the outside world. To protect the interests of the poor and vulnerable groups of the population, the government has adopted some social security measures, including the Prime Minister’s Employment Programme which guarantees a minimum of 100 days employment or the provision of a subsistence allowance for the people. However, with the changing world of work the government needs to substantively engage and provide training in new areas, primarily focusing on information technology, financial services, among other sectors.

Infrastructure is essential for fostering economic growth and creating job opportunities (SDG 8), as well as for improving human capital by ensuring access to health (SDG3) and education (SDG4) opportunities. However, the expansion of infrastructure may lead to increased environmental pollution and risk of loss of biodiversity, negatively impacting SDGs 6 and 15.

Currently, about 93 per cent of the total population have access to electricity with 2,200 MW capacity, which is very low compared to the potential of more than 40000 MW capacity. The total length of blacktopped roads is 12,300km and the road density is just 0.61 km/sqm – very low when compared to other developing countries. Only 54.2% of the rural population have access to all-season roads in Nepal as compared to 86.7% of the rural population in Bangladesh.

The low level of infrastructure also makes the Nepalese economy a high-cost economy and erodes its capacity of producing goods and services at lower cost compared to its comparator countries. Despite these challenges, the infrastructure sector suffers from chronic underspending of the capital expenditure budget. This limits the progress on development goals and prolongs the duration of infrastructure gaps. As a landlocked country, enhanced regional road connectivity and corridors can have a significant positive impact on the Nepalese economy. Infrastructure development in Nepal, however, has caused environmental damage, especially in the hills. Studies have shown that road construction without proper environmental safeguards has destroyed forests and caused landslides.

With the promulgation of the constitution, the country adopted a federal system of governance with three tiers of government: federal, provincial and local. Apart from the federal government at the centre, there are seven provinces and 753 rural and urban municipalities. Several functions related to service delivery have been devolved to the local level. Strengthening the capacity of state institutions, including the legislature and judicial entities at all three levels, will ensure rule of law and justice, reduce corruption and improve public service delivery. This, in turn, will have positive impacts on multiple development outcomes – such as reducing inequalities and improving service delivery and resource management.  However, the local levels have a huge capacity gap, including the human resources capacity to fulfil these functions.

The government has been implementing the Province and Local Government Support Program to strengthen the capacity of these governments to formulate the necessary laws and policies and to strengthen the capacity of officials to implement the laws, in line with the constitutional spirit.

For the federal system to function effectively, several laws, including on the civil service, police, education, agriculture, among others, at the federal level need to be either formulated or revised to allow province and local governments to function with the level of autonomy provided for in the constitution.