Three in five employees lost their jobs due to COVID-19 in Nepal

A latest study - “Rapid Assessment of the Social and Economic Impacts of COVID-19 on the vulnerable groups in Nepal” – commissioned by the UN Development Programme in Nepal and conducted by the Institute for Integrated Development Studies shows that the COVID 19 pandemic has disrupted supply chains, shut or threatened the survival of small and informal enterprises, and made people highly vulnerable to falling back into poverty through widespread loss of income and jobs. The study recommends the government to guard against vulnerabilities by strengthening social protection and livelihoods, reorient public finance to augment human capabilities and introduce measures to limit bankruptcies and create new sources of job-creating growth.

May 26, 2020

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The study Rapid Assessment of the Social and Economic Impacts of COVID-19 on the vulnerable groups in Nepal” is based on a painstaking survey of 700 businesses and 400 individuals, and consultations with over 30 private sector organizations and government agencies, conducted doggedly during the lockdown. The uncertain impact of the COVID-19 pandemic on Nepal’s socio-economy will magnify, conditional on how events unfold on three fronts: first, its dependence on tourism, trade, and foreign employment – and the consequences that will propagate through the services and industrial landscape; second, if or when  the spread of the pandemic overwhelms a grossly inadequate health infrastructure; and third, Nepal’s heavy geo-economic reliance on India and China, and the nature of contagion originating in those countries.

Accommodation and food; arts, entertainment and recreation; and transport are the three most affected sectors of the economy. Given the international travel restrictions and fall in discretionary disposable incomes worldwide, tourism receipts in Nepal are projected to fall by 60 percent in 2020 resulting in a loss of foreign currency earnings worth USD 400 million. Similarly, the fall in remittances is likely to range between 15 and 20 percent this fiscal year. The cumulative impact of trade, tourism and remittance shocks – as well as the negative economic externalities they trigger in allied sectors --  Nepal’s projected pre-COVID GDP growth rate of 8.5 percent will decline to well below 2.5 percent in 2019-2020, and severely constrain a rebound in 2020-2021.

Both formal and informal MSMEs are hit hard as they tend to have low cash-to-asset ratio. We find that every three in five employees have lost their jobs in the micro and small businesses that were surveyed; they have seen a fall of 95 percent in average monthly revenue. These businesses can sustain for only around two months if lockdown continues. Likewise, cash subsidy from the government was ranked the most important kind of support expected as part of economic stimulus, followed by subsidy on interest rate, concessional loan, and rental waiver by landlords. Subsidy on utility payments was considered the least important support needed by small and informal businesses.

The impact on labor differs by the nature of contract. Permanent workers face either pay cuts or unpaid hiatus, backed by strong labor laws that discourage layoffs. Seasonal and informal workers who represent 60 percent of the labor force face job cuts and losses. Temporary workers, internal migrants, day laborers were amongst the most vulnerable based on income, and their ability to sustain through the slowdown. Not being able to find an alternative source of income is judged to be the main impact of the crisis on those already vulnerable or otherwise engaged in precarious work.

[This is a highlight of the study report. Download the full report.]

The lockdown, imposed by the Nepal government since March 24, is likely to serve its purpose of helping to prevent the spread of Covid-19, but it is going to affect the vulnerable people, such as daily-wage worker and labourers disproportionately, reports Adity Aryal of The Kathmandu Post.

On the second day of the lockdown, Ganesh Tamang began the long walk home. With just three packets of instant noodles in his bag, Tamang walked more than 80 kilometres to his home in Makwanpurgadhi. At least there, he knew he wouldn’t starve to death.

Tamang works in Kathmandu as a daily-wage labourer in the construction industry and he lives hand to mouth.

“After the middleman takes his cut for finding me a job for the day, I am left with very little money,” Tamang told the Post over the phone from Makwanpurgadhi. “Surviving the lockdown in Kathmandu would have been very difficult for me as I have not been able to save anything.”

Tamang might be home but things look bleak. He came to Kathmandu to work and send back money to his family. Without a steady source of income, his family is likely to tread the poverty line, subsisting on very little and forced to take loans.

The lockdown, imposed by the Nepal government since March 24, is likely to serve its purpose of helping to prevent the spread of Covid-19, but it is going to affect people like Tamang disproportionately. Daily wage workers and those on the lower end of the socio-economic spectrum will suffer more, losing jobs and getting into more debt.

The World Bank has already warned that “the pandemic will hit hard low-income people, especially informal workers in the hospitality, retail trade, and transport sectors who have limited or no access to healthcare or social safety nets” and that the COVID-19 shock will likely reinforce inequality in South Asia.”

“The upper socio-economic strata have more economic and physical resources, translating to more social benefits, at their disposal,” said sociologist Sanjay Sharma. “Pandemics like these present a clearer picture of the inequalities that are prevalent in our society.”

The luxury of working from home, attending online classes, and ordering groceries for home delivery is only available to the privileged few. Those without jobs and savings are solely dependent on the government’s relief packages and the kindness of strangers.

Daily wage workers and those who are part of the informal economy already suffer from numerous inequalities, including access to healthcare, sanitation and education, which manifests in malnutrition, a lower human development index, and social discrimination and exclusion.

Meena, who works around Kathmandu as domestic help,was not paid last month and all of her employers have asked her not to come by. With her savings running out, she went to collect relief from the ward office in Gyaneshwor. But the packaged food items she received had been tampered with, she told the Post.

“They [officials] had taken a share from our relief before giving it to us,” said Meena, who asked that she only be identified by her first name. But she wasn’t able to say anything and quietly take the food, as any argument might have deprived her of even the little relief.

Meena’s daughter-in-law, who also works as domestic help, has not received any relief because she lacks proof of citizenship as her parents weren’t legally married when she was born and when she grew up, they weren’t around, she said.

Nearly 25 percent of the adult population is estimated to lack citizenship certificates by the Forum for Women, Law and Development, a rights organisation. A majority of this stateless population is ineligible to receive any benefits from the state since they have no form of identification. A lack of citizenship proves to be an obstacle throughout their lives but the effects are exacerbated in times of crisis like this.

For minority groups, crises like the ongoing Covid-19 pandemic can be doubly marginalising.

This story was originally published in The Kathmandu Post on 16 April 2020. Please read the full story here