Datanomics: Emigration to unemployment, a lot on the table for Nepal's PM

High unemployment, migration surge and heavy remittance reliance pose key economic challenges for Nepal's new PM Balendra Shah

Balendra Shah was sworn in as Nepal's prime minister on March 27, months after Gen-Z protests shook the nation. Although the trigger for the protests was the government's ban on social media companies, underlying economic issues — high unemployment, excessive dependence on remittances and migration out of Nepal — also came to the fore. The government, under Shah, will have to address these problems. 

 

One-third income comes from remittances  

Personal remittance receipts formed 26.2 per cent of Nepal’s GDP in 2024, the highest since 2017, according to the World Bank. Further, 76.8 per cent of all households in Nepal received remittances in 2022-23, up from 55.8 per cent in 2010-11. These formed one-third of the recipient households' total income. Over 21 per cent of such remittances in 2022-23 came from India alone. 

  Labour migration rising 

  In recent years, at least 2.5 per cent of Nepal’s population obtained permits to work in foreign countries, the second highest since 2009-10. Nearly 8 per cent of the population emigrated in 2021, up from 3.2 per cent in 2001 (measured by absentee population during a census exercise). 

Unemployment highest in youth  

The youth unemployment rate in 2022-23 was 22.7 per cent, significantly higher than the national unemployment rate of 12.6 per cent. During the same period, the labour force participation rate (LFPR) among youth (15-24 years) was at 26.5 per cent, substantially lower than the national participation rate of 37.1 per cent.