Economic embers had a major role in Nepal’s eruption

One powerful reason, among others, is the failure of its economy to keep pace with the aspirations of its people, especially the young. Hence the term ‘Gen Z’ protests.

Nepal not only depends heavily on remittances from elsewhere, for a country with one of the lowest per capita incomes in the world, it has a high level of unemployment, with the youth worst afflicted. Discontent in Nepal demonstrates the perils of a pressing national issue going unaddressed—such as a scarcity of quality jobs.

According to a World Bank report, although Nepal has done a remarkable job in poverty reduction, it has done so “without transformative domestic growth, investment, or job creation.”

Its reliance on money sent from abroad, which has played a major role in reducing poverty and been central to its economy’s growth, has not translated into quality jobs at home. A staggering 82% of its workforce is in informal employment, far higher than global and regional averages.

Though its economy has recovered from the covid crunch and real GDP grew by 4.9% in the first half of 2024-25, up from 4.3% in the same half of 2023-24, it has not been able to provide sufficient jobs, especially for those aged under 35, who account for a third of its population. ‘Jobless growth,’ a term coined by economist Nick Perna in the 1990s for growth without commensurate job creation or with decreasing employment levels, is at the root of many of Nepal’s ills.

Tackling this problem will not be easy in a scenario where the World Economic Forum’s Future of Jobs Report 2025 expects many jobs to be lost to technological change, especially AI, apart from geo-economic fragmentation, economic uncertainty, demographic shifts and a green transition.

This grim future stares not just at low-income countries, but at rich ones too; US policy convulsions can be traced to popular anxiety over job scarcity, although tariffs are more likely to worsen than resolve America’s problem, even as they cost people elsewhere their livelihoods.

Fortunately for us in India, successive governments have been alive to the need for jobs. Faster growth of services, which typically offer fewer jobs across all skill levels compared to manufacturing, has meant slower job creation than needed. Hence, India’s concerted efforts to raise the share of manufacturing to at least 25% of GDP. This also explains initiatives such as Make in India, Skill India and the Production Linked Incentive scheme, apart from job-oriented budgetary outlays.

Fostering entrepreneurship and making business easier to do are no less critical. Lighter regulation, easier access to credit and enhanced infrastructure can all empower small businesses to grow and generate jobs. Indeed, it is almost a given that no government can afford to let employment stagnate or drop.

Nepal’s turmoil may have been sparked by anger over a key liberty—to associate and speak freely—being curbed, but its youth frustration has a deeper cause: jobless growth. Its big challenge now is to expand its economy while ensuring it also sprouts quality jobs. If it’s any consolation, it is not alone.