An analytical briefing on the social security sector in Nepal

This brief looks at the current and future dimensions of the social security system and the preparation that is needed to better manage delivery of the entitlements and services.

More than 90 per cent of the total labour force in Nepal comprises workers and employees in unorganised and informal sectors. Unfortunately, there are no any social schemes for them.

The social insurance schemes benefit only workers in the formal sector. These include pension and gratuity benefits, the Employees’ Provident Fund and the Citizen InvestmentTrust as well as insurance for disability, maternity leave, work-related injury, sickness and survivors’ benefits. The pension and gratuity benefits and cash transfers are financed through general tax revenue.

The modest social assistance programmes that exist today include social cash transfers, in-kind transfers, primary health care and basic education. Labour market interventions include an employment programme in Karnali Zone, rural community infrastructure works, technical and vocational education training, skill and entrepreneurship development programmes, and child labour elimination and labour law reform programmes. Social security costs consume 15 per cent of the current expenditure for which funding remains a concern. Therefore, it is strongly recommended that workers and self-employed contribute to the improvement and extension of social security benefits during the period of their employment.

Until now social security schemes have been introduced one after another without any systematic policy framework. Governed by their own law, regulations, directives and guidelines, there is no systematic institutional strategy to implement and monitor them. It is hoped that passage of the proposed Labour and Social Security Bills will create the legal basis, inter alia, to implement a comprehensive social protection system for the private sector.