Nepal is one of the poorest countries in the world with about 42 percent of the population living below the poverty line. Approximately 80 percent of the poor work in agriculture. Many health indicators are still below standard.  There are tremendous differences in the incidence of poverty among the country's 75 districts.  Poverty is greater and more pervasive in rural areas.

Over the past 15 years, Nepal’s average economic growth rate has been 4.9 percent per year, while the population continued to grow at an annual rate of 2.5 percent.  This has resulted in an average per-capita income growth rate of only 2.4 percent per annum. Income poverty can also be attributed to low employment rates and to a deteriorating environment and natural resource base. Over the past three decades, employment has risen by less than two percent per year, much less than the yearly additions to the total labour force. This has resulted in widespread unemployment and underemployment, even among the educated, and has tended to depress real wages.

Nepal has made significant progress in promoting human development. In ten years the number of primary and secondary schools has increased by 57 percent and the adult literacy rate has significantly risen. The infant mortality has dropped from 102 per thousand in 1990 to 64 in 2000, and more people now have access to health services today than they did a decade ago, with the number of health workers almost tripling in ten years. During the past decade, the road network more than doubled and almost 7 million people were given access to piped water.  The average life expectancy also increased during this period

Gender disparities still persist, such as in education. Nepal has one of the world’s highest differences in the proportion of girls to boys in primary school. Out of a total net enrolment rate of 70 percent, female enrolment stands at 60 percent and male enrolment at 79 percent.

In May 2000, His Majesty the King formally appointed the Chairperson and four members of the National Human Rights Commission.

The Ninth Plan (1997-2002) adopted poverty alleviation as its long-term objective and has targeted a reduction in the percentage of population living below the poverty line to 32 percent by the end of the Plan period and to 10 percent by 2017 AD.

More recently, HMG/N presented an even more comprehensive Reform Agenda for Poverty Reduction at the Nepal Development Forum held in Paris in April 2000.  It proposes a three-pronged strategy to reduce poverty:

• Creation of more opportunities and access to productive assets for the poor by fostering an enabling environment that promotes growth, employment and income;

• Ensuring effective delivery of the basic goods and services like education, health and drinking water to meet the basic needs of the poor;

• Design and implemention of targeted programs for the development of special areas, regions, communities and social groups that desperately seek support and services to meet their basic human needs.

Nepal’s economic reforms began in the 1980s and intensified in the 1990s. With support from the IMF’s Enhanced Structural Adjustment Facility, the Government began deregulating prices and exchange rates, liberalizing trade, encouraging foreign investment and supporting privatization. The Government is presently preparing a Poverty Reduction Strategy Paper (PRSP) and an interim PRSP has been discussed with the donors several times.

The Local Self-Governance Act passed in 1999 has created the legal basis for decentralization of planning to locally elected authorities and substantially decentralized power and responsibility to district, town and village level authorities.

Several sectoral policies have been designed to support the long-term goal of the Ninth Plan.  HMG/N has formulated a 20-year strategy for accelerated development of agriculture in Nepal, known as the Agriculture Perspective Plan (APP).

In the health sector, the Second Long Term Health Plan (1997) has been developed to guide the vision of a health system.

14 percent of the national budget is currently devoted to education, almost half of which goes to basic and primary education. In order to achieve the goals of the Education For All conference, HMG/N launched a five-year Basic and Primary Education Project (BPEP) in 1992. With joint funding from the Government, the World Bank, DANIDA, JICA and UNICEF, this programme drew on experiences from previous projects and focused on increasing access to primary schooling in 40 districts through an ambitious school mapping and construction programme. By 1997, the project had constructed over 12,000 classrooms and repaired some 4,000 others, meaning that over 65 percent of all children were now within a 45-minute walk of a primary school. HMG/N recently finalised a $106 million Basic and Primary Education Sub-Sector Master Plan, 1999-2004.  This programme, an extension of the first BPEP, is presently the largest social sector programme in the country and utilizes a 'basket approach' to fund activities focusing on increasing girls' access to education, improving quality and improving technical and institutional capacities.

On 17 July 2000, the Government of Nepal declared the Kamaiya (bonded labour) free from bondage and declared all private inheritance of debt as illegal.  In addition, HMG/Nepal also decided to forgive all current loans of the Kamaiya outstanding with landowners and declared it void (whether written or unwritten).  The Government had decided to bring a bill to prohibit such practices during next session of the Parliament.

The ruling Nepali Congress Party presently forms a government headed by the Prime Minister Mr. Girija Prasad Koirala. Mr. Palten Gurung is the Minister for Labour and Transport Management. The two ministeries were merged in April 2000. The ILO is working closely with the Ministry of Labour & Transport Management, Ministry of Land Reform & Management, Ministry of Children, Women & Social Welfare and the National Planning Commission and the other line Ministries, Departments and government institutions.

- The President of Nepal Trade Union Congress (NTUC) Mr. Laxman Basnet is a Deputy Member of the Governing Body of the ILO. The Prime Minister of Nepal was one of the founding members of the NTUC.

The Federation of Nepalese Chambers of Commerce and Industries (FNCCI), established in 1965, remains the major organization of employers in Nepal. It has a network of 68 District Chambers, 41 Commodity Associations, 277 leading industrial, commercial and financial undertakings in public and private sectors as well as five Bi-national Chambers.

In principle, Nepal grants full rights to its workers. The nation has ratified four of the eight fundamental ILO human rights conventions: on organisation and collective bargaining (98), on equal remuneration (100), on discrimination (111) and on minimum age (138).

 Furthermore, the Government is taking the initiatives to ratify the remaining four ILO core conventions: on freedom of association (87), on forced labour (29), on abolition of forced labour (105) and on the abolition of the worst forms of child labour (182). 

On 17 August 2000, the Cabinet approved to place C. 29 and C. 182 before the Parliament for ratification. 

In addition to the above core conventions, Nepal has ratified Convention No. 14 on weekly rest, Convention No.131 on minimum wage and Convention No.144 on tripartite consultation.

The ILO has been providing technical assistance to assist the national initiatives in the fields such as entrepreneurship development; empowerment of women; employment of youth and women; occupational safety heath; industrial relations; control of trafficking of women and children. Similarly, ILO has been providing technical assistance to the Ministry of Labour and the Ministry of Land Reform & Management to bring the freed bonded labourers into the mainstream of national development. Presently an exercise is underway to develop a Time-Bound-Programme to Eliminate the Worst Forms of Child Labour by 2005 and all forms of child labour by 2010. The ILO-IPEC has been providing assistance to the Ministry of Labour in the preparation of a comprehensive master plan of action in this regard.