Kathmandu: The impacts of a significant chunk of the informal economy have been witnessed in the labour market, resulting in a legal gap between employees and employers, stakeholders argued at a programme in the Capital City today. At a programme on ‘Importance and Progress on Formalization of Economy in Nepal’s Context’ organized by the Federation of Nepalese Chambers of Commerce and Industries (FNCCI), the speakers highlighted that the increased size of the informal economy has impacted production, the labour market, and revenue collection.
According to National News Agency Nepal, President of FNCCI Chandra Prasad Dhakal emphasized the importance of maintaining healthy labour relations, asserting that the formalization of business, industry, and service sectors is crucial. Dhakal argued that a formal economy also promotes workers’ welfare, and he noted that production and revenue collection have been affected by the rise of the informal economy. “Our competitive capacity will rise if the informal economy is made formal,” Dhakal added.
Former secretary Mahesh Dahal pointed out that the informal economy poses a serious challenge in developing and under-developed countries. He stated that several laws, including the Labour Act, Trade Union Act, and Bonus Act, are not implemented for workers in the informal sector.
Joint Secretary of the Ministry of Labour, Employment and Social Security, Pradip Kumar Koirala, admitted that workers from the informal sector could not be brought under the scope of social security, and home-based workers could not be integrated into the formal channel. Koirala noted that employers in the informal sector are often unidentifiable, adding to the challenges of the formalization process.
Stakeholders suggested that labour in the informal sector should gradually transition into the formal sector, with the details of labourers being updated to ensure their rights to social security. A study from Tribhuvan University claims that the informal sector currently represents 42 percent of Nepal’s economy.