KATHMANDU, Jan 13: Despite Nepal’s large working-age population, government data reveals a troubling reality: youth unemployment is high, and labor force participation remains low.
A report on Nepal’s National Transfer Accounts (NTA), released by the National Statistics Office (NSO), shows that the country’s total consumption significantly exceeds labor income. According to the report, youth unemployment stands at 12.7 percent, while only 38.5 percent of the labor force is actively participating. Analysis of fiscal year 2078/79 BS data indicates a staggering “life-cycle deficit” of roughly Rs 1,517 billion.
NSO spokesperson Dhundi Raj Lamichhane said the report presents a clear picture of Nepal’s labor market and economic balance. “Consumption exceeds labor income, highlighting a major imbalance between earnings and spending. This is what we call the life-cycle deficit,” he explained.
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The 2078 BS National Census shows that about 65 percent of Nepal’s population falls within the working-age group (15–64 years), offering the country a “demographic dividend”—a golden opportunity for economic growth. Yet, the NTA analysis indicates that this potential is not being fully harnessed. Low labor force participation and high unemployment threaten to turn this demographic advantage into a liability.
The report’s age-specific analysis reveals a striking trend: Nepalese save or generate more income than they consume for only about 20 years of their lives. Only the 27–46 age group shows “life-cycle savings,” earning more than they spend. Lamichhane added, “For children and youth up to 26, and for those over 47, consumption exceeds labor income, creating a life-cycle deficit. The highest per capita deficit is seen among older age groups.”
In practical terms, this means people under 26 remain economically dependent, while after 47, expenses again surpass income, increasing economic reliance. This limited span of productive earning puts pressure on the state’s social security system and long-term economic stability.
Speaking at the report’s launch, Finance Minister Rameshore Khanal called 12.7 percent youth unemployment a “serious challenge” for the state. “About 65 percent of Nepal’s population is of working age, offering real economic potential. But we need targeted, effective policy reforms to capitalize on this,” he said.
Minister Khanal warned that labor force participation is projected to decline sharply after 2104 BS, urging early measures. He emphasized the government’s commitment to strengthening health expenditure management and social protection for the elderly. “Creating productive employment, developing skills, and making full use of the working-age population is now a top priority for the state,” he added.
The report also reveals trends in education and health spending. In education, private household spending exceeds public investment, suggesting rising costs or growing reliance on private funding. Conversely, public spending dominates in the health sector across all age groups, highlighting the need for increased government investment in education to develop human capital.
The NTA framework, globally recognized for analyzing economic flows across age groups, was first launched in 2002 in countries including the United States, Japan, Brazil, and France. By 2013, the UN had developed official NTA guidelines. Currently, 101 countries participate in the NTA network, including SAARC nations such as Bangladesh, India, Pakistan, Sri Lanka, and the Maldives.
Lamichhane noted that Nepal is applying this framework for the first time to examine real economic conditions and intergenerational economic relationships. Supported by the UN Population Fund, the report is expected to guide evidence-based policymaking in education, health, employment, social security, and long-term financial sustainability.
