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A Turning Point
For a long time now, things have not been looking up. Corporate profits are declining and the market confidence is at the nadir-and even the collection of tax revenue is declining. With the economy hibernating for two years or so, there has been massive job loss. This is against the background of the rising economic growth in all Asian countries. Only Nepal has been an exception in this race to prosperity. This time around, Nepal is having not just a cyclical joblessness but permanent job destruction.
The biggest job losses, of course, have been in manufacturing where it started with the recession since 2001/2. Now it is worse. But what's different this time around? Sharply falling productivity. The example is the Biratnagar Jute Mill from where the Golchha Organisation backed out from its management recently citing labour productivity decline from 50 ton to 32 ton per day.
Unfortunately this is not an isolated case. It represents a trend of the ongoing downward spiral - productivity loss followed by profitability loss and job loss. This slide may not end soon in the context of current fluid political situation. In the months ahead, we could see a more decline in job creation as well as in productivity throughout the society. The estimated GDP growth of 2 per cent will not be able to generate enough demand for labour, including the new entrants into the job market and those laid off from dying industries.
The only ray of hope is a chance of job creation abroad. That will help the economy for the next few years but is not good for Nepal in the long term, economists point out, as it does not help in improving the domestic production and productivity.
The tide will clearly start rising once normalcy is restored, which everyone hopes will occur soon in view of the fact that the current phase of agitation seems to have come to an end. Therefore, the business sector should start working on a plan that would ensure that everyone gets into the boat. It would be prudent for the new policymakers and specially the private sector organisations to start thinking about helping people find the education and the training to start new careers. It will not only help the private sector in the short run to find skilled manpower but it will also help the economy in the long run. Otherwise, there will be a real classless society as envisaged by the Communists, meaning that the business class will be without business and it will have to join the mob on the streets because of the lack of workers needed.
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