Cracks in the job programme

The Prime Minister Employment Programme (PMEP) launched in February 2019 with the aim of creating a minimum of 100 days of employment for 5 million beneficiaries in a single fiscal year. The flagship programme would create jobs for the 18 to 59 age group by tapping into the prospect of involving them in public infrastructure projects in various capacities. Employment Information Centres were established across all 753 local units and tasked with enrolling beneficiaries under the programme. Additionally, an overarching goal was set to mitigate the gaps in demand and supply of labour at all three levels of government as well as curb migration of labourers by creating a mechanism that would involve private, co-operative and non-governmental actors. Under the same programme, willing entrepreneurs were eligible for loans at a subsidised rate to start a venture that matched their skills and

In May 2019, only weeks after the announcement of the PMEP, the target for that particular fiscal year was revised downwards to 30 days of employment from 100 days. According to the Ministry of Labour, Employment and Social Security, 175,909 applicants from 599 local units were employed for 13 days on average in the first year. The government spent Rs2.36 billion to implement the programme in the fiscal year 2018-19. An additional budget of Rs5.6 billion was provisioned to help the programme achieve its target of creating 200,000 jobs.

In the fiscal year 2019-20, the PMEP was able to register 743,081 unemployed workers, out of which more than 99 percent were yet to get jobs. Under the Right to Employment Act, a registered worker who has not been employed for a minimum of 100 days in one fiscal year is eligible to receive a sustenance allowance equivalent to 50 percent of the minimum wage for the remainder of the period. In 2019, the government decided to accept a soft loan of Rs13.6 billion from the International Development Association to the dismay of labour experts who believed the programme failed to create assets and was a distributive effort. The Office of the Auditor General called the programme ‘unproductive’ in its 57th annual report, and cautioned that its vision of alleviating poverty and institutionalising a sustainable social security net needed serious exploration.

These observations accentuate the fault lines that the government failed to see from the very beginning. One can argue that the scheme was merely a populist measure for the government based on the decision to rely heavily upon a distributive model under the shroud of creating meaningful job opportunities. But there’s no harm if such a populist model, as such, works, for once.

What went wrong?

The PMEP has a fundamental bearing on the ability of provincial/local governments to realise infrastructural projects at a time when the other tier of government is yet to have the institutional capacity to envision development projects. These projects should fall within the 13 sectors as identified in the PMEP Directive 2018. Clause 19 (2) of the PMEP Directive also binds the Government of Nepal, provincial/local governments and the concerned ministries to create room for manual labourers instead of using machinery for projects costing less than Rs10 million. Clause 65 maintains that a portion of the capital expenditure assigned for a project must be allocated for job creation at the local level. The provision intended to target job creation at the grassroots level, in hindsight, also acted as a constraint for parallel tiers of government in terms of allowing them to exercise control over customising their priorities.

Furthermore, the scheme failed to conceptualise and enact an incentive system for the private, co-operative and non-governmental actors to remain committed to the scheme. These actors were brought on board to assist capacity building and facilitate transition via mentorship/traineeship programmes. However, with a limited role and little to no incentive, except for a promise of financial reward, these actors seem unwilling to engage. As per the official data available on the official portal of the PMEP, 145 unemployed workers have been trained so far.

The scheme has also fallen victim to the centre’s vision that has been plagued with cases of misplaced priorities since the Oli government took the reins. While it is important to note that the government did show some resolve in endorsing an ambitious scheme that sought to absorb domestic unemployment, it is vital to note that the employment created is terminal. A better option would have been to create and sustain employment with a smaller target in mind instead of going the other way around. A majority of beneficiaries of the scheme have been daily wage earners from a marginalised background. This eliminates or diminishes the possibility for semi-skilled and trained labourers to benefit from the scheme. If the focus is realigned, the programme could, in phases, cater to unemployed workers with various skill levels.

Way forward

The PMEP uses income level as a targeting mechanism; however, the distributive nature of cash transfer means there’s a greater incentive among the mass to fraudulently claim the benefits. Designers of such programmes often face the ‘targeting trade-off’ dilemma—maximising vertical efficiency (targeting a particular segment in need) against horizontal efficiency (aiming for widespread coverage). From an administrative standpoint, if the cost of implementation in reaching the target group increases, it reduces the programme’s resources. On the other hand, if optimum coverage is aimed (by applying labour-intensive rather than labour-based methods), it will compromise targeting accuracy.

The PMEP seems to fail on both these fronts. One way to deal with this is to ensure that local actors are involved in framing an implementation framework that reduces administrative overhead, distributes job roles of institutions (both private and non-governmental), and builds ownership at the grassroots level. Another way is to utilise the reach of existing programmes like the Youth and Small Entrepreneur Self-Employment Fund, operated by the Ministry of Cooperatives and Poverty Alleviation, aimed at providing subsidised loans to unemployed individuals aged 18 to 50. The programme relied on the existing networks of banks and financial institutions to channel loans, thus reducing overheads, and utilised credit assessment criteria that were already in place, thus correcting the problems with targeting.

This article was originally published in The Kathmandu Post by Navneet Jha on January 24, 2020.