The Present and Future of Gig Economy in Nepal

Introduction

The gig economy, broadly defined as short-term, flexible, and platform-mediated employment, has become an increasingly visible feature of Nepal’s labor market in recent years. Once a novelty, now, especially after technological advancements and bolstered by the COVID-19 pandemic, gig work has become mainstream in Nepal, providing an alternative to traditional employment. According to a report by the Asian Productivity Organization (APO) released in 2024, the gig economy in Nepal contributed to 7% of the country’s GDP. But what really is the gig economy?

The term ‘gig economy’ refers to jobs where people work independently through digital platforms. These platforms allow organizations to hire employees as needed or for specific projects, resulting in increased efficiency and reduced costs. This new employment framework is transforming conventional ideas of work by leveraging technology to link job seekers with employers from different regions. The gig economy is more prevalent in areas like freelancing, food delivery, medicinal home deliveries, online teaching, and ride-sharing, which provide flexible work options. As a result of rapid digital adoption, the gig economy provides social and economic impacts such as greater flexibility, improved connectivity, and easier transactions between businesses and consumers. However, these opportunities come with challenges, including job insecurity, weak legal protections, and power imbalances between workers and employers. This article explores the current landscape of Nepal’s gig economy, its pitfalls, and potential policy recommendations needed to turn short-term gigs into sustainable livelihoods.

Current Landscape in Nepal

The country’s gig ecosystem today is broad and visible in everyday life. According to the Online Labor Index, 49% of the online freelance workforce in Nepal is engaged in software and technology development services. Ride-hailing platforms, like Tootle, Pathao, InDrive, and Yango, are among the well-known enterprises in Nepal’s gig economy. According to the report published by APO in 2024, Pathao alone had been providing employment to over 200,000 individuals, including 190,000 motorbike riders, over 10,000 cab drivers, and more than 5,000 food delivery personnel. Similarly, over the last 4-5 years, Foodmandu, a leading food delivery company, has done business of over USD 5.58 million per year, contributing to the growth of gig-economy and attracting venture capitalists. In the freelancing sector, platforms such as Nepal Freelancers provide professionals with access to global markets, offering services in IT, content creation, and graphic design. Furthermore, the growth of outsourcing firms such as Leapfrog Technology, Cedar Gate Technology, and Incessant Rain Animation Studio has helped position Nepal as a rising contributor to the global gig workforce.

Why It Matters: Youth and Inclusion

The gig economy in Nepal has brought major advantages in terms of job creation and inclusion, especially for groups that often struggle to find formal employment. With its low entry barriers usually requiring only a smartphone and internet access, gig work is accessible to women, students, and individuals in rural areas. In the fiscal year 2078/79 BS (2021/22 AD), over 25% of gig workers of Nepal originated from rural areas, reflecting how digital platforms are expanding opportunities beyond Kathmandu. This has helped households raise income levels and reduce inequality, while also giving women more flexibility to balance paid work with family responsibilities.

At the same time, Nepal’s demographic dividend, which will last until 2035, has produced a large youth population seeking work. For many of these young people, the gig economy provides an easy entry point into the labor force, even without prior experience. By connecting Nepali freelancers to global platforms like Fiverr and Upwork, it allows them to earn in dollars, gain technical skills, and compete internationally, all without leaving their homes. In this way, the gig economy not only addresses youth unemployment but also integrates Nepal’s workforce into the digital economy.

The gig economy proved especially valuable during the pandemic, assisting workers in managing job losses and salary reductions. Post-pandemic, gig work has emerged as a vital labor market avenue in Nepal, with displaced workers utilizing its flexibility and income potential. The COVID-19 pandemic posed as an opportunity to the informal sector employees. This led to gig-economy holding potential as a solution to Nepal’s high youth unemployment rates.

Regulatory and Institutional Context

Most gig workers in Nepal are part of the informal economy, which employs the majority of the workforce. Unfortunately, the country’s labor laws have not kept up with this shift. Nepal currently lacks a legal definition of gig workers, leaving their employment status unclear. While labor laws protect formal employees, it is uncertain whether these protections extend to gig workers, leaving most in the informal sector without safeguards. As a result, they often miss out on basic rights such as job security, social security, or workplace benefits.

The most significant regulatory steps have come from the provinces. Gandaki Province issued Nepal’s first ride-hailing guidelines, requiring registration, insurance, and data sharing – a move seen as a milestone toward formalizing the sector. Similarly, Bagmati Province followed with its own draft. However, both faced pushback from transport groups and doubts about enforcement. On the other hand, at the federal level, the 2023 E-commerce Bill set general rules for digital platforms but left gig work unaddressed. The result is fragmented governance and an urgent need for coordination between provincial and federal authorities.

The International Labour Organization’s Decent Work Country Programme for Nepal (2023–27) sets important goals for fair and productive employment, but it does not yet address gig work. Globally, progress is faster: in 2025, the ILO committed to creating binding international standards for platform workers by 2026. For Nepal, these standards could provide a roadmap to include gig workers in national labor protections.

Challenges and Risks

While the gig economy is creating new opportunities in Nepal, workers still face serious challenges. Gig jobs often come without job security, benefits, or clear protections, leaving workers vulnerable to sudden income loss or unfair treatment. Most of Nepal’s labor laws were designed for traditional, long-term employment and do not recognize gig workers, placing them in a legal gray area and excluding them from basic protections such as social security, workplace benefits, or minimum wage guarantees. This gap is made worse by the fact that government surveys rarely capture gig employment, meaning the sector remains underrepresented in policymaking.

A second set of challenges lies in payments and taxation. For Nepali freelancers working through global platforms, receiving international payments remains a major obstacle. Services like PayPal are not available in Nepal, forcing workers to rely on expensive intermediaries or informal channels that reduce their earnings. Limited digital banking infrastructure also makes it difficult to ensure timely and secure transactions. On top of this, taxation rules for cross-border freelancing are vague, creating confusion for workers and leaving many in the informal sector despite their willingness to comply.

Social and cultural barriers further complicate participation. Women remain underrepresented in gig work due to safety concerns, household responsibilities, and persistent wage gaps. Broader cultural attitudes still privilege traditional employment or foreign migration over flexible digital work, which can undermine the acceptance of gig jobs as “real” livelihoods. Resistance also comes from traditional employers and transport cartels, who see the growth of ride-hailing and delivery platforms as a threat to their established business models and political influence. These pressures make it harder for gig work to gain legitimacy and fair regulation in Nepal.

Policy Recommendations

For the gig economy in Nepal to evolve into a sustainable and fair sector, reforms must focus on a few key priorities. First, gig workers should be formally recognized in labor law, with access to basic protections such as fair pay, dispute resolution, and coverage under social security through flexible, portable schemes. Without this recognition, the sector will remain vulnerable to exploitation and instability. Second, clear payment and taxation rules are needed, especially for freelancers earning from global platforms. Currently, limited access to systems like PayPal restricts Nepali workers from receiving timely and affordable payments.

Nepal should take insights from international best practices in regulating the gig economy. For instance, India has already recognized gig workers in its labor codes and set up a social security fund to provide benefits like health insurance and pensions. The European Union is moving toward legislation that would give gig workers the same rights as traditional employees, reflecting a commitment to fairness in the digital economy.

For Nepal, these global lessons must be adapted to local realities. Most gig workers come from the informal sector and face unstable incomes, limited payment options, and weak protections. Regulations should balance worker rights with flexibility, while investments in digital infrastructure, secure payment systems, and skill-building programs will be key to making the sector fair and sustainable.

Conclusion

Nepal’s gig economy is no longer a passing trend but a lasting part of its economic future. It offers vital opportunities for youth, women, and rural communities, while linking Nepali talent to both local and global markets. Yet without national coordination and stronger protections, the sector risks remaining fragile and inequitable. The challenge now is to preserve the flexibility that makes gig work attractive while building safeguards that ensure dignity and fairness. If policymakers act decisively, the gig economy can evolve from precarious side hustles into sustainable and respected livelihoods that strengthen Nepal’s broader economy.