Women seek new ways to support themselves and their families. Despite their important roles, they often face discrimination and unequal pay.
Introduction
In the midst of the dominant formal economy, the often neglected informal sector exerts considerable influence, with women playing essential roles within its complex network of livelihoods. Nepal’s informal economy is estimated to contribute approximately NPR 2.2 trillion annually out of the country’s total economy of NPR 5.381 trillion which is 42.66% of the Gross Domestic Product (GDP). Out of the total employed population of 7.1 million people, approximately 84.6 percent (6 million) are involved in informal work. A significant portion, 90.5 percent, of women workers in Nepal are engaged in informal employment.
Changes like technological advancements, global debt, shifts in trade terms, growing income gaps, land ownership changes, environmental decline, higher divorce rates, population growth, and migration have weakened old support systems. This forces women to seek new ways to support themselves and their families. Despite their important roles, women often face discrimination and unequal pay and are often found in low-paying jobs with limited access to money, technology, and training.
Types of informal work
The types of work women informal workers get associated are agriculture, tea plantations, garment, domestic, service, beedi making, street vendors and home based workers/self employed. The agricultural sector exhibits the highest level of informality with 97% of workers employed informally and women representing the predominant segment of informal labor. Women working in garment factories come from diverse age groups, many migrate to urban areas for employment opportunities in the garment sector, though they are typically assigned low-skilled tasks like sewing labels or cutting threads. Supervisory positions are usually held by male workers.
Around 500,000 women are self-employed in micro and medium-level enterprises. However, most training for women focuses on traditional skills like tailoring and cooking, mainly for home-based businesses. Small-scale and informal enterprises make up 77% of the economy. The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) officials estimate that there are only about 3,000 registered businesses run by women. The government is providing incentives such as subsidies and tax rebates for women entrepreneurs, including a 50% tax rebate according to officials at the Nepal Chamber of Commerce. Surprisingly, despite these facilities being available, many women are still unaware of them.
Women home based workers are involved in key export industries like textiles, garments, footwear, and handicrafts. Women use their traditional skills and local resources but their contributions often go unnoticed by organizations and industries. There are two main types of home-based workers: piece-rate workers and own-account workers. Piece-rate workers often encounter issues such as exploitation, low pay, insecurity due to lack of stable contracts, deception by middlemen, and working in unsafe or unhealthy conditions. On the other hand, self-employed individuals face challenges like limited market access and competition, difficulty in obtaining raw materials, lack of financial resources, and outdated production technology.
Gaps and Challenges
Women Informal workers lack basic rights, social security and economic safety nets. They often struggle to find decent job opportunities which results in poverty, high unemployment, illiteracy and unequal distribution of development benefits. Mostly, women face harsh conditions: long hours, inadequate laws, and low wages that risk their safety. This imbalance between work and family responsibilities reduces productivity. Women’s involvement in male-dominated roles and decision-making has declined. They often do not get the benefits they need and are not safe at work. Research from the Centre for Social Change (CSS) shows that these women deal with unfair pay, discrimination, harassment, and unpaid work.
Groups vulnerable within current socio-economic conditions include those disadvantaged by caste and religious discrimination, along with class-based disparities. Many people faced criticism from their community for engaging in activities deemed inappropriate for their caste, like tailoring, which is seen as low-caste work.
Additionally, women street vendors, Nangla Pasales vendors, low-income jobs, women with disabilities, as well as victims of prostitution and human trafficking, are among those at risk. This includes all women members of the Dalit community. They’re also at risk of Gender-Based Violence (GBV), with 66.5% of women in informal jobs in Nepal vulnerable to violence and exploitation, according to CARE Nepal. Even though there are laws like the Sexual Harassment (Elimination) at Workplace Act, 2015, they do not cover violence in informal workplaces.
Women face barriers when it comes to formalizing their work and ventures. Lack of education about the formalization process and the necessary documentation can be significant obstacles. Additionally, factors such as limited access to loans, fear of penalties, and the complexities surrounding VAT and tax requirements can further deter women from formalizing their businesses.
The involvement of women in the trade union movement still falls short. At the leadership level across all Confederations which are, General Federation of Nepalese Trade Unions (GEFONT), Nepal Trade Union Congress (NTUC) and Democratic Confederation of Nepalese Trade Unions (DECONT) , women only make up 12.6%, and in national affiliates, their representation stands at 11.95%. While there has been an increase in women’s participation compared to previous times, achieving equal representation remains a distant goal.
Path towards Formalization
The informal economy significantly affects economic and social development, national accounts, and public finance. It creates market distortions, causing unequal production between formal and informal sectors. This leads to inaccuracies in economic indicators. Additionally, policymakers may make decisions based on flawed information, reducing the efficiency of public policies.
Moving toward formal standards for informal workers means they will have to follow rules that come with both responsibilities and benefits. This shift will help them contribute to taxes and the economy, while also providing access to protection and insurance. The International Labour Organization (ILO) adopted a recommendation in 2015 to help transition informal workers from the informal to the formal economy, aiming to create better jobs and prevent job informality. However, solutions need to be tailored to different contexts and stakeholders, as what works in one place may not work in another. International Labor Organization (ILO) in Nepal focuses to promote social protection and labor rights by implementing sustainable social security schemes and enhancing minimum wage and care policies. A significant aspect of their work involves assisting individuals in transitioning from informal employment to formal employment.
Informal sector needs proper laws. Trade unions could emphasize on gender sensitive leadership as well as in union policies and programs. The focus needs to be on women’s development, leadership cultivation and sustaining women’s involvement in the union movement. The informal economy’s success relies on meeting workers’ needs and collaborating with similar businesses for production and sales. Close ties to society and local governance could help spread job opportunities more fairly. Providing access to microloans or grants specifically designed for women entrepreneurs to help them overcome financial barriers associated with formalization. Working with government agencies to simplify the formalization process, reduce bureaucratic hurdles, and make it more accessible to women with limited resources or education. Launching awareness campaigns to educate women about the benefits of formalizing their businesses, including access to financial services, legal protections, and opportunities for growth is necessary.
Regina Khanal works as an intern at Nepal Economic Forum (NEF). She holds a bachelor's degree in Business administration (with specialization in international business and digital marketing). Her interests range from academia to social work. She aspires to excel in economic domains that actively contribute to the welfare of the community, driven by her keen interest in economics.