Nepal is currently experiencing a remarkable demographic shift. The population of working-age individuals is rising rapidly. By 2050, the country must create 6.5 million jobs to capitalise on its demographic dividend. However, a recent World Bank report, Nurturing Nepali Talent to Foster Economic Growth, suggests that the country is not prepared to protect its people from the looming challenge. If the state does not act now, this potential will simply vanish. According to the report, Nepal’s Utilization-Adjusted Human Capital Index (UHCI) sits at 0.18, one of the lowest rates in the region. This means a child born today will likely only use 18 percent of their full productive potential when they grow up. Nepal’s talent is trapped by a lack of opportunities. Even when children go to school, they do not learn enough. A Nepali student, on average, spends 12.3 years in a classroom, but only gains the equivalent of 7.2 years of learning.

Nepal’s failure to include women in the formal economy is another old problem limiting progress. Less than one in three working-age women has a paid job. Most engage in unpaid household chores and childcare, resulting in a massive economic loss. When more than half the population is left out of the formal workforce, the economy cannot see the desired progress. Further, the labour market is dominated by an insecure informal economy. About 82 percent of workers are in the informal sector, marked by low pay and no benefits. The overall scarcity of job opportunities in turn has pushed millions of youths to leave. As a result, migration has climbed to 2.6 million people, to 8 percent of the population.

The government must rethink its public spending. Disappointingly, Nepal spends only 3.7 percent of its GDP on education and 2.1 percent on health. How can we expect a high-tech or high-growth future if we do not invest in the health and skills of our children today? The Gen Z protests were also partly against the deteriorating job market and an ailing economic model. Driven by frustrations over corruption, Gen Z-ers demanded change, not just in the political dispensation but also in the economic system. They have called for an employment-focused model that offers youths an alternative to foreign jobs.

There is a desperate need for more investment in foundational sectors like health and education. Progress also requires tackling the interlocking injustices faced by youth in Madhesh and Karnali who are excluded from growth, as highlighted in the report. There is also a strong case to be made for subsidised childcare and family-friendly workplaces in order to boost women’s participation in the economy. In fact, there is no shortage of such sensible solutions. Extending the Social Security Fund to informal workers will ensure their dignity and defence against economic shocks. More support to micro, small and medium enterprises so they can create more jobs will also work wonders.

If this gap between potential and reality of the young workforce cannot be bridged, the demographic dividend will become a demographic burden. Nepal’s youth have the potential to bring about groundbreaking change in the economy and in national development with enough state investment. On the other hand, if it fails to do so, the country will have forever lost its one-true opportunity for exponential development.