Nepal Employment Fund – Nepal

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Context: According to the 2013 School-to-Work Transition Survey, the youth unemployment rate in Nepal for that year was at 19.2 per cent (17.1 per cent for males and 22.2 per cent for females). The share of youth neither employed nor in education/training was 11.9 per cent (7.4 per cent for young men and 17.4 per cent for young women). On average, the period needed to complete the school-to-work transition was 6.9 months for young people with secondary or tertiary education and 8.1 months for those with primary education. Mismatches between the education system and the labour market mean that unemployment in 2013 was higher among young persons with higher education: 22.9 per cent for tertiary educated youth, compared to 10.7 per cent for secondary and 10.8 per cent for primary educated youth. In that year, four in ten (40.6 per cent) of the employed youth worked as wage and salaried workers, which is the same figure as those that worked as unpaid family workers, and about 10.5 per cent were own-account workers. Half (50.2 per cent) of employed youth in 2013 were undereducated for their job, compared to a 7.8 per cent that were deemed overeducated.

Implementation of programme/ initiative: The Employment Fund (EF) was established in 2007 by the Government of Nepal, the Swiss Agency for Development and Cooperation (SDC) and HELVETAS Swiss Inter-Cooperation. EF provides training (technical, vocational and soft skills) to young people from economically poor and/or socially disadvantaged backgrounds, with the goal of facilitating their entry into gainful employment and/or in setting up their own micro-enterprises. Training is delivered by local private sector actors knowledgeable of local market needs. EF operates on an output/outcome-based financing approach. Training and Employment Service Providers (T&Es) receive payment for their services depending on their success to reach disadvantaged youth and of participants in getting gainful employment after the training. Since 2013, some EF projects have introduced cost-sharing fees for both trainers and trainees.

During its first phase (2008-2015), EF provided technical assistance to two government-run projects: 1) the Enhanced Vocational Education and Training (EVENT) and 2) the Safer Migration (SaMi) initiatives. Since 2015, EF has been implementing the Skills for Reconstruction (SfR) project, aimed at imparting owner-led house reconstruction skills to young people in districts affected by the 2015 earthquake.

EF’s budget in 2014 was 8,639,886 Swiss Francs. Funding for the second phase of EF comes from SDC, the UK Department for International Development and the World Bank.

Main challenges: T&Es and training participants have been reluctant to endorse the recent introduction of cost-sharing approaches. The introduction of a fee for skills testing in the Micro-Enterprising for Job Creation project resulted in a decline in the number of participants from disadvantaged backgrounds. Likewise, in order to build the capacity but also the cost awareness of T&Es, EF has introduced cost-sharing for some training for trainer courses. In addition, some T&Es advertize training courses as totally free, causing tensions between T&Es and trainees. In the future, training announcements will have to clearly state that participants have to pay the skill test fees.

Most T&Es are highly dependent on EF for generating revenue. Although many of them provide fee-paying courses for the public, these fees represent a small share of their revenue. Diversification of the sources of revenue of T&Es has been identified as a challenge for the long-term prospects of their training businesses.

Results achieved: The first phase of EF trained almost 100,000 youth and successfully increased their income and improved their livelihoods. Over 85 per cent of EF participants are young people from disadvantaged groups and 54 per cent are women. About 80 per cent of the young people that have undertaken EF training have found employment and 74 per cent are still gainfully employed. Two years after the training, the income of young people more than doubled on average. Despite migration to work abroad being high among Nepalese youth—1,500 are estimated to migrate daily—only 2 per cent of young people that undertake EF training leave Nepal. During the second phase of EF, the SfR project has helped young people to rebuild 4,000 houses in six districts affected by the 2015 earthquake. Since the inception of EF, 40 private companies have participated as trainers, of which 17 are currently implementing training skills under the SfR component.

Moving Forward: As EF will continue to introduce cost-sharing approaches to T&Es and trainees, it will need to ensure that fees do not exclude disadvantaged young participants and that T&Es remain viable businesses. Despite over half of EF participants being young women, they still face greater difficulties in accessing the labour market. To improve women’s employability skills, EF seeks to expand their participation in the programme through creative outreach campaigns. EF also aims for closer collaboration with the government in the provision of technical assistance for government-run projects. Partnerships with government agencies have also been identified to be important to ensure a larger outreach of training activities, particularly in geographically remote areas. As part of its SfR component, and in follow up to the reconstruction of houses in earthquake-affected districts, EF now plans to provide training in reconstruction to additional 5,000 youth over 2017.

Replicability: The successful implementation of EF across the country has set an example for other large-scale projects in Nepal on skills training and beyond. EF has been a pioneer in Nepal in the introduction of output- and outcome-based financing approaches. Its emphasis on rigorous monitoring and evaluation, continuous innovation and online information database systems has been key to its success and has been replicated by the Government of Nepal, including the Ministries of Education and Labour, where EF supports implementation of several vocational and technical training programmes.. EF openly shares lessons and insights learned from its monitoring and evaluation activities, thus facilitating replicability in Nepal and elsewhere.


Background Information on Nepal school-to-work transition: Nepal School-to-work Transition 2013 Survey (2016).—ed_emp/documents/publication/wcms_537754.pdf

Official websites of the project: and

Chakravarty, S., M. Lundberg, P. Nikolov, J. Zenker (2016) The Role of Training Programs for Youth Employment in Nepal Impact Evaluation Report on the Employment Fund. World Bank Policy Research Working Paper Number 7656.


This good practice was kindly prepared by Dr. Antonio Postigo

Nepal Employment Fund
Project Details

Date: January 26, 2017

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