Nepal’s Employment Service Network Falls Short of Modern Job-Matching Promise, ILO Finds

Nepal has successfully established nationwide coverage of Employment Service Centres (ESCs)—but the system is still falling short of delivering the core functions of a modern, digitally enabled Public Employment Service (PES), according to a new International Labour Organization (ILO) assessment released in collaboration with the Ministry of Labour, Employment and Social Security (MoLESS).

The assessment, conducted at the Government of Nepal's request, identifies a persistent gap between policy ambition and frontline service delivery. While ESCs now operate in municipalities across the country, most remain narrowly focused on administering the "Cash for Work" component of the Prime Minister Employment Programme (PMEP), with limited capacity for job matching, employer services, career guidance, or labour market analytics.

"This network has real potential," said Numan Özcan, ILO Country Director for Nepal, at the national dissemination event. "But to become a reliable one-stop service for citizens and employers, ESCs must move beyond short-term employment measures and invest in governance, digital systems, and employer partnerships."

Employer Trust and Digital Capacity: The Critical Bottlenecks

The report—Assessment of Public Employment Services and Labour Market Policies in Nepal—highlights weak employer engagement as one of the system's most pressing constraints.

Survey data shows that 63 per cent of ESCs do not register job vacancies at all, and where vacancies are registered, they are overwhelmingly from the public sector. This imbalance underscores the need to build private-sector trust and employer-facing services at scale.

Digital readiness presents an equally stark challenge. The assessment found that 51 per cent of ESCs have no IT-based registration system, while many of those that do report platforms that are only partially functional—severely limiting service quality, data reliability, and performance monitoring.

The report also documents structural barriers affecting daily operations, including staff shortages, limited training, inadequate infrastructure, weak outreach, bureaucratic inefficiencies, and fragmented data management—factors that discourage both jobseekers and employers from engaging with the system.

Five Policy Decisions to Modernise Public Employment Services

While Nepal's legal and institutional foundations are assessed as broadly sound, the ILO concludes that coordination, financing, capacity, and digital infrastructure gaps are holding back performance—particularly in a federal governance context.

To address this, the report recommends a phased modernisation pathway anchored in five key reforms:

• Adopt a unified national PES policy framework, standardised yet adaptable across federal, provincial, and local levels, and integrated into the National Employment Policy

• Strengthen governance and social dialogue, in line with ILO Convention No. 88, ensuring employers' and workers' organisations play a formal role in PES design and oversight

• Build employer-centric services, including a national employer engagement strategy to improve vacancy registration, recruitment support, and skills alignment

• Develop a national Labour Market Information System (LMIS) and a centralised digital job portal linking all levels of government to enable data-driven planning and accountability

• Pilot, learn, and scale, using incremental reforms and tested service models before nationwide rollout

Development partners welcomed the findings, with World Bank Nepal and others urging swift implementation to unlock the system's full potential.

A Turning Point for Labour Market Reform

The findings were presented at a national policy dialogue hosted by MoLESS and the ILO, bringing together government officials, social partners, and development agencies.

Dr Dipak Kafle, Secretary at MoLESS, said the assessment would serve as a practical guideline for reform, while senior officials confirmed that a national PES policy framework and supporting documents will be developed based on the report's recommendations.

The assessment was conducted under the ILO's Strengthening of Employment Service Centres in Nepal (SESC) project, implemented with MoLESS and supported by the Swiss Agency for Development and Cooperation (SDC).

As Nepal seeks to transition from fragmented employment support to a modern, digital, and employer-responsive labour market system, the report positions ESC reform as a critical lever—linking decent work, inclusive growth, and evidence-based policymaking.