ILO Calls for Nepal to Modernize Employment Services

A new ILO assessment, conducted at the request of and in close collaboration with the Ministry of Labour, Employment and Social Security (MoLESS), finds that Nepal has achieved nationwide coverage of Employment Service Centres (ESCs) but that the system is not yet delivering the full promise of modern Public Employment Services (PES).

The assessment highlights a clear gap between policy intent and day-to-day delivery: in most municipalities, ESC activities are still largely limited to supporting the "Cash for Work" component of the Prime Minister Employment Programme (PMEP), while job matching, employer services, career guidance and labour market information functions remain limited or uneven.

Key findings: employer links and digital capacity are major bottlenecks

The report Assessment of Public Employment Services and Labour Market Policies in Nepal points to weak employer engagement as a critical constraint. Survey findings show that 63 per cent of ESCs do not register job vacancies at all, and where vacancies are registered, most are from the public sector- indicating the need to build private-sector trust and services at scale.

Digital readiness is also a major gap. The assessment found that around 51 per cent of ESCs reported having no IT-based registration system; among those with a system, many described it as only partially operational.

Beyond these quantified gaps, the report documents practical barriers that limit service quality: vacant posts and limited training for staff, poor infrastructure, weak outreach and awareness, bureaucratic inefficiencies, and inadequate data management-factors that discourage both jobseekers and employers from using ESCs.

What the ILO recommends: five policy decisions to modernize PES in a federal system

The assessment concludes that Nepal's legal foundations are strong, but that performance is being held back by coordination, management, financing, capacity and digital infrastructure.

It recommends a modernization pathway centred on the following reforms:

1. Adopt a unified national PES policy framework - standardized but adaptable across all three tiers of government and mainstreamed into the National Employment Policy.
2. Strengthen governance and social dialogue, including mechanisms consistent with ILO Convention No. 88 (Article 4) to ensure employers' and workers' organizations contribute to PES operation and policy development.
3. Build employer-facing services that create trust, including an employer engagement strategy that increases vacancy transparency, supports recruitment, and aligns skills development with labour demand.
4. Create a national Labour Market Information System (LMIS) and centralized job portal linking federal, provincial and local tiers, enabling data-driven planning and performance management.

Pilot, learn and scale - the report recommends a phased, incremental modernization approach, trialling new service delivery models to prove what works before national expansion.

Speaking at the dissemination event, Numan Özcan, ILO Country Director for Nepal, said: "This assessment shows Nepal's ESC network has real potential, but it must shift from primarily delivering short-term measures to providing modern job matching and employer services, backed by strong governance and digital systems. The recommendations point to the policy decisions that can make ESCs a reliable one-stop service for citizens and employers."

Milestone for policy dialogue

The findings and recommendations were presented and discussed today at a national event hosted by MoLESS and the ILO, bringing together government counterparts, social partners and development partners. The assessment draws on broad consultation and field engagement, reflecting shared insights from institutions and stakeholders working across the PES system.

The ILO will continue supporting MoLESS and tripartite constituents to translate the recommendations into a practical reform roadmap-strengthening governance, capacity, employer partnerships and digital delivery so that ESCs can better connect Nepalis to decent work opportunities and support a more inclusive labour market.

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