Kathmandu district has the highest labour productivity in the country with a score almost three times the national average.

According to the Nepal Human Development (HDI) Report 2014 released on Thursday, the districts of Manang, Bara, Lalitpur and Kaski are close behind Kathmandu . Manang is a mountainous district with a low density of population, and is a popular trekking destination.

The HDI report has calculated the average national labour productivity to be worth Rs 119,107. Among the country’s 75 districts, 56 districts have a labour productivity below the national average while 19 are above or equal to it.

Labour productivity in districts such as Bajhang, Bajura, Achham, Baitadi, Pyuthan, Kalikot, Darchula and Rolpa located in the Far Western and Mid-Western regions is at the bottom. The figure is less than 20 percent of the level in Kathmandu , according to the study. The report, jointly prepared by the National Planning Commission (NPC) and the United Nations Development Programme (UNDP), has determined the labour productivity by measuring the district’s gross domestic product (GDP) and counting its economically active population as of 2010-11.

The report’s lead author, economist Pitambar Sharma, said that as people in a majority of the districts were dependent on agriculture, low investment and lack of commercialization and modernization of the farm sector had resulted in low labour productivity .

 “There has been government investment of just 15 percent in the agriculture sector including agriculture infrastructure such as irrigation,” he said. “There is no productive employment opportunity in the sector which has resulted in massive under-employment.”

According to the report, despite two-thirds of the country’s labour force being dependent on agriculture, a majority of them are unskilled and lack knowledge of updated cultivation practices. As a result, labour productivity of the sector is far lower compared to the industrial and service sectors.

According to the report, the national average labour productivity in the primary sector (agriculture) is Rs 68,562 while productivity in the secondary sector which includes manufacturing, construction, electricity, gas and water is Rs 198,486. The highest labour productivity is in the service sector with an average productivity of Rs 225,684.

Higher labour productivity would mean greater potential to increase incomes, which could enhance human development through greater spending on health and education.

“The report says that when productivity is high, there is a strong possibility that poverty will decline, suggesting that labour productivity could be the cornerstone of poverty reduction efforts,” stated the report.

The report has evaluated productivity on a regional basis by dividing the country into nine economic development regions. Based on the regional perspective, the Kathmandu valley has the highest labour productivity followed by the Eastern and Central Tarai. Other regions have scored below the national average. The Mid-Western and Far Western hills rank the lowest. Other regions having a low productivity level are the Western Tarai, the Western, Mid-Western and Far Western mountain regions, the Eastern and Central Mountain regions, and the Western, Eastern and Central hill regions.

“Lower productivity is due to inadequate and poor quality physical and human capital,” said the report. “It also affirms the low capability of these regions from the standpoint of human development.”

Published on: 16 May 2014 | The Kathmandu Post