The Day the Workers Started Walking Home
May 13, 2020
Nepal’s 2015 earthquake took 9,000 lives in seconds. But beyond the immediate tragedy, the earthquake treated the economy rather gently. Yes, GDP growth in 2015–16 fell hard, to less than 1 percent, but in the next three years Nepal grew almost 7 percent per year. This year, too, Nepal was poised to exceed 6 percent. Minimum wages were going up, human development indicators were improving, and the incidence of poverty was decreasing. Then Covid-19 happened. The coronavirus has not yet caused any deaths in Nepal, but in less than 45 days the damage to the economy has been deep and growing deeper.
The coronavirus has not yet caused any deaths in Nepal, but in less than 45 days the damage to the economy has been deep and growing deeper.
The government ordered a lockdown, beginning at 6:00 a.m. on March 24, essentially banning all movements of citizens except to purchase food and other essentials. That left more than 4 million daily-wage workers and their employers with a single day to plan their next move. In those 24 hours, close to 200,000 domestic migrant workers left Kathmandu and surrounding areas for their homes elsewhere in Nepal. Weeks into the repeatedly extended lockdown, this movement could not be halted. As late as April 23, newspaper reports of migrant workers walking home were still pouring in from different parts of the country.
There were two main drivers of this exodus. First, fear of the epidemic itself—by the time the lockdown began, television screens and social media were abuzz with images of death and chaos from China, Italy, Spain, and New York City. The government of Nepal, for its part, never mounted an effective public information campaign to explain who was at greater risk and who was not, or how the disease would affect healthy, young adults—the main demographic in the daily-wage workforce. Workers were barraged with calls from their family and friends urging them to come home. Fear of disease and death and longing for the comfort of their families filled the minds of workers, who suddenly dropped what they were doing and started walking.
Fear of disease and death and longing for the comfort of their families filled the minds of workers, who suddenly dropped what they were doing and started walking.
A second driver of the mass exodus was uncertainty about when the epidemic would end. The initial lockdown was for seven days, with no guidance as to what would follow. Some workers nonetheless chose to hang back, even as the lockdown began on March 24. But that very evening, when India announced its own three-week lockdown, it became clear to both workers and their employers that the lockdown might not end soon. Many workers were trapped by this confusion. When they did start to walk home, the government chose to brutally clamp down on the walkers instead of facilitating their safe passage. Harassed by the police, stigmatized by communities along the way, and short of food and water, thousands have now reached the safety of their homes.
Four sectors of the economy generate most of the jobs for Nepal’s 4.4 million daily-wage workers: tourism, transportation, construction, and wholesale and retail. In a recent revision of the national accounts by the Central Bureau of Statistics, all four sectors were judged likely to contract this year, with tourism, in the lead, falling by as much as 16 percent. It is unlikely that Nepal’s tourism sector will pick up steam again before a reliable vaccine comes along. With tourism facing a long-term recession, demand in all other sectors has dipped precipitously. Only the construction sector, with 1.4 million daily-wage workers, can be revived through fiscal stimulus. All other sectors rely heavily on external rather than internal economic drivers. The revival of the construction sector, therefore, is the key to economic stability in Nepal going forward.
A brand new study by The Asia Foundation for the World Bank in Nepal identified five conditions for the revival of the construction sector. First, the government must be able to contain the pandemic when the lockdown eases—an event currently scheduled for May 18—and international borders reopen for traffic. Second, social restrictions must relax enough to restore the construction supply chain within two to four weeks after the lockdown ends. Third, the government must act decisively to forestall the contractual disputes that will certainly arise from the sudden disruption in construction, so that economic activity in the sector can recover. Fourth, the relief and welfare system must prevent widespread hunger and rural distress. And fifth, the FY 2021 budget must significantly increase allocations to the construction sector.
The uncertainties surrounding the pandemic will make it difficult to meet all five of these challenges in a timely manner, yet failing to do so could completely reverse the gains of the last four years, particularly on the poverty front. For Nepal’s poor, the sudden loss of 1.4 million low-threshold, informal jobs in the construction sector, compounding the losses in tourism, transportation, and wholesale and retail, would be devastating. For the 18 percent of Nepalis who already lived under the poverty line, the post-Covid-19 picture looks particularly grim.
Only the construction sector, with 1.4 million daily-wage workers, can be revived through fiscal stimulus. All other sectors rely heavily on external rather than internal economic drivers.
The report also points to three political developments in Nepal’s Covid-19 response that may have longer-term consequences for the country. First, in response to the crisis, the government has rapidly centralized all decision-making powers. A high-level committee headed by the deputy prime minister with a few senior ministers has now assumed all responsibilities for pandemic response. This has severely undercut the ability of Nepal’s provincial and local governments to address local problems as they arise. This centralized decision-making is bound to create inefficiencies when Nepal begins opening up.
Second, there appears to be a general apathy among decision-makers in Kathmandu towards the plight of the poor. The “one-week” lockdown has now lasted for 50 days and counting, and it has wiped out over 90 percent of informal, daily-wage jobs. Yet even a moderate easing of the lockdown doesn’t seem to be forthcoming, despite the fact that Nepal has had fewer than 100 cases of Covid-19 and has no functioning welfare system to speak of. For the poorest households, informal, daily-wage jobs are a vital source of income during household crises. Women escaping abusive men, farmers seeking some extra cash to buy fertilizer, single mothers working a few days a month to feed their children—all such possibilities have now been shut out. This will drive many more households back into poverty.
Third, the political will to combat the stigma of infection and misinformation has been missing. Newspapers have reported villagers blocking roads and bridges to prevent migrants from returning to their villages. When a cluster of 23 new cases of the disease was identified in the western town of Nepalgunj, small neighborhoods took matters into their own hands and started building barricades and forming vigilante groups. The local administration tried to contain such reactions, but with limited success, and it has become clear that without serious political messaging these tendencies will not be curbed. If fear and stigma spread unchecked, it will be even more difficult to resume economic activities when the pandemic diminishes.
Nepal’s economic woes are not unique among low-income countries, but the nation does have its own social and political context, within which the actions and attitudes of political leadership, the choice of infection-control measures, and the efficiency of the mechanisms of government will have an outsized impact on its progress out of poverty. To all appearances, Nepal has already lost precious ground in its ability to protect the poor. From this point on, each mistake is likely to be costlier than the one before.
The new Asia Foundation / World Bank report, The Impact of Covid-19 Lockdown on Nepal’s Construction Sector: A Rapid Assessment, is available now.
Sagar Prasai is a senior advisor to The Asia Foundation and formerly the Foundation’s country representative in India and deputy country representative in Nepal. He can be reached at firstname.lastname@example.org. The views and opinions expressed here are those of the author, not those of The Asia Foundation.
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