Nepal’s Parental Leave System: Barriers and Opportunities for Working Parents

The study highlights the gap between Nepal’s parental benefit laws and their real-world implementation, particularly for informal workers and working mothers. Stronger enforcement, increased social security coverage, and better workplace policies are needed to promote gender equality and economic inclusion.

A study conducted by the World Bank and supported by the Rapid Social Response program examines the coverage and implementation of parental benefits in Nepal. Authored by Ambika Sharma and Himanshi Jain, the study highlights the disparities between Nepal's labor laws and their practical application, particularly in the areas of maternity and paternity leave, income replacement, medical benefits, workplace protections, and childcare provisions. Despite making up nearly half of the working-age population, women have significantly lower labor force participation rates, mainly due to childcare responsibilities. Nepal's labor laws provide for 98 days of maternity leave and 15 days of paternity leave for formal sector employees. Employers are responsible for paying for the first 60 days of maternity leave, while the remaining 38 days are partially covered by the government's Social Security Fund (SSF). However, gaps in enforcement, lack of awareness, and limited access to benefits have left many workers unable to claim their rights.

Limited Access to Parental Benefits in the Formal Sector

Among formally employed parents, 68 percent took parental leave, with women taking an average of 76 days and men only 11 days. While most formal workers receive some form of income replacement during leave, broader provisions such as employer-provided childcare and breastfeeding spaces remain largely unavailable. Only half of formal sector workers are enrolled in SSF, which limits their ability to access maternity and medical benefits. Although most employers comply with the law by providing the minimum leave duration, workers struggle to receive additional benefits promised under SSF due to lack of awareness and low enrollment. Workplace protections remain weak, with only 18 percent of formally employed mothers having access to a breastfeeding space, and just 2.35 percent of parents in firms with over 50 employees reporting access to employer-provided childcare—despite legal mandates. This highlights the urgent need for better implementation and enforcement of labor laws.

The Informal Sector Faces Even Greater Challenges

The situation is even more challenging for informal sector workers, who form the majority of Nepal's workforce. Before the introduction of the voluntary SSF scheme in 2023, informal workers had no structured parental benefits. Consequently, only 35 percent of informal sector parents took any leave at childbirth, with 28 percent having to borrow money to cover medical and childcare expenses. Lacking employer-backed leave or financial support, informal workers relied on personal savings (67 percent), spousal income (61 percent), or financial assistance from family and friends (21 percent). Only 6 percent of informal sector parents received any formal cash benefit from government programs, underscoring the absence of financial security for working parents. Despite these hardships, the voluntary SSF scheme, which aims to extend social security to informal workers, remains underutilized. At the time of the study, only 9 percent of informal workers were aware of the scheme, and only 47 percent expressed willingness to contribute NPR 1,000 per month—close to the required contribution amount after government-matching subsidies.

Employment and Parenthood: A Gendered Divide

Women's employment decisions in Nepal are significantly influenced by childbirth, whereas men's employment trajectories remain largely unchanged. Before childbirth, 92 percent of formally employed men were in a paying job, compared to only 47 percent of women. In the informal sector, 97 percent of men were employed before their child's birth, compared to just 43 percent of women. After becoming mothers, many women left full-time jobs to become self-employed, seeking flexibility to balance childcare responsibilities. In contrast, fathers were more likely to switch jobs for better pay rather than adjust their careers based on family needs. Fathers spent an average of 56 hours per week on paid work, while mothers spent 49 hours on paid work and an additional 54 hours on childcare. The research also found that 55 percent of mothers were not working before the birth of their youngest child but entered employment afterward, compared to only 6 percent of fathers. This gender gap in labor market participation highlights the urgent need for policies that encourage shared childcare responsibilities, particularly through better paternity leave policies.

Shifting Social Norms and Strengthening Policies

Since Nepal's labor reforms in 2018, which increased maternity leave from 52 to 98 days and introduced 15 days of paternity leave, parental leave uptake has improved, particularly among fathers. Among formally employed fathers, 64 percent took paternity leave after 2018, compared to only 39 percent before the reform. However, despite the extended maternity leave, the actual number of leave days taken by mothers declined slightly, suggesting that workplace or financial pressures might prevent women from fully utilizing their entitlements. Public perception strongly supports parental benefits, with 98 percent of respondents believing that the government and employers should provide support. Yet, women were more likely than men to view existing leave policies as insufficient. While 68 percent of respondents felt that 98 days of maternity leave were adequate, only 66 percent of women agreed, compared to 76 percent of men. Similarly, 58 percent of respondents felt that 15 days of paternity leave was sufficient, but women were less likely than men to be satisfied with this duration. Among those who considered leave policies inadequate, the ideal duration suggested was 161 days for maternity leave and 36 days for paternity leave.

The findings emphasize the need for stronger enforcement of labor laws, particularly in ensuring that all workers both formal and informal can access social security benefits. Increasing SSF enrollment, especially among informal workers, will be key to expanding parental benefits. Employers must be held accountable for compliance with workplace provisions like childcare centers and breastfeeding spaces, which are currently lacking. Encouraging greater paternity leave uptake can also help shift social norms around caregiving, reducing the disproportionate burden placed on women. Ultimately, a more inclusive and well-enforced parental benefits system will support both economic growth and gender equality, creating a fairer labor market for all.