Registered Businesses, Unprotected Workers: ILO Exposes Nepal's Transport Job Crisis

A new policy brief from the International Labour Organization (ILO) highlights serious concerns about employment conditions in an industry that plays an essential role in connecting communities, businesses and markets across the country.

Nearly 73 per cent of jobs in Nepal's transport sector remain informal, leaving thousands of drivers, conductors, helpers and other workers without written employment contracts, reliable wages or adequate social security protection. A new policy brief from the International Labour Organization (ILO) highlights serious concerns about employment conditions in an industry that plays an essential role in connecting communities, businesses and markets across the country.

The report, titled Informality in Nepal's Transport Sector: Promoting Enterprise Formalization and Extending Social Protection to Transport Workers, reveals a major gap between officially registered transport businesses and the employment protections available to their workers. Despite widespread business registration, many employees continue working under informal arrangements that offer limited financial security and expose them to unsafe working conditions.

Nepal's transport industry contributes 6.73 per cent of the country's gross domestic product (GDP), making it an important part of the national economy. The ILO warns that improving business registration alone will not address the employment challenges facing transport workers unless stronger labour protections, fair wages and accessible social security systems are introduced.

Business Registration Fails to Guarantee Workers' Rights

According to the ILO brief, 89.5 per cent of Nepal's transport establishments were officially registered in 2018, but informal employment remained widespread across the sector. About 62 per cent of jobs within formal transport enterprises were still informal, demonstrating that operating a legally registered business does not necessarily mean providing workers with formal employment arrangements.

The findings suggest that many transport employees continue working without written contracts, predictable earnings or adequate protection against workplace risks, even when their employers operate through officially recognised businesses.

A survey of 160 transport workers revealed particularly concerning conditions, with none of the participants reporting a written employment contract. Only three workers were enrolled in Nepal's Social Security Fund (SSF), pointing to extremely limited social insurance participation among those surveyed.

The report also found that approximately 41 per cent of informal transport employees earned below the minimum support wage, leaving many workers struggling to meet basic household expenses. Informal transport workers were four times more likely to experience poverty than formally employed workers, highlighting the connection between insecure employment and financial hardship.

Transport Workers Face Unsafe Conditions and Financial Insecurity

Drivers, conductors, vehicle helpers and other transport workers often face irregular earnings, extended working hours and unsafe workplace conditions that can affect their health and financial stability.

Without written employment agreements, workers may have limited ability to establish their rights regarding wages, working hours, leave and other employment benefits. Limited access to social protection can also make it difficult for families to cope with illness, workplace injuries or unexpected interruptions in income.

Numan Özcan, ILO Country Director for Nepal, stressed that business registration should not be confused with meaningful employment protection. He explained that a registered business does not automatically guarantee fair wages, written contracts or social security for its employees. Progress towards formal employment must be measured through improvements in workers' actual lives rather than the number of registration certificates issued to businesses.

The ILO's findings reinforce the need for employment policies that address both the legal status of transport enterprises and the working conditions of the people they employ.

Ride-Hailing and Delivery Platforms Create New Employment Challenges

The expansion of digital ride-hailing and delivery services is creating additional income opportunities in Nepal's transport industry, but it is also introducing new challenges concerning workers' rights and employment security.

Many people working through digital platforms operate without written agreements or clearly defined employment protections, creating uncertainty about their access to wages, insurance and social security benefits.

These arrangements can make it difficult for workers to understand their legal rights or determine which organisations are responsible for providing employment-related protections.

The ILO brief calls for a clearer legal framework covering digital platform workers, ensuring that new forms of transport employment do not develop outside essential labour standards. Stronger regulations could help establish more transparent working arrangements, improve access to social insurance and provide better mechanisms for addressing employment-related disputes.

ILO Recommends Eight Actions to Improve Transport Employment

The policy brief identifies eight priority actions designed to reduce informal employment, strengthen labour protections and extend social security coverage throughout Nepal's transport industry.

Among its main recommendations is the introduction of more affordable and flexible social security contribution arrangements for workers whose earnings fluctuate throughout the year. Such measures could make it easier for drivers, conductors and other transport employees to enrol in social protection programmes and maintain their contributions.

Simplifying enterprise registration and regulatory compliance procedures is another important recommendation, particularly for smaller transport businesses that may face administrative or financial barriers to formalisation.

The ILO also calls for stronger enforcement of minimum wages and labour standards to ensure that employees receive fair compensation and work under safer conditions.

Improved worker registration systems could help authorities identify people working outside formal employment arrangements and extend protection to those currently excluded from existing schemes.

Accessible grievance mechanisms would provide workers with clearer ways to report workplace problems, including wage disputes, unsafe conditions and violations of employment rights.

The brief also highlights the need to address occupational safety and gender-related risks, recognising that different groups of transport workers may face specific challenges requiring targeted protection.

The recommendations are intended to support cooperation between government institutions, employers' organisations, workers' representatives and other stakeholders involved in Nepal's transport industry.

By connecting enterprise formalisation with actual improvements in employment conditions, Nepal could strengthen financial security for transport workers and their families. The ILO emphasises that a more productive and resilient transport sector depends not only on registered businesses but also on decent wages, safer workplaces and social protection that reaches the people keeping the country's transport system running.