The employment situation in Kathmandu and throughout Nepal is currently characterized by a state of acute instability and a deepening “jobs crisis” as of early 2026. This environment of economic hardship was a primary catalyst for the historic youth-led protests in September 2025, which ultimately led to the resignation of the previous government and the scheduled general elections on March 5, 2026.

While the national unemployment rate is officially projected at approximately 9.8% to 10.7%, the situation for young people is significantly more dire. Nepal’s youth unemployment rate (ages 15–24) stands at approximately 20.6% to 20.8%, the highest in South and Southeast Asia. Large numbers of graduates in Kathmandu are underemployed, often taking low-skilled roles or remaining inactive because the market offers too few quality jobs. For example, in early 2026, tens of thousands of young people in Kathmandu and across the country queued to apply for roughly 149,000 temporary election police positions, which pay approximately $280 for 40 days—a “princely sum” relative to typical earnings.

The domestic labor market is dominated by “informal” work, which lacks legal protections, social security, and stable wages. Approximately 82% to 84.6% of the workforce remains in the informal sector. Informal workers earn between 61% and 65% less than their counterparts in the formal sector, perpetuating a cycle of poverty and limiting the country’s overall economic growth.  While agriculture still provides over 60% of jobs, its productivity is declining, and roughly 20% of the population earns less than $2 per day.

A lack of domestic opportunity has forced a record-breaking number of workers to seek livelihoods abroad. Currently, approximately 1,500 young Nepalis leave the country every day for foreign employment, primarily heading to the Gulf region and East Asia. Over 1.9 million Nepali workers are employed in the Gulf region alone. Remittances contribute roughly 24% of Nepal’s GDP, but this reliance leaves the economy vulnerable to regional conflicts, such as current tensions in West Asia. During the first two months of the 2025/26 fiscal year, foreign employment approvals rose by 17.9%, reflecting persistent domestic job scarcity.

The “Gen Z” uprising of late 2025 was fueled by deep-seated frustration over corruption and the lack of jobs. Nepal estimated it suffered roughly $586 million in losses and approximately 15,000 job losses immediately following the September 2025 protests. Leading candidates in the 2026 election, including Kathmandu Mayor Balen Shah and the Rastriya Swatantra Party (RSP), have made job creation their primary platform, with vows to generate between 1.2 million and 1.5 million jobs over the next five years.