Who pays for Nepal’s informal workers’ security?

Informal workers are people whose jobs generally lack secure contracts, reliable legal protection or access to social security. Their work may be temporary, seasonal, mobile or undocumented. Informality describes the employment relationship, not simply whether a business is registered.

A worker in a registered construction company may still be paid informally or lack enforceable benefits. A brick-kiln worker may migrate seasonally and work through a labour contractor. Such workers can change employers, locations or occupations, making continuous coverage difficult.

This difference matters because registration alone does not protect workers. Nepal’s 2017-18 Labour Force Survey found 84.6 percent of employed people in informal employment. In 2018, about 78 percent of workers in registered firms still held informal jobs. Effective protection therefore needs portable records, affordable contributions and benefits that follow workers.

In December 2025, the ILO reported that over 86 percent of Nepal’s workers were in informal employment. That means nearly nine in ten workers may lack the stable employment arrangements usually connected to social protection. The figure shows why informal-worker coverage is a national issue, not a small administrative task.

Nepal’s Social Security Fund had nearly 2.7 million registered workers overall. However, only about 1,500 of them were informal or self-employed. The registered informal group was therefore tiny compared with the country’s informal workforce.

This gap shows that having an operating fund does not automatically create broad coverage. The SSF has allowed informal and self-employed workers to enrol voluntarily since 2023, with a government co-contribution. Yet affordability, payment arrangements and uncertainty about public financing have slowed actual enrolment.

Registering a business does not prove that every worker inside it has a contract, benefits or enforceable protection. Informal employment can exist within registered firms, so an enterprise may be officially recorded while its workers remain outside social-security coverage.

Construction shows the problem clearly. Workers may move between projects, work through subcontractors and receive wages under changing arrangements. A registered contractor or company may therefore be unable to maintain accurate records of every worker or collect contributions continuously.

Nepal’s experience confirms the gap between formal registration and real protection. About 78 percent of workers in registered firms held informal jobs in 2018. By December 2025, only about 1,500 informal or self-employed workers were registered with the SSF. Coverage requires worker-level records, affordable contributions, public co-financing and portable benefits, not registration alone.

Temporary jobs, migration and subcontracting break the fixed employer-and-workplace model used by many social-security systems. A worker may have no stable employer, address or documented employment relationship. Irregular income also makes regular contributions difficult, especially when earnings fall below minimum-wage benchmarks.

A construction worker can move from one building project to another, with a different contractor, worksite and wage arrangement each time. Brick-kiln families migrate seasonally, often through labour contractors, while the industry generally operates from November to May. Their need for protection continues even as work changes.

The SSF therefore needs records and payment systems that remain linked to workers rather than one job. The article identifies temporary employment, mobility and subcontracting as barriers. It also reports that 41.9 percent of informal wage workers earned below the minimum-wage benchmark, making affordable contributions essential.

Nepal’s system allows informal and self-employed workers to enrol voluntarily and contribute to the Social Security Fund. The government is also expected to provide a co-contribution. This shared arrangement is meant to make protection possible for workers who lack a stable employer to pay or organise contributions.

The payment chain becomes difficult when workers earn irregularly or below the minimum-wage benchmark. In construction and brick kilns, employers, contractors and worksites can change. Local governments may help enrol workers, but they need clarity about their financial responsibilities and how the government share will be paid.

By December 2025, 114 local governments had signed agreements with the SSF, but only six had enrolled workers. The article identifies uncertainty over the government’s share as a principal bottleneck. Since 41.9 percent of informal wage workers earned below the benchmark, contributions must also be affordable and flexible.

Portable social-security records keep a worker’s contributions and eligibility connected when jobs, employers or locations change. This matters because the need for accident protection and income security does not end when a project or seasonal contract ends.

A construction labourer could carry one contribution record from project to project, even when contractors and wage arrangements change. A brick-kiln family could remain linked to benefits while moving seasonally. The same system could avoid tying protection rigidly to one permanent address or employer, while helping maintain children’s education continuity.

The article presents portability as a response to temporary employment, mobility and subcontracting. It would not by itself solve affordability or missing records, but it would make coverage better match workers’ lives. Combined with reliable co-financing and flexible payments, portable benefits could reduce gaps caused by repeated movement.

Social protection is the set of policies and benefits that help people withstand risks such as injury, illness, unemployment, maternity, disability and old age. It matters because workers can lose income or face major costs when these events occur. The article links protection to accident cover, income security, health, maternity and old-age benefits.

Governments commonly combine worker or employer contributions, insurance arrangements and public funding. Shared financing spreads risk across a wider group and can support people whose incomes are low, irregular or interrupted. For informal workers, government co-financing can help make enrolment and contributions affordable.

Nepal’s Constitution and Contributory Social Security Act provide legal footing for this approach. Since 2023, the SSF has allowed informal and self-employed workers to enrol voluntarily with a government co-contribution. The challenge is turning that framework into practical coverage through reliable financing, flexible payments and portable records.