Based on the population census data, this blog post highlights key features related to population, and its structure and evolution. Overall, the population growth rate is declining, working age population is increasing, dependency ratio is decreasing, and new entrants to the labor market are almost peaking. The demographic dividend may not last long unless the enabling policy and institutional environment are created along with investments in critical physical and social infrastructures. Gradually, new entrants to the labor market will decrease, dependency ratio will increase (as 65 years and above population increase), and working age population will shrink. It will not be an ideal situation for a country with low per capital income and the vast untapped opportunities.
Population structure
Population growth is slowing down. In 2021, the population of Nepal was 29.2 million (of which 49% are male and 51% female), up from 26.5 million in 2011. However, the population growth rate was 0.92% between 2011-2021, down from 1.35% between 2001-2011.
The number of households is increasing but the average household size is decreasing, indicating the increase in nuclear families (or the decrease in joint families). There were 6.7 million households with an average household size of 4.4 in 2021. These were 5.4 million and 4.9 in 2011, respectively.
Urban population constituted 66.2% of total population, up from 63.2% in 2011. Note that the definition of urban area was changed after the country adopted a federal structure of governance. The number of urban municipalities increased from 58 in 2013/14 to 293 in 2017/18.
Madhesh and Bagmati provinces each have 21.0% of the total population, Lumbini 17.6%, Koshi 17.0%, Sudrupaschim 9.2%, Gandaki 8.5%, and Karnali 5.8%.
The highest populated districts are: Kathmandu 6.6%, 4.0% Rupandehi, 3.7% Morang, 3.3% Kailali, 3.1% Jhapa, and 3.1% in Sarlahi.
Literacy rate has increased, but there is wide gender disparity. Among males 10 years and above, 83.6% are literate, but it is just 69.4% among females. These were 75.2% and 57.4%, respectively, in 2011.
Demographic dividend
The working age population (15-64 years) is increasing, reaching 65.2% of total population in 2021 or 19 million people. The population below 15 years of age is decreasing (reaching 27.8% of total population or 8.1 million people) but those 65 years and above are increasing (reaching 6.9% of total population or 2 million people). In 1991, these were 54.1% and 3.5% of the total population, respectively.
The increase in working age population also means that the dependency ratio is decreasing (from 84.7% in 1991 to 53.3% in 2021). Dependency ratio is defined as the dependent population (0-14 years plus 65 years and above) per 100 productive population.
The declining population growth rate and dependency ratio, rising life expectancy along with declining fertility and child mortality, and gradually peaking working age population indicate that Nepal may be hitting the unique point where it could exploit this demographic change to spur economic growth (or demographic dividend), i.e. more people to work and fewer people to support.
Seizing this opportunity would require reorienting policies to facilitate a meaningful structural transformation, whereby high-value added sectors (such as industry, high value agriculture, ICT, travel and tourism, healthcare, education) dominate the economic structure, resulting in higher jobs-centric and inclusive growth and higher productivity. Adequate supply of affordable and competitive hydroelectricity, better connectivity including logistics network, human resources development through investment in education and healthcare, social protection, and political as well as policy stability would be critical for that. Else, this demographic bulge will continue to be a burden to the economy, resulting in large-scale outmigration for work or study overseas. The benefits of a demographic dividend are not unconditional.
Given the decreasing population growth rate, this could also be an indication that the working age population will soon peak because the population below 15 years of age is decreasing. The 65 years and above population will gradually increase, burdening the public social protection scheme.
New entrants to the labor market
About 2.0% to 2.5% of the total population enter the job market annually. In 2021, about 607,128 entered the labor market (basically those who turned 15 years old in 2021). There were already 18.4 million population in the job market (basically those between 16-64 years old). About 246,944 exited the job market (basically those above 64 years of age). In 2011, 652,525 youths entered the labor market.
