Nearly three in four transport jobs in Nepal are informal despite widespread business registration, ILO finds

KATHMANDU (ILO News) – Nearly 73 per cent of jobs in Nepal’s transport sector remain informal, leaving drivers, conductors, helpers and other transport workers without written contracts and with little or no social safety net, according to a new policy brief by the International Labour Organization (ILO).

The brief Informality in Nepal’s Transport Sector: Promoting enterprise formalization and extending social protection to transport workers highlights a critical gap between business registration and workers’ rights.

While 89.5 per cent of transport establishments were registered in 2018, informal employment relationship remained widespread, with approximately 62 per cent of jobs within formal enterprises still informal, highlighting a significant gap between business registration and employment formalization.

The numbers are stark. Of 160 transport workers surveyed, none had a written employment contract, only three were enrolled in the Social Security Fund (SSF). Around 41 per cent of informal employees earned below the minimum support wage, and informal transport workers were four times as likely to live in poverty as their formally employed counterparts.

© Nistha Rayamajhi/ILO

Transport contributes 6.73 per cent of Nepal’s gross domestic product (GDP) and connects people, businesses and markets. Yet the drivers, conductors and helpers who keep it running face unstable incomes, long hours, unsafe working conditions and little or no social protection.

Numan Özcan, ILO Country Director for Nepal highlights this crucial gap, “A registered business is no guarantee of a protected worker. When nearly three in four transport jobs are informal, a licence on the wall changes nothing for the person behind the wheel. Workers need a written contract, a fair wage and social security that actually reaches them. Formalization has to be measured in workers’ lives, not in registration certificates.”

The gap is following workers onto the apps. Ride-hailing and delivery services are creating new income opportunities, but workers often lack written agreements, clear employment protections and pathways into social security.

Eight actions to close the gap

The ILO brief identifies eight priority actions to advance formalization and extend social protection to transport workers. Key recommendations include making social security contributions more affordable and flexible for workers with irregular incomes, simplifying enterprise registration and compliance procedures, strengthening enforcement of minimum wages and labour standards, and establishing a clear legal framework to protect digital platform workers.

It also calls for better worker registration, accessible grievance mechanisms and stronger measures to address occupational safety and gender-related risks.

The brief is blunt: formalization cannot stop at registering businesses. It has to show up in workers’ lives, as fair wages, safer working conditions, employment security and effective social protection.

By identifying practical pathways for reform, the brief provides an evidence base for policymakers, employers' organizations, workers' organizations and other stakeholders to advance inclusive and decent work environment within Nepal’s transport sector. Its recommendations can help inform Nepal’s ongoing efforts to strengthen its labour laws and policy frameworks and expand social protection coverage.

The bottom line: a registered business is no guarantee of a protected worker. Decent jobs and real social protection for transport workers secure their families first. They are also the foundation of a more resilient and productive economy.

About the brief

The ILO policy brief draws on a 2026 diagnostic study of informality in Nepal’s transport sector, combining data from the Nepal Labour Force Survey 2017/18 and Nepal Living Standards Survey 2022/23 with a primary study involving 160 workers, supplemented by interviews and focus group discussions in Kathmandu, Hetauda, Janakpur and Birendranagar.

For more information, please contact:

ILO Country Office for Nepal
Nistha Rayamajhi, Communications Officer
[email protected]

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