Introduction to the Gig Economy:
If you have ever ordered food through Foodmandu or taken a ride via Pathao, Indrive, Tootle, or Yango, you have already participated in Nepal’s fast-growing gig economy. In simple terms, the gig economy refers to short-term, task-based, or freelance work facilitated through digital platforms. Workers engage in flexible jobs, everything from delivery and ride-sharing to online freelancing, often outside traditional employment contracts.
Globally, this sector is expanding rapidly. Between 2016 and 2020, job postings on a major digital labor platform increased by 130% in Sub-Saharan Africa, compared with just 14% in North America. COVID-19 further accelerated this shift as remote work became a necessity. Coupled with advances in digital technology and increased global connectivity, the gig economy has become a major part of how modern labor markets function.
Gig economy in the context of Nepal:
Nepal is experiencing its own gig economy boom. Digital platforms such as Foodmandu, Pathao, Yango, Indrive, and Tootle now play a key role in urban transportation and food delivery. Meanwhile, global freelancing platforms like Upwork and Fiverr have enabled Nepali youths, especially tech-skilled workers, to build careers from home. The shift from traditional to remote work culture has contributed to increasing economic opportunities and the promotion of innovations.
According to a 2024 report by the Asian Productivity Organization (APO), the gig economy in Nepal contributed 7% to the country’s GDP. As there are no entry barriers, an inclusive labor market is expected. It has created more job opportunities for rural communities and marginalized minorities. Around 25% of gig workers are from rural areas. Furthermore, it has developed professionalism, skills, and a culture of side hustles among Nepalese youths.
Constitutional and legislative structure of Nepal:
The prevailing Constitution, the Constitution of Nepal 2072, has guaranteed labor rights under Article 32(1) and 32(2), which state that every citizen has the right to employment. However, the implementation of labor protections still focuses primarily on the traditional formal sector. The principal statute that regulates labor law in Nepal is the Labor Act 2017 (2074 BS). The Act defines labour as “a worker or employee or a person employed with any job title who performs a physical or intellectual work for the employer.” Gig workers are excluded from this provision, meaning this Act does not regulate them. This creates uncertainty about their job status. They are not given proper facilities such as sick leave, insurance, and social security. They lack collective bargaining power because they are not eligible to form or join formal labor unions. Their work remains uncertain and informal, despite contributing significantly to the economy.
However, a bill related to regulation was tabled in Parliament in relation to e-commerce, but the regulation of gig workers was left out. At the provincial level, Gandaki and Bagmati introduced guidelines for regulating ride-hailing services, but implementation remains inconsistent. In June 2025, the International Labor Organization made an agreement to issue binding regulatory standards for platform workers. This can be a breakthrough for Nepal to develop a binding law that protects the rights of gig workers and solves the uncertainties they face.
Challenges of gig workers in Nepal:
The gig economy has transformed how people work in Nepal, especially by popularizing flexible and remote work arrangements. However, despite its rapid growth, gig workers continue to face significant challenges. The most pressing issue is the absence of statutory provisions that regulate gig-based work. Without legal recognition under existing labor laws, gig workers are deprived of essential facilities such as social security, insurance, and sick leave. Their rights remain undefined, leaving their economic status unstable and uncertain. A traditional mindset among policymakers, who still tend to prioritize conventional formal employment, further sidelines gig workers and prevents them from receiving legitimacy or legal protection.
The lack of a clear legal framework also affects how gig workers are paid and taxed. Because there are no monitoring provisions for wage standards or payment systems, many workers may receive earnings below a fair or living wage. Similarly, the absence of tax regulations for platform-based income means gig workers are neither required nor guided to pay taxes, contributing to potential tax leakage that affects national revenue. Freelancers working with companies outside Nepal face even more difficulties, as limited international payment systems make it challenging for them to receive income smoothly. Compounding these problems is the fact that gig workers cannot form labor unions under current law, leaving them with little bargaining power and no collective voice to advocate for better working conditions.
Access to technology also plays a crucial role in shaping participation in the gig economy. While many urban workers rely on digital platforms for work, large parts of Nepal still suffer from limited internet access. Data from the Nepal Living Standards Survey 2022/23 highlights stark regional disparities: 59.8% of households in Bagmati Province have internet access, compared to only 14% in Karnali and 19.7% in Sudurpashchim. The survey further shows that only 9.5% of households below the poverty line have reliable internet access. These gaps restrict large sections of the population, especially low-income and rural communities, from entering the gig economy, effectively limiting their access to income generation and employment opportunities.
Policy Recommendations:
In this context, the need for proper legislation becomes evident. Lawmakers should prioritize recognizing gig workers within Nepal’s legal framework so that they can receive the protections and benefits enjoyed by other categories of workers. A well-defined regulatory structure that guarantees social security provisions, insurance, and fair wage standards must be introduced and enforced consistently. Updating or amending the Labor Act 2074 BS to include gig workers under the definition of “labour” would be an important step in ensuring long-term security for platform-based workers. Policymakers should also consult experts and study international practices in countries that have already enacted gig economy laws. While these global examples provide useful guidance, Nepal’s laws must ultimately reflect its own economic realities and labor market conditions.
Conclusion:
The unprecedented growth of the gig economy in Nepal depicts a dual reality: an opportunity to increase inclusive jobs and innovative startups, yet a passive legal system that has no framework to regulate and monitor it. While platforms like Indrive, Yango, Pathao, and Foodmandu contribute to Nepal’s GDP, the workers who power these digital services remain legally invisible under the country’s principal labor statutes. Addressing this gap is essential. If lawmakers take timely steps to legally recognize gig workers and safeguard their rights, Nepal can build a more inclusive and forward-looking economy where both innovation and worker protection advance together.