Formalization of micro and small enterprises and their employees: Experiences from Nepal
This document is part of a series of case studies by the ENTERPRISES Department of the ILO. Each case study presents one or several approaches that contribute to enterprise formalization across the world. The case studies provide a snapshot on a particular initiative and may not be exhaustive.
In a country where nearly 80% of employment lies in the informal economy, Nepal has taken bold steps toward transformation. In 2019, with the support of the International Labour Organization (ILO), the Government of Nepal launched a landmark diagnostic study to uncover the root causes and scale of informality across the nation. Spearheaded by a tripartite committee led by the Ministry of Labour, Employment, and Social Security (MoLESS), and backed by a coalition of government agencies, social partners, and the National Statistics Office, the study laid the foundation for a national strategy to formalize work and extend social protection. This case study explores how evidence-based analysis, inclusive policymaking, and targeted reforms—such as the registration of over 660,000 informal workers into the Social Security Fund—have created meaningful entry points for formalization, especially for micro and small enterprises (MSEs), marking a critical step toward achieving decent work for all in Nepal.
Case studies of enterprises formalization