The unions have
demanded that industrial workers be paid on a par with first level office
helper in the civil service.
Workers say they are
being buffeted by high inflation while employers say they are having a hard
time staying alive with the economy in a tailspin.
The government, private
sector and trade unions are bracing for a long fight ahead as scheduled
two-yearly wage hike negotiations get underway.
Workers say they are
being buffeted by high inflation while employers say they are having a hard time
staying alive with the economy in a tailspin.
The unions have
demanded that industrial workers be paid on a par with first level office
helper in the civil service who get a monthly salary of Rs. 26,348.
A factory worker
currently earns a minimum of Rs. 15,000 per month, and employers say their salary
expectations are too high when the country is wallowing in an economic
slowdown.
Four months ago, an
11-member committee was formed to recommend a minimum wage plan. The panel is
expected to submit its report to the government in the next two weeks.
The committee is under
the coordination of Dandu Raj Ghimire, joint secretary at the Ministry of
Labour, Employment and Social Security, and consists of representatives from
the Labour Ministry, Department of Labour and Occupational Safety, Ministry of
Industry, Commerce and Supplies and Nepal Rastra Bank.
Representatives from
the trade unions and employers' organisations also sit on the committee.
As per the existing
provisions, the minimum wage is reviewed every two years. This year’s
negotiations are particularly unusual and intense as they are taking place at a
time when the economy is going through a bad phase and consumers are being
battered by runaway inflation.
Hansa Ram Pandey, a
senior expert at the Federation of Nepalese Chambers of Commerce and Industry
(FNCCI) and a member of the committee, said they had alerted the government
about the country's economic situation.
“Despite the legal
provision requiring the minimum wage to be reviewed every two years, we cannot
ignore the fact that the economy is in a slump. Many factories have shut down
or have cut production. Manufacturing plants are operating at 50 percent capacity,”
Pandey said.
“While we should
consider workers' benefits, it is equally important to consider how industries
will survive in a recession-like situation.”
As per the National
Statistics Office, the country was officially in a recession until the second
quarter of the current fiscal year, with the annual economic growth rate
projected to slow down to 1.86 percent as a result.
The first meeting of
the wage committee was held on January 27, according to Janak Chaudhary,
vice-president of the General Federation of Nepalese Trade Unions (GEFONT) and
one of the panel members.
“On behalf of the trade
unions, we have asked that the government either provide subsidies to workers
at the low end of the pay scale or hike the minimum salary to Rs26,348,”
Chaudhary said.
The minimum monthly
wage for industrial workers is currently Rs15,000 which includes Rs9,385 basic
salary and Rs5,615 inflation allowance.
The last time the
minimum wage was reviewed was in the fiscal year 2021-22. Prior to that, the
minimum monthly salary was Rs13,450.
Nepal’s private sector
employs around 4.93 million persons, nearly 86 percent of the country's labour
force, according to a study entitled State of Private Sector in Nepal:
Contributions and Constraints, jointly produced by the FNCCI and the
International Finance Corporation (IFC).
Chaudhary said high
inflation appears to have become the new enemy for workers who have a small
salary. “We have demanded an end to pay discrimination between government and
private sector employees,” he said.
“Why is the minimum pay
for civil servants much higher than for private sector workers? The government
has increased the salaries of government officials despite low revenue.”
According to Nepal
Rastra Bank, the country’s central bank, the year-on-year consumer price
inflation rose to 7.44 percent in mid-March from 7.14 percent a year ago.
Economists say that
since inflation has risen from a higher base of 7.14 percent, Nepal is passing
through hyperinflation, an extreme case of inflation. They say that higher
inflation rates are more prevalent in Nepal because the country often lacks
sufficient data and transparency.
Raising the minimum pay
has not been so easy in Nepal. Insiders say that unions normally resort to a
strike if their demand is not met. In the past, unions tried organising strikes
and picketing government buildings to put pressure on it.
The unions are in a
wait-and-see mode. Chaudhary says they haven’t planned their next move and are
eagerly waiting for the committee report.
He said the government
would not increase the minimum pay but make some adjustments to the pay
structure in line with growing inflation.
Ghimire says they plan
to submit the report to the government in the next two weeks with their
recommendations. “The government will make an informed decision whether or not
to raise the minimum salary based on the report.”
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