Minimum Wages Some Issues

-By Narayan Manandhar

RECENTLY, the government has formed the Minimum Wage Fixation Committee (MWFC) as per the provisions made in the Labour Act to determine the minimum wages of the employees and the workers  at the enterprise level. This will be the fourth time the government has planned to revise minimum wages after the restoration of multi-party democracy in the country. Earlier the government has formed, for the first time, the MWFC for the agriculture workers.

Process

At the time of this writing, although the wage rate for agriculture workers have not been announced officially, it is known that the government is in the process of determining two layers of minimum wages for the agriculture workers. The first one is the uniformly applicable "floor wage" to be fixed at the central level. The second one is the "fair wage" to be fixed at the district level by the local government. The prescribed fair wages should not be less than the floor wages.

The fixation of minimum wages in Nepal has been a most sensitive, complicated and controversial issue. Although MWFCs have been formed to study, determine and recommend the wage rates to the government, ultimately, the wage rates have been settled through negotiation and bargaining.

The controversy has been extended to such an extent that, in 1995, FNCCI, the apex body of business community, had to file a case against the government’s unilateral decision to hike minimum wages by increasing the dearness allowance by Rs 300 per month. The case was later withdrawn under mutual understanding.

Minimum wages have remained a sensitive issue both for the employers and the employees, not because it is determined at exceptionally high market wage rate. Rather the general wage rate in Nepal is so low that the trade unions take the case of minimum wage revision as only an opportunity to demand wage increase. Ironically, the policy makers still like to boast that Nepal has a comparative advantage due to "cheap labour costs".

The newly formed MWFC has to struggle with a couple of tricky issues on minimum wages in Nepal. The first one is the fixation of regional level minimum wages. So far, the government has been fixing minimum wages in terms of skill category, of industry category like tea estates and of age groups like minors and adults.

The amendment in the Labour Act has made it possible for the government to fix minimum wages on a regional basis. As mentioned above, in line with this new provision, an attempt has been made for the agriculture workers to have both centralised and decentralised minimum wages.

The fixation of minimum wages on a regional basis for the industrial labour force is a very complicated task. The nature of work in the industry is very much different from that of the agriculture sector. Two textile mills located in two different regions may be producing a similar product but in a different way. One cannot have such diverse way of production in agriculture sector.

The second tricky issue will be the inclusion of dearness allowance and other facilities in the minimum wage component. Nepal is, probably, following a unique tradition of fixing dearness allowances as the part of minimum wage component. This provision is not only against the principle of minimum wage rather is found no where in the other parts of the world.

At present, the minimum wage rate for an unskilled labour is prescribed as Rs 1300 per month plus Rs 500 dearness allowance. The dearness allowance has been tailing the minimum wage rate way far back from Rs 50 in 1979.

Allowances have been acting not only as an untouchable element but also providing a safety cushion for the actors to determine minimum wages. By increasing allowances, instead of minimum wage base rate, the policy makers can both say "Yes" and "No" to a single question. Had there been an increase in minimum wages? Yes, because they have increased the allowances, no, because, the increased allowance is not statutorily binding. Sounds like ambiguity and confusions provide a room for policy maneuver. It is also difficult to understand why the employers have given up their rights to fix allowances which are supposed to be based on their "ability to pay" factor.

The third tricky issue is determining the relevancy of minimum wages by skill category. Although, the government has been fixing minimum wage rates for four categories of workers, namely, unskilled, semi skilled, skilled and highly skilled workers, its practical relevance is near zero.

First, there is no hard and fast rule to determine the skill category. Even if there is, the historical figures on minimum wages for different skilled category have been slowly narrowing down to make any dent on the practicality of wage differentials by skill category.

The fourth issue is the relevancy of having a separate wage rate for the tea estate workers. The trade unions are now claming it more as a discriminating practice and asking for a single rate irrespective to industry classification. Similar, question might be raised for the determination of wage rates for adult and minor workers. This brings into question the basic philosophy of minimum wages in Nepal: Is it for the protection of the vulnerable workers, eradication of poverty, creation of employment or providing fair wages to the workers? This fifth issue, i.e., the basic purpose of minimum wage fixation is far more important and determining than any other issues raised above. Unless the government precisely comes up with a concise minimum policy objective, all other technical exercises to fix minimum wages just turn out to be "exercise for the sake of exercise".

Exercise for the sake of exercise has been amply demonstrated also by the lack of enforcement mechanism. Minimum wage is a statutory obligation, any one paying below the minimum wage rate can be punished and asked to pay compensation to the workers. We have hardly come across such news, forget about the actions.

Just having fulfilled the task of fixing minimum wages is not enough, there must be a periodic check, revision, monitoring and enforcement. Given the administrative strength of the Ministry of Labour, it is very difficult to have such an option. Yet, the cooperation of the trade unions could be sought in this respect. Already, the unions are asking for the indexation of the wage rate with the inflation factor. This calls for further strengthening of data management in the country. Are we prepared for this?

Hope

Let us hope that the new MWFC breaks the traditional way of having incremental negotiating approach to minimum wage fixation. Let it comes up with some new approach that suits the needs of the country, i.e., labour-market flexibility as being demanded by the employers and social security as being demanded by the unions.

Issues Concerning Tourism Development

-By Madhusudan Misra

Visiting places other than from one’s home surroundings for some days for thrills and experiencing something new for pleasure is what makes a person a tourist. The activities of tourists come under the umbrella of tourism.

Types

Tourism are of two types: domestic or foreigners visiting other countries. In Nepal, as defined by the Tourism Ministry, any foreign guest, having foreign passport irrespective of his/her purpose has been recognised as a tourist. So, especially international visitors only are included within its definition. Most of the tourists engage in trekking, mountaineering, official works, business works, pilgrimages and so on.

Since 2007 B.S., after the advent of democracy in Nepal, doors were opened for tourists. And tourist inflow gained momentum from in the1960s. In the fiscal year 1965/66, 9,211 tourists visited the country while the figure reached 380,301 in 1995-96. This exhibits the growing popularity of Nepal among the tourists.

In Nepal, touristic attractions are confined especially to the Himalayas, Historical monuments, National parks and nature reserves and diverse ethnic communities living in perfect harmony.

One most significant fact we should never undermine is that such kind of natural and cultural heritage has made Nepal a unique destination for tourists. Tourists seek diversities to fulfill their desire for excitement. In addition they seek conducive environment and facilities too. But, Nepal yet has to develop more tourist products and infrastructure to attract a greater number of tourists.

In present competitive world, great efforts are needed to develop tourism hence, efforts both from the government as well as the private sectors are essential.

Regarding government efforts concerning tourism development, much has been done but there is still a lot to be done on a massive scale. Field monitoring done by Tourism Ministry has not been substantiatively positive. More insight and appropriate strategies have to be devised if we are to see tourism develop at a faster pace.

Here too, an astonishing matter has been prevailed that, if calculated honestly and transparently then cumulated amount of dollar contribution made by donor countries would have already made great contributions not only for the development of the country but also increase the flow of tourists to the country.

While raising the matter of private sector initiatives, NATA (Nepal Association of Travel Agents) was established with the objective of coordinating activities of tourism related organisations, thus eradicating their inherent problems collectively, so as to impart qualitative services to tourists. Up to now, circumstances has prevailed that this organisation too performed as was expected from it.

Similar to this organisation, another tourist related association was founded under the banner of TAAN (Trekking Agencies Association of Nepal), committing to keep coordination between trekking agencies. In a matter of twenty years TAAN affiliated agencies have reached 180 in number from a mere five or seven then.

Now trekking permissions are not allowed on several trekking routes without TAAN’s recommendation. For example, only with its recommendation, tourists can visit Dolpa. Now, His Majesty’s Government has scrapped the trekking permission provision for tourists. This may be considered as good and timely move to attract more tourists into the country for a unique experience.

Apart from this, TAAN informs its member agencies about international fairs, touristic exhibitions, so that member agencies take part in them and identify and develop new products and destinations so that more tourists can be expected.

In the same manner, HMTTC (Hotel Management and Tourism Training Centre) has been producing skilled manpower for the hotels and restaurants. Till update, HMTTC has given guide training to eleven thousand people, among them seventy five per cent are employed in various agencies.

Simultaneously, one another same kind of organisation has founded recently, and already started its operations, that names is ‘Nepal College of Travel and Tourism’.

Nepal Mountaineering Association has also given training to six hundred persons and so has the Rafting Agency contributed its mite for developing tourism.

Thus, private sector initiative can be termed as encouraging to some extent though the target of attracting 500,000 tourists during the Visit Nepal Year 1998, an increase by 22 percent was not totally successful yet optimism prevailed that in the future there would be encouraging results.

Until we make available the goods and services utilising local resources our foreign currency earnings will not be significant as much has to be spent on imports of goods required for the visitors. In this direction the development of Village Tourism can contribute much as in this concept about 60 per cent of the expenditures made by the tourists are retained by the villagers themselves which goes a long way in raising their standard of life.

Village Tourism has its own plus points in the sense that the villagers stand to benefit a lot. If this initiative is taken in earnest then much can be done to develop the villages themselves through the local people’s initiatives. A number of model villages are operating and there has been encouraging responses. Through this means the visitors are actually able to experience the culture and tradition of the local people closely.

Innovation

There is yet much to be done for the adequate development of tourism in Nepal. In this respect the private sector should come up with innovations and join hands with the government so that tourism develops in the manner that it should.

Scrapping The SLC Exams

-By Bijay Aryal

SEVERAL months ago the Education Minister, Yog Prasad Upadhyaya, had said at a public function that His Majesty’s Government was scrapping the SLC examinations. Judging from stray newspaper reports, the Education Ministry officials are reported to be engaged in overhauling the school education systems.

For the past few months they have been busy with this task, it is said. This review is being conducted in view of the extremely weak educational standard of today which in turn has affected the process of producing skilled manpower.

The areas being reviewed include curricular development, choice of textbooks and other materials, the question of clearly defining the objectives of education and the education policy.

This seems to give the impression that the new syllabuses that have recently been introduced at the school level with the Tenth Class scheduled to follow the new curricula from the next year, maybe changed again. This in itself shows the shortsightedness and ad hocism of our educational mandarins.

According to the new thinking, three levels of education are to be introduced. The first level will consist of Class One to class Eight. The Second Level will be made up of four years from Class Nine to Class Twelve. The tertiary level will be higher education above Class Twelve.

The present Class Ten level School Leaving Certificate Examination will thus be naturally scrapped. Probably from the year 2060 B. S. But the SLC, whatever name may be given to it, is going to stay, though that will take place at Class Twelve on grounds that the last year of school education will be taken to be Class Twelve. Nation-wide School Certificate Examinations will have to be conducted.

A dispute is said to remain among educational experts over whether it should be Class Eight or Class Ten to designate the last year of the first stage of school education.

Those who say it should be Class Eight seems to do so with an eye to the possibility of making education up to Class Eight free and compulsory. The concept of equating the existing primary level (up to Class Five) with fulfilling the need to make a person literate needs to be reviewed in the light of the changed times. It would be even better to make education free at least up to Class Twelve. But government resources will hardly allow it.

So a compromise, that is, making the first stage of education or whatever you may call it. consist of Class One to Eight, would make a person really literate, the chronic problem of low retention rate thus being done away, with.

The decision of the government to make education up to SLC free was a very shortsighted decision. They have not been able to implement it. It would be impracticable in the present context, to make education up to Class 8 compulsory. But it could be made really free. But at the same time, from Class Nine upwards the fees should be enough to run the school.

And for many of the people who have passed Class Eight and who have been unable to pursue regular education further, the concept of technical schools should be introduced. At leas one technical school for each district should be established, offering courses designed to produce such manpower as carpenters. masons, electricians, plumbers and many others. This will help to reduce the unemployment problem. But this aspect has received little attention.