COVER STORY (Spotlight Weekly)

Scattered And Lacking Focus

Highly politicized and divided on partisan lines, Nepali trade unions celebrated the International Workers Day (May 1) with many fanfares. Though there have been some significant changes in industrial relations in the last one-decade the trade unions are yet to extend their reach to majority of the labor force that works in an unorganized and informal sector

By BHAGIRATH YOGI

It was a day to prove their strength. About half a dozen trade unions took out rallies in the streets of capital on Monday to mark the 111th International Workers Day-that commemorates martyrdom of laborers, who were

fighting for their rights in the US more than a century ago. "The government is committed to protect and promote the rights of the workers," said Prime Minister and Nepali Congress President Girija Prasad Koirala, who began his political career as an industrial worker, addressing the function organized by Nepal Trade Union Congress at Bhrikuti Mandap.

"Nepali workers are still exploited," declared UML general secretary Madhav Kumar Nepal, inaugurating the third annual convention of the General Federation of Nepali Trade Unions (GEFONT) at Basantapur. "A well-managed organization and dedicated cadres can only fight with the mismanagement in the national affairs," he said.

Workers at a garment Factory : Are they competitive ?

Former Prime Minister and Nepali Congress leader, addressing the mass meeting organized by DECONT (Democratic Confederation of Nepali Trade Unions) at New Baneswor, said his party was always working in favor of the Nepali workers right from its establishment in the fifites. He, however, did not elaborate what led the two pro-Congress trade unions to organize different functions to mark the International Workers Day.

"There is a need to amend labor laws in order to make the management more responsive to the well-being of the workers," said President of Rastriya Prajatantra Party Surya Bahadur Thapa, addressing a colloquium organized by National Democratic Trade Union Council.

Trade union activists belonging to Nine Left parties, on their part, blocked all three entrances leading to Singha Durbar, the central secretariat, on Monday as part of the agitation program launched by their parent parties.

Nepali Trade Unions thus celebrated the International Workers Day that calls upon solidarity among labor unions to ensure better living standards for workers worldwide.

Even after a decade of restoration of democracy, Nepali Trade Union movement remains highly politicized and divided to the grass-roots level on partisan lines. Importantly, they have failed to extend their network to more than 90 percent of the country's economically active population-which

works in informal sector under highly exploitative conditions.

Nepali Labor force : Unskilled and underemployed

"I don't have any time to participate in such rallies," said Gyanu Tharu, a migrant worker from within the country, who was downloading sand from a mini-truck at the construction site of a house at Maitidevi around mid-night on Monday (May 1) along with three other colleagues. "All these leaders talk nice about us while they are seeking votes but forget us later on," he added. Tharu said his work begins after dusk till wee hours in the morning, as traffic police doesn't allow entry of heavy vehicles in downtown areas during the day.

Of course, there have been some significant developments too. "During the Panchayat days, we didn't have any rights to raise our voice or get organized demanding our rights. Now we have every freedom to voice our protests," said Khila Nath Dahal, general secretary of DECONT. "The level of minimum wage has gone up as much as three times in comparison to that during the Panchayat period though the prices are also rising. Wages have also been fixed for the agricultural laborers."

The history of industrial relations-relations among the government, employers and workers-- in Nepal is not that old compared to other countries in the region. It dates back to the establishment of Biratnagar Jute Mill (BJM) in 1936 as a joint stock company. Most of the industries since then have been set up as a private limited company. So, the ownership of the company is also personalized. The trade union movement in Nepal is also quite young.

As Trade Union organizations are trying to rope in nearly 500,000 (less than 5 percent of the country's total labor force) workers, who are working in organized establishments. none of them have worked sincerely to bring in nearly nine million economically active population into their fold. All of the Trade Unions are politically affiliated and are inclined more toward the political parties and government rather than working for the labor. Easy money that is flowing in from the overseas has also spoiled the habit of trade unions, said critics.

Nepal enacted Labor Act in 1992, Trade Union Act in 1993 and Labor Court Laws in 1995. The Labor Act is considered as very comprehensive as it covers all the areas of industrial relations that were not addressed by the Factory Act 1959. The government also fixed minimum wages for the workers who work in industrial establishments

"The existing Labor Act is not being implemented as per its spirit," said Bishnu Rimal, general secretary of GEFONT. "There is a need to stop the practice of recruiting labor under contract and develop a system of social security network. The Labor administration, too, must be impartial, which it is not today," he added.

Workers in a garment factory : Uncertain future

Nepal was considered a peaceful country in terms of industrial productivity till the eighties, but as soon as democracy was restored a decade ago industrial disputes went up at once. According to Department of Labor, number of industrial disputes (including strikes and lockouts) stood at 189 in 1991/92 which came down to 49 in 1998/99. Similarly, man-days lost due to such disputes and lay off stood at 163,176 in 1991/92, which declined marginally to 127,820 in 1998/99.

According to a recent survey entitled "Employment and Labor Related Issues in Nepal" conducted by the FNCCI, employers' feel that the Labor Act doesn't contain explicit provisions for the strike. The workers, on the other hand, consider that strike is their ultimate weapon in order to force the employment to consider their demand. "Majority of the workers don't know whether collective bargaining is practiced at the national level," said the Survey. " Labor laws in Nepal do not seem to have any influence on corporate investment. No evidence of increase/decrease in investment because of labor laws was observed in the factories surveyed."

"Present Labor Act is traditional and there are a lot of inconsistencies as issues such as the right to hire and fire exit policy, contract labor and labor policy for Export Processing Zones don't exist here," said Rajendra K. Khetan, President of Employers' Council of FNCCI. "Trade Unions have upper hand in industrial relations and there is a strong feeling that Labor Act needs to be completely revised.

Nepal's labor market is characterized by abundance of unskilled labor. About 54 percent of Nepal's population constitute the labor force (in age group 15-64 years) but the productivity of Nepalese laborers is too low. Worse, the number of industries is also declining over the years. According to the Central Bureau of Statistics (CBS), number of manufacturing establishments declined to 3557 in 1996/97 from 4271 in 1991/92.

Nepal Labor Force Survey (NLFS), published by the CBS early this year reveals that agriculture is still the predominant sector of employment for Nepalese either by economic activity (54.7 %) or occupation (67.3 %). Outside agriculture, informal sector provides the largest source of employment (about 73 percent of the jobs outside agriculture).

With the annual growth of labor force at a rate of 3 percent (against the population growth of 2.1 percent), employment problem has emerged as the dominant economic problem in the country. Underemployment among the self-employed and irregular wage laborers in the agriculture is the core problem. Its solution, however, may demand the expansion of employment opportunities in non-agriculture sector, said experts.

Reports suggest that a number of non-Nepali workers are replacing the Nepalese or taking away the major chunk of employment opportunities generated locally. According to annual census of manufacturing establishments 1994/95 conducted by CBS, around 18,000 Non-Nepali workers were employed in the manufacturing sector alone constituting about 8 percent of the total work force. The number of non-Nepali workers in services and unorganized sector is estimated to be much higher. The Labor Market Survey carried on by Department of Labor in 1996/97 involving about 24,000 workers in seven terai districts showed the involvement of non-Nepali workforce to be around 21 percent.

Women workers : Discrimination at the work place

"At a time when we have surplus labor within the country, why should Indian laborers should be allowed to work?" asked Bishnu Rimal of GEFONT. "It's wrong to say that Nepali laborers are not competitive while they are working in Indian States and overseas. Industrialists want to employ foreign workers as they can exploit them compared to the domestic one."

A recent verdict by a tribunal constituted by the Supreme Court saying that foreign nationals must get work permit to work in industrial establishments is likely to have a far-reaching impact in this regard.

Employers, on their part, complain that Nepali Trade Unions are not serious

toward the future of the economy. "The Trade Unions haven't been able to have full grip upon their members. They work in a traditional way and are not serious about their priorities. They lobby for issues like more holidays. High pay and perks but don't guaranty productivity and quality," said Rajendra Khetan. "Since the world is moving toward globalization of trade, Trade Unions must be serious about developing quality, skilled and competitive manpower."

All the actors in industrial relations scenario agree that there is the need to raise productivity and efficiency of Nepali workers. "We should be able to understand that labor is just one small component among many other inputs when we talk about productivity of an organization. We always have to think about increasing the productivity of an organization not by exploiting the employees," said Dinesh Chapagain, a labor relations and quality expert.

So, do we have the appropriate mechanism? No, says Chapagain. "The mandate of the Ministry of Labor is too narrow. So, we need a Ministry of Manpower and Employment to address issues like providing employment to our manpower. Other south Asian countries have already gone into that concept. So, we need a very strong Ministry to look after employment policies and programs and to develop appropriate skill of our People," he added.

Industrial workers : Learning skills

Trade Unionists, too, are becoming aware of the new emerging scenario worldwide. "The definition of labor has widened in the 21st century and there is a need for both the white-collar and blue-collar workers to move hand in hand," said Khila Nath Dahal of DECONT. "The challenge now is how to adopt to new technologies and concepts."

Experts also warn that Nepal should not harp more on the competitive advantage of her cheap labor supply as it is not being matched by adequate skill level. "The challenge for Nepal is to reconcile the opportunities created by the increasing supply of labor force with the management's desire for productivity and flexibility," says Dr. Narayan Manandhar, executive director of Industrial Relations Forum of the FNCCI. "The search for overseas employment is only a stopgap measure. The final and enduring system must look for more job creations inside Nepal. And, the need of the hour is to educate and convince the trade union leaders on this."

Will the highly politicized and partisan trade unions listen?

Minimum Wages

The government has fixed minimum wages for laborers and employees working in institutions other than the tea industries where the Act is yet to be enforced. According to the Labor Ministry, the minimum wage for unskilled labor has been fixed at Rs 1450 per month, Rs 1500 for semi-skilled, Rs 1610 for skilled, Rs 1800 for highly skilled and Rs 1144 for child workers. The above-mentioned minimum wage also includes an additional dearness allowance of Rs 666.00 for adults and Rs 500.00 for children. Similarly, adult workers working on a daily wage basis is entitled to receive Rs 74 per day while children will receive Rs 60 per day, the Ministry said.

"We Need A Ministry Of Manpower And Employment"

— DINESH CHAPAGAIN

Chairman of MISSION, a non-governmental organization working to improve management practices in the country with the use of information technology, DINESH CHAPAGAIN is also well-known as a labor relations and quality expert. He spoke to SPOTLIGHT on the issues related to improvement of quality and productivity of Nepali labor force. Excerpts:

How productive is our labor force?
I don't like this phrase " Productive labor force". Instead, I think we have to talk about how productive our organizations are. We should be able to understand that labor is just one small component among many other inputs when we talk about productivity of an organization. We always have to think about increasing the productivity of an organization not by exploiting the employees. We can follow the productivity model of Japanese organizations. Many developing and newly developed countries are following this model. In Japan, productivity is understood as the ratio of output to input minus manpower cost. They give emphasis on wastage reduction, capacity utilization, improving quality and continuously delighting customers. They said it is possible only by motivating the labor force or employees, and not by talking about low labor productivity at all. But in our case it is just the opposite. Employers pass the blame of being uncompetitive to the labor. This is absolutely wrong. Another thing, the gains generated from productivity is being shared by the management only. It should be shared equally between the employers, employees and customers. Then only these three stakeholders of the organization strive hard for improving productivity of the organization.

How can the present situation be improved?
Every body in our country talks about "Poverty alleviation" as our first prioritized agenda. In my opinion, employment of the economically active population is the only vehicle and productivity is the only engine for it. Which agency is responsible for it. Everybody? Everybody's job is nobody's job. The mandate of the Ministry of Labor is too narrow. So, we need a Ministry of Manpower and Employment to address issues like providing employment to our manpower. Other south Asian countries have already gone into that concept. So, we need a very strong Ministry to look after employment policies and programs and to develop appropriate skill of our people. There is no justification in linking the Ministry of Labor with the Transport Management. This shows the neglect of the government toward this sector. While the management has profit motive only, government lacks focus on the issue of labor and employment.

Will foreign employment solve the present problem of unemployment?
Not at all! it is just to relieve the immediate pressure. It will rather distract our effort to improve internal employment situation. Has Nepal gained from 'lahure' culture? Has there been any productive use of the huge money remitted to Nepal. It has mainly been used for sustenance and in unproductive sector.

How can the informal sector be brought into the mainstream?
The amendment in Trade Union Act 1999 has also ensured labor rights to people working in informal sector. But organizing labors into Unions alone is not a solution. There is a need to motivate labor and improve their quality of life, which can't be ascertained unless the overall economy grows. This needs again giving more stress on improving organizational productivity and employment opportunities.

How is the training and research and development scenario?
Different government agencies have been providing basic vocational training since the fifties but they haven't been effective. We now have a number of training institutes and vocational schools under different umbrellas. Even 5 percent of their graduates are not consumed by the market. There is a lack of coordination between the training institutions. So, we should go from the concept of linking training to the market demand. A separate Ministry with adequate authority alone can do it.

How could our labor force be made competitive in the changing global context?
The key is quality and information technology (IT). While the quality is oriented toward the customer, IT is oriented toward innovation. Over the last one decade, productivity hasn't improved in our industries. Even privatized units like Bhrikuti Pulp and Paper Mills haven't performed better in terms of productivity and profitability. Because, they could not understand this `mantra' of innovation and customers. Industrialists have the tendency to hire Indian workers to avoid provisions of Labor Act, which demotivate the Nepalese labor. So, unless we develop an industrial culture things will not change.

"TUs Must Be Serious About Developing Skilled Manpower'

— R. K. KHETAN

President of Employers' Council and ex-officio Vice President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), RAJENDRA KUMAR KHETAN is emerging as a dynamic leader of Nepali private sector. The young industrialist spoke to SPOTLIGHT on issues related to industrial relations in Nepal. Excerpts:

How do you see the Nepali labor scenario? What needs to be done to make it more productive?
In general, we have a good industrial relations in Nepali labor scenario. It's just been ten years after the restoration of democracy and trade unions have emerged much stronger. Nepal is a small economic zone especially with low competitive advantage. Our labor is equal to Indian labor in terms of cost but in terms of productivity it is much low. As there is no comprehensive training policy at the national level the burden falls more upon the enterprise level. There is a need to link productivity with the wages. The productivity is very low against pay at this stage because majority of our laborers is unskilled and inexperienced. Frequency of holidays is at much higher side and labor is not serious about outputs.

How would you evaluate the present Labor Act and its implementation? Is there need to revise it?
Present Labor Act is traditional. It doesn't fulfill today's need. There are a lot of inconsistencies as issues such as the right to hire and fire exit policy, contract labor and labor policy for Export Processing Zones don't exist here. Trade Unions have upper hand in industrial relations and it is a strong feeling that Labor Act needs to be completely revised. There may be some shortcomings on the part of employers' side as well but our labor force is not result-oriented that is the crux of the problem.

How do you see functions of Nepalese Trade Unions? On what issues should they focus more?
The Trade Unions haven't been able to have full grip upon their members. They work in a traditional way and are not serious about their priorities. They lobby for issues like more holidays. High pay and perks but don't guaranty productivity and quality. Since the world is moving toward globalization of trade, Trade Unions must be serious about developing quality, skilled and competitive manpower.

Is the private sector, especially FNCCI, doing anything to develop training and research activities to improve Nepalese labor market?
With whatever resources we have, we are doing our best to develop a more congenial industrial relations, human resources development, training and research. We are also trying to find new areas of employment, review existing policies, laws and regulations. Our labor market needs grassroots training and new areas of employment. The FNCCI-Employers' Council is actively working in these areas with the ILO, other donor agencies, and employers' organizations of other countries.