Cost of labour unrest pulls manufacturing sector's growth down

The industries that are bearing the burnt of high interest rates and regular power outages are now under the pressure from the trade unions to raise the minimum wage.
The All Nepal Industrial Trade Union (ANTUF) -- UCPN-Maoits sister wing -- called indefinite strike from March 26, if their conditions are not met.
At a time, when the country needs more investment -- both domestic and foreign -- the trade unions forceful closure of the industries will create negative impact to the economy that has been witnessing around 3.5 per cent growth in an average in last one decade.
"The cost of fund has risen by almost 100 per cent due to rising interest rates and labour cost has risen by 50 per cent,” said Hari Sharma, MD of Janata Pharmaceuticals and vice-president of Confederation of Nepalese Industry (CNI) that has requested the labourers to return to their work and settle the problem through dialogue. The private sector is deeply affected by insecurity, forced donation, strikes and shutdowns and labour unrest that has brough the production and productivity both down.
"We want the issue to be sorted out through dialogue not by force," Kush Kumar Joshi, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said, adding that the investor will loose confidence, if the labour unions use forceful strategy.
The highly politicised and increasingly assertive trade union activity have spread the negative message to the investors, he added.From yesterday, the factories of nearly 80 companies -- in Hetauda Industrial Zone -- closed indefinitely after the ANTUF called a strike in Makwanpur to press their demand for a minimum wage of Rs 10,000 per month up from the current Rs 4,600.
Though the party supremo pledged that they will not strike throughout 2011 to mark Nepal Tourism Year 2011 successful, ANTUF disobeyed its own chairman and announced indefinate strike from March 26.
This is the second industrial strike called by the Maoists after they targeted Kaski, forcing the industries there to announce a raise of Rs 1,500 after one day closure of industries last month.
The call for higher minimum wages is also being supported by other trade unions affiliated to CPN-UML and Nepali Congress, but they have slightly different take on the issue and have urged to solve the problem through dialogue.
"The industries, reeling under almost 20-hour power cuts during working hours cannot take the presure of labour trouble," Joshi added.Some 400,000 youth enter the job market annually and half of them are consumed by the foreign employment. But the rest needs to be consumed by the domestic industries. However increasing labour-management problem could lead to more unemployment.
With $35.31 billion, Nepal ranks in the 102nd position in the GDP (purchasing power parity 2011 Country Ranks) and as long as there is labour unrest the country cannot see more investment that is key to create employment and economic growth.
The umbrella organisation of private sector has urged the trade unions to be more disciplined. "We are ready for the wage hike according to the current inflation rate," it said, adding that, it, however ,doesnot subscribe to the forceful means.

Manufacturing Production Index (MPI) increases by 1.23 per cent only
KATHMANDU: According to the Central Bureau of Statistics (CBS), the Manufacturing Production Index (MPI) grew by 1.23 per cent in the first quarter of this fiscal year. MPI is a key indicator of the country’s industrial activity. For the last few years, the country’s industrial sector has been in a sorry state. Not only its contribution to the GDP has declined, the private sector is also making an exit from the industrial sector. The decline or slow growth of some major sectors with higher weightage in the MPI resulted in poor growth of the overall manufacturing sector. There has been a huge decline of 7.89 per cent in the index of fabricated metal products — iron rod, billets and GI pipes -- that has the heighest weight of 11.71 per cent in the MPI. The GI pipe index, which commands 6.17 per cent weight in the MPI, has declined by 14.21 per cent in the first quarter.