Private sector opposes government's ulilateral minimum wage fixation

The private sector has opposed the government's unilateral minimum wage hike, and asked not to hike the minimum wage at the time of pandemic.

Issuing a joint statement, the three private sector representing bodies said that the raised minimum wage to workers, which the government is implementing from new fiscal year, cannot be implemented as the second wave of the Covid-19 prolongs and continue to impact businesses and the economy further.

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Confederation of Nepalese Industries (CNI) and Nepal Chamber of Commerce (NCC), in the joint statement, said that more than 700,000 businesses across 54 districts across the country have been affected due to the ongoing prohibitory order. As most of them are small and medium entrepreneurs (SMEs), it will be difficult for the private sector to manage their daily expenses, they said.

"As businesses are already finding it difficult to make regular payment to workers, we cannot implement the increased minimum wage, if situation further deteriorates,” the press note reads, adding that increment of wage to workers is untimely and might also impact foreign investors and investment in Nepal.

The government has increased minimum wage of labourers from Rs 13,450 per month to Rs 15,000. It has been already published in the Nepal Gazette on May 4. 

Expressing reservations against the government's recent decision of increasing minimum salary of workers, the private sector also has asked the government not to interfere in the arrangement of fixing wages by mutual consent.

At a time, when the private sector has been unable to get any respite from the government despite announcement in fiscal and monetary policy. "In the current context, the private sector is taking all possible measures to improve the supply chain and promote economic activities as far as possible," the press note reads, adding that special emphasis should be placed on measures to keep the economy afloat and save employment. "The pandemic has affected tourism and dependent industries for more than a year and has further impacted SMEs."

At present, many tourism-related enterprises have reached a mutual agreement with their staff regarding pay in the absence of work," the press note reads, adding that increasing the minimum wage will further affect these businesses and entrepreneurs. 

PM Oli pledges to raise minimum wage to Rs 15,000, Private sector says 'not possible'

 Prime Minister KP Sharma Oli today announced that the minimum wage of workers will be increased to Rs 15,000 from the nest fiscal year that starts from July 16.

The premier's pledge to hike the minimum wage from the current Rs 13,450 in the time of Covid-19 pandemic has however surprised the private sector.

"Though the prime minister announced to increase the minimum wage, we are in no condition to pay regular wage due to second wave of pandemic, let alone increasing it," said one industrialist. "There has no been discussion on minimum wage hike either," he said, adding that the announcement came to a mere surprise to the private sector. "It could be the prime minister's election propaganda."

On the occasion of the 132nd International Workers’ Day today, Oli extending his best wishes to all working-class people said that minimum wage will be increased from the beginning of the new fiscal year.

But the private sector players think the prime ministers move is election oriented. "Since he has lost confidence from every quarter for his failure in securing livelihood of the people, he announced unilaterally the wage hike to get votes in the election," one of the industry players said, adding that such uncertainty in policy will not only discourage the private sector and investment but also force the industrialists to rethink their investment plans. "We are already suffering from the high cost economy, and the increase in wage will make Nepali products not only costly but also incompetent in the market."

Another industrialist said that the cost of production has been increasing lately due to various circumstances, and the increase in minimum wage will not only hurt the industries but also government plan to create employment in the country. "The government is forcing the Nepali youths to foreign employment by pushing the Nepalis industries to the closure."

The industries that have been hit by the lockdown from last March 24 for four months, and subsequent prohibitory order for another almost half year, have just started to gain momentum, the second wave of the pandemic struck the country. The government has imposed prohibitory order restricting the movement from Thursday to break the chain of coronavirus spread. The second wave seems more dangerous as it has posted over 5,000 new cases everyday.

There is a provision to hike the minimum wage every two years. But the industries, labours and government agreed last year not to increase the minimum wage during the pandemic.

"Job security and creation of additional job opportunities will be the priority of the government,’’ the prime minister said, adding that Nepali trade union movement had brought the people’s hardship and sufferings to the limelight.

Covid-19 drives wages down, new ILO report finds

 A new report by the International Labour Organisation (ILO) has revealed that monthly wages fell or grew more slowly in the first six months of 2020, as a result of the Covid-19 pandemic, in two-thirds of countries for which official data was available, and that the crisis is likely to inflict massive downward pressure on wages in the near future.

The wages of women and low-paid workers have been disproportionately affected by the crisis, it reads.  

Furthermore, while average wages in one-third of the countries that provided data appeared to increase, this was largely as a result of substantial numbers of lower-paid workers losing their jobs and therefore skewing the average, since they were no longer included in the data for wage-earners. In countries where strong measures were taken to preserve employment, the effects of the crisis were felt primarily as falls in wages rather than massive job losses, the report reads.

The Global Wage Report 2020-21 also reveals that not all workers have been equally affected by the crisis. “The impact on women has been worse than on men,” it reads, adding that estimates based on a sample of 28 European countries find that, without wage subsidies, women would have lost 8.1 per cent of their wages in the second quarter of 2020, compared to 5.4 per cent for men. “The crisis has also affected lower-paid workers severely as those in lower-skilled occupations lost more working hours than higher-paying managerial and professional jobs.”

Using data from the group of 28 European countries the report shows that, without temporary subsidies, the lowest paid 50 per cent of workers would have lost an estimated 17.3 per cent of their wages. Without subsidies, the average amount of wages lost across all groups would have been 6.5 per cent. However, wage subsidies compensated for 40 per cent of this amount.

“The growth in inequality created by the Covid-19 crisis threatens a legacy of poverty and social and economic instability that would be devastating,” said ILO director-general Guy Ryder. “Our recovery strategy must be human-centred,” he said, adding that they need adequate wage policies that take into account the sustainability of jobs and enterprises, and also address inequalities and the need to sustain demand. “If we are going to build a better future we must also deal with some uncomfortable questions about why jobs with high social value, like carers and teachers, are very often linked to low pay.”

The report also includes an analysis of minimum wage systems, which could play an important role in building a recovery that is sustainable and equitable. Minimum wages are currently in place in some form in 90 per cent of ILO member states including Nepal. But even before the onset of the Covid-19 pandemic the report finds that, globally, 266 million people – some 15 per cent of all wage earners worldwide – were earning less than the hourly minimum wage, either because of non-compliance or because they were legally excluded from such schemes. “Women are over-represented among workers earning the minimum wage or less,” the report reads.

“Adequate minimum wages can protect workers against low pay and reduce inequality,” said one of the authors of the report Rosalia Vazquez-Alvarez. “But ensuring that minimum wage policies are effective requires a comprehensive and inclusive package of measures,” she said, adding that it means better compliance, extending coverage to more workers, and setting minimum wages at an adequate, up-to-date level that allows people to build a better life for themselves and their families. “In developing and emerging countries, better compliance will require moving people away from informal work and into the formal sector.”

The Global Wage Report 2020-21 also looks at wage trends in 136 countries in the four years preceding the pandemic. It found that global real wage growth fluctuated between 1.6 per cent and 2.2 per cent. Real wages increased most rapidly in Asia and the Pacific and Eastern Europe and much more slowly in North America and northern, southern and western Europe.

PM Employment Programme benefits some 175,909 unemployed

Though, the economists and opposition have been blaming the government for wasting the taxpayers hard-earned money on unproductive way, the government today claimed that it has provided employment to some 175,909 people through 6,864 projects across the country – based on the data received from 599 local units – run by various local units under the ambitious Prime Minister Employment Programme (PMEP) in the last fiscal year 2018-19.
According to the Ministry of Labour, Employment and Social Security (MoLESS), the programme beneficiaries carried out some 2,262,269 days of work through 6,864 community works (projects) that amounted to Rs 2.37 billion in the last fiscal year. A total of 31,958 beneficiaries in Province 5 carried out tasks that amounted to 492,630 working days. Similarly, some 34,432 beneficiaries in Sudur Paschim Province carried out tasks of 433,306 days; some 27,448 people in Province 2 carried out tasks of 312,675 days; some 31,022 persons in Province 1 completed works of 311,093 days; some 25,871 in Karnali Province carried out works of 283,755 days; some 17,619 persons in Province 3 carried out works of 226,036 days; and some 17,559 people in Gandaki Province carried out work of 202,774 days.
According to the ministry, these projects provided employment for 13 days per person and received Rs 13,460 in an average. Organising a press meet at the ministry today, minister for Labour, Employment and Social Security, Gokarna Bista, said that the government has been able to create short-term employment opportunities through these programmes in the first year of the implementation of the programme. “We have been able to create employment for such a high number of people in the first year of the implementation of the programme after completing over 86 legal processes,” Bista said, claiming that the issue of employment was never a priority earlier. “But, we have been able to create employment opportunities in a massive scale.”
Though the short term employment means those who were employed have already been unemployed by now, the government has claimed that its vow to create half a million employment in the current fiscal year could also be met with the federal government allocating Rs 2.36 billion in conditional grants to the local units to run such programmes to create such short term unemployment. “Each local unit had received up to Rs 10 million to run such projects for employment programmes,” the minister claimed.
The ministry, however, claimed that the actual employment figures could be higher as they are still collecting data from all local units across the country.
The incumbent Prime Minister KP Sharma Oli had launched the Prime Minister Employment Programme with a much fanfare on February 13 last year, but the programme became a controversial from the very beginning due to its non-transperent way of allocationg the budget. The government had allocated Rs 3.10 billion for the programme in the last fiscal year 2018-19. “The budget has been wasted in the haphazard manner, and the party cadres have been paid for no-output show-up programmes,” the economists blamed, adding that the government hass borrowed the budget from the development partner especially from the World Bank (WB) to diostribute to its party cadres but the Nepali citizens have to pay for the interest of the money spent by Nepal Communist Party (NCP) party cadres. Despite criticism of misuse of the development partner’s fund, the government has allocated Rs 5.1 billion for the PMEP for this fiscal year 2019-20.
However, minister Bista – in the press meet – defended the programme in the press meet claiming the programme to be successful. “These employment programmes include road construction and maintenance, irrigation canals, preservation of ponds and heritage sites, and construction of walking trails,” he claimed, adding that the government mobilised unemployed citizens, who are registered with the Employment Service Center (ESC) set up in each local unit under local development programmes. Bista also informed that the government has now appointed employment coordinators in most of the local bodies to make the programme move ahead in a full-fledged manner from the current fiscal year.
Over 1.71 million people have registered in these centers across the country so far, according to data compiled by the ministry, which is still in the process of verifying the eligibility of the applicants.
Under the programme – introduced also to implement the Act to Guarantee the Right to Employment 2075 – all citizens registered with the ESCs should get employment opportunity for at least 100 days in a year, if none of their family members are employed for a year. If the government fails to provide employment opportunities to those registered with the ESCs, it must pay them 50 per cent of the minimum wage as unemployed allowance, the Act reads. “Since the government had set a monthly minimum wage of Rs 13,450 for workers on July 9, last year, such families will receive Rs 22,417 annually.”
The Constitution of Nepal has also guaranteed the right to employment to the citizens. 

ILO calls for investment in people’s capabilities for a brighter future

With technological advances changing the nature of many jobs, and leading to the need for new skills, the International Labour Organisation (ILO) has pointed out the urgency to expedite the human –centred agenda for the future of work.
As part of marking its 100 years, ILO country office organised a special programme in Kathmandu  to share the key findings of the Global Commission Report, which calls for investing more in building people’s capabilities to enhance skills, reskills and upskills  for social justice and decent work. 
Minister for Labour, Employment and Social Security Gokarna Bista, on the occasion, said that  recommendations of the Global Commission Report on the 'Future of Work' have fittingly incorporated challenges that Nepal is facing in the labour market and expressed commitment to implemement the ILO Declaration on the future of work when it comes up.
“The government has embraced the plan to provide decent employment opportunities to all people as their constitutional right,” he said, adding that social contract will be the basis to ensure social justice to all workers. He also urged the ILO to start a global campaign to urge countries to pay equal wage for work of equal value, done abroad for migrant workers.
Secretary at the Ministry of Labour, Employment and Social Security Mahesh Prasad Dahal said that the government is making efforts to address skills mismatch in the labour market and stressed the need to address the challenges of youth population.     
Likewise, Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Bhawani Rana said that small and medium scaled enterprises should be promoted to ensure decent employment, especially to women. "FNCCI is ready to team up with the government to promote jobs at home,” she emphasised.
Nepal Trade Union Congress (NTUC) president Pushkar Sharma, on the occasion, said that effective implementation of social security schemes and newly agreed minimum wage will build trust between workers and employers.
Assistant Director General of the ILO and Regional Director for Asia and the Pacific, Tomoko Nishimoto said that the ILO is seriously considering, country by country in Asia how it can realize the concept of decent work, with much focus laid on challenges posed by climate change, shifting demographics and new technologies.
“The core issue concerning labour markets relates to the nature and portability of workforce skills and building an agile workforce for the future of work transformation,” she added.
Likewise, head of ILO Economic Analysis Unit Sara Elder presented the highlights of the report, whereas economists Dr Govind Nepal and Dr Swarnim Wagle commented on the report. They also suggested that its recommendation will be a good reference for the government, employers and workers to prepare strategies for implementation of the future of work. 

Nepal, UAE agree to seal revised labour deal

Nepal and the United Arab Emirates (UAE) today agreed to sign a revised labour agreement that is expected to benefit as many as 360,000 Nepali migrant workers, who are currently working in the UAE. The both sides also agreed on a draft of revised labour agreement that guarantees zero investment jobs in the Gulf country for Nepali workers.
The two sides reached the consensus during a two-day second Bilateral Technical Meeting on the draft Memorandum of Understanding (MoU) between Nepal and the UAE on Recruitment, Employment and Repatriation of Workers that concluded today, in Kathmandu.
The deal was signed by joint-secretary at the Ministry of Labour, Employment and Social Security (MoLESS) Ram Prasad Ghimire and director of International Bilateral Relations under the Department of Ministry of Human Resources and Emiratisation of the UAE Abdullah al-Muaimi. According to the understanding, Nepali workers will not have to bear any financial burdens – whether cost or any fees – for jobs in the emirates.
The revised agreement that has put special stress on enforcement of wage protection system for Nepali workers will be tabled at the cabinet soon to approve it. "The MoU will be signed once the two governments approve the document,” Ghimire, who led the Nepali delegation, said, adding that once the new agreement is signed, it will officially replace the ‘MoU between the Government of Nepal and the Government of United Emirates in the Field of Manpower’ signed on July 3, 2007.
According to the proposed agreement, the Nepali workers will not pay any amount in cost or fees for jobs in the UAE. "The employer will be paying all the expenses on behalf of the worker,” the agreement reads, adding that employers will bear the cost of recruitment to the recruitment agencies, employment and residency of Nepali workers in the UAE. "The employers will bear all the costs related to recruitment, employment and the residency of Nepali worker in the UAE including but not limited to recruitment agency fees, air ticket costs, insurance fees, visa fees, medical examination fees and all other recruitment related costs and fees."
"The UAE government will ensure access to Labour Court for the worker without any cost until the case is resolved," it reads, adding that when the case is in the Court, the worker is entitled to apply for a temporary work permit in accordance with the relevant Laws of the UAE. "The terms and conditions of employment of the Nepali worker in the UAE shall be defined by an Employment Contract between the worker and the employer."
The Employment Contract will specify the basic employment conditions, and the rights and obligations of the employer and worker in accordance with the laws and regulations in force in the UAE, it further reads. "The UAE government will ensure that the employment offer shall indicate the job specifications, required qualifications, types of jobs for which recruitment is proposed as well as the terms and conditions of employment offered including wages, non-wage benefits, accommodation and transportation when applicable, end-of-service entitlement, and any other details required by the government of the UAE. All these details must be reflected unaltered in the Employment Contract, Ghimire said, adding that the worker will be eligible to seek and obtain alternative employment when it is duly established that the employer has failed to meet contractual or legal obligations to the worker due to any reason including closure or winding up of business or if the worker is subjected to violation of any of his or her rights under UAE laws, without prejudice to the right of the worker to collect his or her dues from the employer and/or seek judicial redress. "In such events, the worker shall also have the right to return back to Nepal, if he or she so desires. In such case, the employer will bear all associated costs."
Most of the Nepali migrant workers currently are ordinary workers engaged in construction, hospitality, farming and security service sectors in the Gulf nation.
The UAE government has also agreed to ensure the safety, security and welfare of the Worker with due regard to the female worker. "The government of the UAE shall ensure that the worker is not subject to any form of unlawful treatment and is free to communicate with any third party," it reads, adding that the UAE will ensure extensive and close oversight over the application of the existing wage protection systems to monitor timely payment of wages and other benefits. "Besides, the UAE law has a provision of both work related insurance as well as medical insurance schemes that cover almost all the cases of accidents or injuries and sickness except personal negligence.
Nepal, as the chair of the Colombo Process – a common regional forum of labour source countries – has put priority on securing zero cost jobs for its workers as well as reviewing the existing labour agreements and signing new deals with other destination countries lately. Likewise, the UAE has been one of the most-preferred labour destinations among the Gulf countries for Nepali migrant workers for its better treatment, remuneration among other facilities. 

Tea estate workers in east demand minimum wages

Tea estate workers in the eastern region started protest against factory owners as they have not implemented the monthly minimum wage and social security scheme, though tea factory owners have been claiming that the rule is not applicable to the tea industry as it requires seasonal workers only, not full time as in other industries.
The new labour and social security laws have guaranteed the minimum wages and social security to the workers. The government has made it mandatory for employers to pay industrial workers a minimum wage of Rs 385 daily and create a social security fund by this fiscal year but tea factories have not yet implemented the rule. However, the tea factory owners are complaining that the tea industry should not be in the 'industrial category' as it requires only seasonal workers.
The workers have intensified their protest against tea factory owners for not implementing the Labour Act, according to the central president of the Nepali Congress-affiliated Nepal Tea Estate Workers Association.
The tea factory owners have been paying their workers only Rs 278 for the last nine months – claiming that they are seasonal workers – through the workers have been demanding the government fixed the minimum daily wage at Rs 385 for industrial workers.
Only two tea factories in Dhankuta and three in Ilam have implemented the new law, according to the president of All Nepal Tea Workers Association. The government had formed a high level committee to study the tea sector last year. Its report has not yet been made public.
The Nepal Tea Producers Association said that it would be forced to shut down the factory if the industries implemented the law and paid the minimum wages fixed by the government. However, the tea producers claimed that the tea industry globally had separate labour laws. The industry is governed by the Tea Labour Regulation 1994.
According to the new Labour Act, employers require to provide a provident fund equal to 10 per cent of the basic salary for temporary employees and bonus. The previous law had provisioned a 5 per cent provident fund but only to permanent workers. There are nearly 50,000 tea workers in five districts in the eastern region.

Global wage growth lowest since 2008

Global wage growth in 2017 fell to its lowest rate since 2008, far below levels before the global financial crisis, according to a new International Labour Organisation (ILO) report.
The Global Wage Report 2018-19 finds that in real terms – adjusted for price inflation – global wage growth declined to 1.8 per cent in 2017 from 2.4 per cent in 2016. The findings are based on data from 136 countries.
In analysing wage growth, the report finds that in advanced G20 countries real wage growth declined from 0.9 per cent in 2016 to 0.4 per cent in 2017. By contrast, in emerging and developing G20 countries, real wage growth fluctuated between 4.9 per cent in 2016 and 4.3 per cent in 2017.
“It’s puzzling that in high-income economies we see slow wage growth alongside a recovery in GDP growth and falling unemployment," said ILO director-general Guy Ryder. "And early indications suggest that slow wage growth continues in 2018," he said, adding that such stagnating wages are an obstacle to economic growth and rising living standards. Countries should explore, with their social partners, ways to achieve socially and economically sustainable wage growth.
In the last 20 years, average real wages have almost tripled in emerging and developing G20 countries, while in advanced G20 countries they have increased by just 9 per cent, the report shows. But, in many low- and middle-income economies, wage inequality remains high and wages are frequently insufficient to cover the needs of workers and their families.
The report calculates gender pay gaps in innovative and more accurate ways, using data covering some 70 countries and about 80 per cent of wage employees worldwide. It finds that globally women continue to be paid approximately 20 per cent less than men.
“The gender pay gap represents one of today’s greatest manifestations of social injustice," Ryder said, adding that the gender pay gap represents one of today’s greatest manifestations of social injustice, and all countries should try to better understand what lies behind them and accelerate progress towards gender equality.
The report finds that in high-income countries it is at the high end of the pay scale that the gender pay gap is wider, while in low- and middle-income countries the gender pay gap is wider amongst the lower paid workers.
Using empirical evidence, the report also shows that traditional explanations, such as differences in the levels of education between men and women who work in paid employment, play a limited role in explaining gender pay gaps.
"In many countries women are more highly educated than men but earn lower wages, even when they work in the same occupational categories,” said econometrician and wage specialist at the ILO and one of the authors of the report Rosalia Vazquez-Alvarez. "The wages of both men and women also tend to be lower in enterprises and occupations with a predominantly female workforce," she said, adding that to reduce gender pay gaps more emphasis therefore needs to be placed on ensuring equal pay for women and men, and on addressing the undervaluation of women’s work.
Another factor which weighs on the gender wage gap is motherhood. The report shows that mothers tend to have lower wages compared to non-mothers. This may be related to a host of factors, including labour market interruptions, reductions in working time, employment in more family-friendly jobs with lower wages, or stereotypical promotion decisions at enterprise level.
According to the report, a more equitable sharing of family duties between men and women would in many instances lead to women making different occupational choices.
Surprisingly, the evidence shows that even before women reach motherhood, there is already a pay gap. This suggests a need to combat stereotypes and discrimination at the point of entry into the labour market.