By Gaurav Aryal

Labour Dilemma

An Analysis of Labour Issues Facing Nepal

On the eve of celebrating Nepal Investment year 2012/13, over unionisation of labour has continued alarming foreign investors and discouraging local investors to venture into new industries. Multiple unions affiliated to more than one political party exist within a company. Such politicisations of labour unions have resulted in inter union and employee-employers rifts that significantly reduce productivity along with losses of working hours.

Political instability, labour problems and power supply are said to be the major causes of poor investment climate in Nepal. According to a survey report of 2009 conducted by enterprisesurveys.org, political instability is the major constraint for doing business followed by power shortage and labour problems respectively.

According to Bishnu Rimal, President of General Federation of Nepalese Trade Unions (GEFONT), there are 353,000 individual members of GEFONT and altogether 29 affiliates. Similarly, there are 800,000 members in All Nepal Trade Union Federation (ANTUF) which has 42 different professional organisations as affiliates., There are around 286 trade unions registered at the Department of Labour (DoL) that are affiliated to 10 trade union federations. A total of 86 new unions have been added after the People’s Movement II, six years ago, when there were 200 unions in the fiscal year 2005/06. According to Manish Agrawal, Vice Chairman of Employers Council at FNCCI, there are 10 authorised trade unions (including GEFONT and ANTUF) at national level in Nepal and they are all affiliated to different political parties. These unions themselves are divided into different categories according to the nature of industry. There are separate unions on tourism, hospitality, service industries, banks and financial institutions and manufacturing sector rather than having branches of a unified labour union that represents overall workers from the entire business sector.

According to World Bank data, labour unrest is one of the contributing factors for adverse investment climate. According to the Global Competitive Index 2012/13 prepared by the World Economic Forum, inadequately educated workforce is one of the major hurdles for doing business in Nepal. The same report ranks Nepal at 125th position on labour market efficiency out of 144 countries. Likewise, poor work ethic in national labour force was placed at 8th most problematic factors for doing business in Nepal.

In addition, restrictive labour regulations was placed in the 5th position under the same category. A report by Nepal Business Initiative (NBI) with support of South Asia Enterprise Development Facility presented to the Prime Minister in the last week of September, labour problem ranks as one of the major challenges faced by the Nepali economy. Similarly, the Global Competitiveness Report 2012–2013 lists various aspects related to the labour market of Nepal and their efficiency and their world ranking.

(See table).

In nutshell, if the ongoing problem of power shortage is resolved today, labour problem will come up as the biggest hurdle to beat, for making the overall investment environment favourable for new investors and existing corporate houses.

Wrong Message to Investors

 The never ending labour problems have given unintended messages to the local as well as foreign investors who are willing to venture into Nepal. Recent dispute in KFC and Pizza Hut has definitely given a wrong message to interested foreign investors. Similarly, Shikhar Shoes was closed after workers manhandled the Managing Director of the company and padlocked its factory at Goldhunga. It seems that labour unrest, one of the major roadblocks to higher investment, will continue unabated in the future too.

 An investor usually looks to invest where there is favourable business environment. Experts believe that the labour issues have created a hostile environment to investments. Labour trouble experienced in Nepali units of multinational giants like Surya Nepal, Unilever, GMR and Asian Paints have turned off prospective investments to Nepal. A handful of such representative cases are enough to scare away either domestic or foreign investors. Khila Nath Dahal, Former Co-president of Nepal Trade Union Congress Independent (NTUC-I) and former President of Democratic Confederation of Nepalese Trade Union (DECONT) denied, “It is a false assumption that labours are the cause to repel the investment. Labours, investors themselves and the government policy. have roles in r creating threat to investors venturing new business in Nepal. Lack of infrastructural development like roadways, electricity and drinking water has also affected investment.”

 However, Rimal claims that industrial strikes are in a decreasing trend. He said, “After 2008, the number of industrial strikes has been decreasing. Trade unions have contributed to only six per cent of the total work stoppages last year as around 28 per cent cases of such work stoppages were due to bandhas called by employers and the rest was contributed by political parties and other organisations.”

 Still, leading corporate houses like Chaudhary Group, Golchha Organisation, Dugar Group, among others say that due to unfavourable environment for the manufacturing sector, they have identified service sector as safer areas for investment. Service sector, except from tourism and hospitality, sees very few cases of labour strikes and union problems. These corporate houses have been minimising their foothold on manufacturing sector and moved onto the service sector like hospitality, education, banking and finance, healthcare among others.

Over Politicisation of Workers

 Naturally, the private sector companies look to make profits. When the workers are involved in union activities, more than working for the company, it adversely affects the productivity. So, a voice for ‘No Work No Pay’ was raised by the entrepreneurs but it has not been implemented till date as trade unions have strongly opposed this proposal.

 Agrawal said that as per the international norms, the identity of a labour is associated with the industry. “On the contrary, the identity of the worker in Nepal is associated with the trade union to which they belong,” he clarified.

 Due to frequent strikes and even physical assault upon the employers and managers has led to closure of factories and companies. Foreign investors have shut down their industrial units and reduced their presence in the country. Agrawal said that Colgate-Palmolive is one such example. “Nepal is losing many investors because of labour problems. Recently, Surya Garment was also shut down due to labour problems,”. he said. However, Dahal says, “If the demands of employees are fulfilled they would not choose violent way to fulfil their demands. If one side does not provide basic rights of employees as stated in the Labour Law, then the other side would definitely not follow law and order also. This consequently results into imbalance between the employers and the employees.”

 In many cases, once an issue is resolved at a point of time and place, even more severe ones are raised at the next point of time and place. Numerous industries have closed down and, looking at the recent examples of KFC and Pizza Hut, it cannot be ruled out that similar situation won’t arise in other companies too.

 Unruly unions are protected by the political parties who don’t tire talking about importance of bringing foreign investments. Different unions that belong to different political parties come up with different demands, mostly as dictated by the respective political party. Thus, there is conflict of interest and opinions among the unions themselves. They are primarily guided by party philosophy rather than working for creating a win-win situation for both employers and employees. Agrawal said, “The major problem of the trade unions in Nepal currently is that they are focused on following political ideologies of associated political parties rather than fulfilling the interests of workers.”

 According to Agni Prasad Thapaliya, Judge at the Labour Court, one union does not allow formation of second union in the company. “In most cases, employees are not allowed to work without taking membership of a trade union and paying a levy to the union and inter-union rivalry has also become problematic. The same person is found involved in numerous unions,” he said.

Strange Demands

 In a series of recent events, workers have come up with weird and strange demands. Labour unions at Hotel Greenwich Village, a three star hotel in Lalitpur, recently came up with a demand that their members be felicitated with a gold medal weighing one kilogram. Labour unions affiliated to the Maoists (the party that is leading the present coalition government) and CPN-UML party are pressing the hotel management submitting a 22 point demand paper.. According to the demand paper, employees who have been working for more than 20 years in the hotel should be presented gold medals each weighing more than a kg. Prabin Acharya, Deputy Managing Director at the hotel said, “It is natural to demands an increase in remuneration and compensation but a demand like this was unheard of earlier.” The hotel has resumed its operation.

Similarly, workers at Thai Airways Nepal office have presented an ultimatum with various absurd demands like paying their income taxes by the airline. Such activities have become a threat to the need of the day – increase investment that will have forward linkages to employment and overall national economic growth.

Legalities of Strikes

 Although Nepal too has a legal procedure to a strike, there are very few cases of complying with these procedures before a strike is held. Thapaliya said that most of the strikes are organised without following the legal procedure.

However, the trade union leaders deny this charge. Rimal says that the legal procedure of strikes is not violated. “Labour laws are not violated in recent years. However, if employers and employees both are found defying the law, they should be brought under the book.”

 Shalikram Jamakattel, President of ANTUF says, “Strikes which are not in accordance with the law make workers’ case weak. Therefore, they go for the strikes according to the law unless there is a compulsion.’

 According to Thapaliya, the due process requires prior information about the strike. If the management does not settle the issues, then it is taken to the labour office, where both parties – the workers and the management - sit for dialogues. “If the dialogues do not resolve the issue, the workers should give a 30 days ultimatum. If the management does not resolve the issue even by the end of such 30 days, the workers can go for strike,” he adds.

Collective Bargaining

 Collective bargaining in Nepal is commonly focused on demanding additional facilities, mostly wages and other fringe benefits that often includes strange demands like that in the cases of Thai Airways and Greenwich Hotel.

 It is quite natural to adopt unique bargaining standpoints by the workers according to different types of companies. However, at times, workers are alleged to have come up with insatiable demands that can be hardly fulfilled by the employers. Thapaliya said that workers are often overambitious and their demands revolve around the political ideologies to which the union is affiliated, rather than relating to the overall benefits for workers.

 However, Rimal explains this differently. “I think the approach that we follow for collective bargaining is correct. We conduct collective bargaining at the central level for minimum standards like wage determination and finalise it there. Collective bargaining for maximum standards is done at the enterprise level and we think such standards should be different in different enterprises. Multinational companies have high paying capacity so we demand more from them whereas we demand less from companies that have less income and profits.” Jamakattel complains that collective bargaining is not conducted as promised in the policies. “Labours in industrial sector do collective bargaining every two years but it has not been managed systematically. Unless new labour law is made, these problems cannot be managed.”

 Agrawal on the other hand complains that there has not been effective collective bargaining as it is affected by the overruling political ideologies of trade unions they are affiliated to.

Employment Security

 Trade union leaders also complain that many employers do not provide appointment letters. Dahal says, “The law guarantees a system of providing appointment letter to employees as soon as they join a company. But there are many employees who have not received their appointment letters. Thapaliya too has the same comment to make.

 Labour law also states that an employee who has completed 240 working days should automatically become a permanent employee. However, there is a system of provisional period as well. If the employer finds the performance of an employee unsatisfactory, the employer has the right to terminate the service of such employee at any time during the probation period.

 A minimum wage is fixed at Rs 6,200 per month. But many employees arereceiving less than this, complains Dahal. Therefore, he claims, more than fifty per cent of the labour strikes have been aimed to implement such provisions of the labour laws. Labour law also requires that the salary should be revised every two years. Also, this provision is neglected by employers, adds Dahal.

 Out of nearly half a million youths that enter the Nepali employment market every year, around 305,000 are going abroad for jobs. According to the Central Bureau of Statistics, there are around 11.7 million people in the workforce and only 1.8 million of them are in the formal sector jobs within the country while about 3.5 million are employed abroad.

Act Amendment

 Both employers’ organisations and trade unions have been demanding amendment in the Labour Act. Both believe that to maintain cordial industrial relations, the Act urgently needs amendments.. Still, the leaders of these trade unions claim that half of the existing disputes could be resolved with the existing laws if executed properly. However, Rimal) is hopeful that the proposed amendment to the Act will address the issues of daily-wage workers and those working in the informal sector.

 And it has been around 10 years since the government begun planning to amend the labour laws. Both employer’s organisations and trade unions want the law amended. However, their respective demands are different and some of them even conflicting. Employers are demanding the inclusion of provisions like ‘No Work No Pay’ and ‘Hire and Fire’ while trade unions are demanding setting minimum wage also for informal sector.

 But there are other issues as well to be incorporated in the labour law. Thapaliya says, one such provision needed is for a tripartite commission to resolve issues that could not be addressed through collective bargaining. He suggested that the informal sector too should have rules and regulations that address issues of manual labours like minimum wages, contract system, working hours and provision of social security.

Merger of Unions

 Another labour sector issue being intensely discussed these days is the merger of trade unions. During a recent function organised by GEFONT, Sharan KC, Regional Coordinator for South Asia at Trade Union Solidarity Centre of Finland (SASK) said that Nepali trade unions should merge with each other so that they become stronger and influential. He also shared examples of merger of unions in the international arena.

 Employers too are positive about this proposal. Agrawal believes, “The presence of more than two trade unions within an enterprise has been creating a very difficult working atmosphere. It divides the workers into different ideologies.” He added, “There should be only one trade union for one enterprise.”

 FNCCI is planning to form an Industrial Relations Forum involving all the presidents of major Trade Unions, industrialists and President of FNCCI. He informed, “It will be a platform to discuss the emerging issues of labour and industrial relationships. The forum will work towards safeguarding the rights of both employers and employees.”

State’s Role

 Both the employers and employees are found unanimous on the state’s role for resolving the problems in industrial relations. As the government has a major responsibility to protect the investments in the country, it becomes the state’s responsibility to protect investors, when needed, from unlawful activities carried out by trade unions as well. Agrawal cites an example of Maruti Suzuki in India where the state came forward to provide such protection. During the recent labour strike there, the management team was beaten up by the labourers, and the Indian police deployed 500 rapid action forces. “This shows the level of concern the government has shown towards the investors. This action showed that Indian government will not tolerate repetition of such activities.. If Indian government can do it, the Nepali government too can do it,” he says. He said, “Sense of insecurity is the major problem that the investors are facing now due to the inability of the government to take actions when trade unions behave illegally.”

Upper Karnali Project

Energy Limited, GMR Infrastructure Limited (GIL) and Italian-Thai Development Project Company had signed a Memorandum of Understanding (MoU) with the Government of Nepal, for development of 900 MW Upper Karnali Hydro electric Project. The project was set to develop under a Build, Own, Operate and Transfer (BOOT) basis. The plant was targeted to be commissioned by the end of 2016.

 The attack on Indian infrastructure and energy major GMR’s power project in western Nepal by Maoists delayed the 900 MW hydropower project to meet its 2016 completion date. The nearly $469 million project’s environmental impact assessment was on the verge of completion when the attack occurred.

 Upper Karnali Hydropower Project’s camp site in Dailekh district was burnt down. The act of arson and vandalism destroyed all the three pre-fabricated buildings in Dailekh, including the GMR site office with its computers and documents. The fear of further attacks and the pulling out of all personnel was said to have caused the delay to go up further, causing an escalation in costs as well.

 Soon after the attack, the second in two months, GMR’s director G Subba Rao and Harvinder Manocha, GMR Energy’s associate vice-president as well as country director for Nepal, held talks with Nepal’s erstwhile Energy Minister Gokarna Bista and all lawmakers from the three districts spanned by the project - Dailekh, Accham and Surkhet.

 Besides Dailekh, Accham and Surkhet, GMR’s projects in Nepal, including the 600 MW Upper Marsyangdi, have been regularly threatened by the Maoists with their top leaders demanding that their licenses be scrapped.

 The Independent Power Producers’ Association of Nepal warned the government in a press statement that such attacks would demolish investors’ confidence in Nepal. Facing an 18-20 hour daily power cut during the dry winter and summer seasons, Nepal has been banking on the Upper Karnali project to ease the power crisis within the next five years. GMR Group is a Bangalore headquartered global infrastructure major with interests in Airports, Energy, Highways and Urban infrastructure.

Surya Nepal Textile

Established in 2004 with an investment of approximately Rs 700 million, Surya Nepal Private Limited’s garment manufacturing unit - Surya Textile Industry - had been providing jobs to 608 workers directly, while the number of workers indirectly related to textile industry was more than 1,000.

 Remunerations demanded by workers for the eight days strike that took place in mid-April 2011 and the management’s refusal to provide any remuneration, under the “no work no pay” provision, in the long run turned out to be the main reason for the permanent closure of Surya Textile. Workers didn’t agree with the “no work no pay” pact arguing that they were present inside the industry’s premises during the strike but could not work, because the industry itself was closed. This way, arguments and counter arguments continued and it deepened the conflict between management and labourers. On June 14, the situation worsened when factory workers, under backing from major trade unions, locked up 42 officials of the management without food and water supply for more than 24 hours. Finally, police had to rescue the captivated officials forcefully, because the major trade unions wanted their demand to be fulfilled immediately, or else they were not ready to release the officials. During the rescue clash, 8 labourers and 12 policemen were injured. After the officials were rescued, the management announced an indefinite closure of the industry effective from June 15 itself.

 Since June 15 to August 17, the industry remained closed during which labourers and even the trade unions demonstrated to re-open the industry but the management continuously refused to re-open citing unfriendly industrial climate and security problems. Finally, an agreement was reached among representatives of Morang Industry Organisation, Trade Unions and Surya Nepal to shut down the industry permanently paying Rs 29,800 as lay-off benefits to each worker and also according to agreement, the laid-off workers will be given priority as per the workers’ efficiency and capacity if the company comes up with new venture or resume its factory again. The security problems, militant trade unionism and their irrational demands, according to the management, forced the company to permanently close the textile industry. Irrespective of many other cases where monthly wage is the main cause of rift between management and labourers, Surya Textile was an exception. Sanjiv Keshava, Surya Nepal’s Managing Director, claimed themselves as good paymaster and explained that they paid almost double the amount stated in the minimum wage.

KFC and Pizza Hut

Outlets of international fast food chains KFC, Pizza Hut and Cream Bell resumed operation on September 17, 2012 after a three point agreement between the workers and the management. KFC, the biggest fast food chain in Nepal, had remained closed for over a month. On August 14, 2012 Devyani International, a subsidiary of Varun Beverages which operates outlets of KFC and Pizza Hut in Nepal had written a letter to authorities with announcement of immediate closure of all the four KFC and Pizza Hut restaurants running in the capital. “In order to disrupt our operations, some staff have physically attacked and threatened to kill the senior managers,” the letter read.

 The settlement of dispute took nearly a month’s time because the management was seeking action against those law breakers who threatened to kill the managers. Moreover, it was demanding a commitment from the workers on not repeating such violent behaviour again. The management of the company decided to reopen the outlets after taking action against 22 staff who manhandled a senior manager of the company. Yogendra Kumal, Joint Coordinator of All Nepal Trade Union Federation (Revolutionary); Tika Subedi, Vice President of ANHWU-R; Nawaraj Bhatta, President of ANHRWU-R´s Devyani International Nepal unit and Vishnu Reddy, Country Manager of Devyani International, signed the pact. As per the agreement, the trade union will make all the staff obey rules and regulations of the company and will not object if the management takes action on those violating the company´s rules. Likewise, the management agreed to respect the trade union rights. On August 29, the workers registered ANHRWU (All Nepal Hotel and Restaurant Workers Union-Revolutionary).

 The fast food chain had been talk of the town since there was a dispute over the formation of a trade union. According to the sources, the management and its employees started crossing swords with each other in August after cadres of the Mohan Baidya led CPN-Maoist goaded the staff into forming the party’s trade union. The five outlets used to record average daily turnover of Rs 800,000. According to the senior managerial staff at KFC Durbarmarg, the company suffered a loss of around Rs 30 million including loss of perishable goods.

‘Activities of Trade Unions and Employers are Guided by Traditional Mentality’

AGNI PRASAD THAPALIYA
Judge
Labour Court

How do you view the current labour situation as a judge of Labour Court?

 Labour court gives its verdict on a legal basis on the disputes whatsoever comes to the court. The labour statutes have envisioned secured employment, secured employees and guarantee of social security. Looking at these, it seems that our law is labour oriented to some extent because it has made provision of secured work for workers. But in practice, workers are forced to work for a company for a long time without an appointment letter. In many cases, they don’t even have attendance files and they are not even given identity cards. To file a case in the court, one must be able to produce evidences. There must be some evidences like employment letter, identity card, payslip or attendance registers. In some case, none of these are existent. There are cases where people are put to work like bonded labours. Companies must formally employ its workers with proper documentation that clearly mentions post, type of work, job description and remuneration, according to the legal provision. There are cases where employers have not followed these rules. Based on available documents and evidences, we have made verdicts in the favour of employees. In some cases, we have not been able to reinstate the workers. Similarly, to employ foreigners in Nepal, having a work permit from the Department of Labour is a must when the company has to hire foreigners. But a research I have conducted shows that around 20 per cent employees are working without permit in the bordering areas. Similarly, around 48 per cent employees are put to work sans contract papers. There is also disparity on salary of males and females. There are also cases of sexual harassments at work. In the absence of provision to address sexual harassment in our labour law, decision made by the management of a company has been endorsed also by the court and in some cases; international law is also put into practice.

What is the annual number of cases that are filed in the labour court?

 Most of the cases reinstated in labour court are about unlawful dismissal of employees. In many cases, the misconduct is not established while in some cases there are shortcomings in the job done by the workers. There are situations when the workers have to be reinstated if misconduct is not proved or employees are not allowed an opportunity of clarification. There were 103 verdicts made last year through the labour court and 84 cases were appealed against the actions of proprietors or against decisions of Labour Offices.

 It seems that labour unions are guided by political ideologies rather than for the benefits of workers. How do you view this?

 Politics has also made inroads into civil service and police while it was common in the private sector. But, this is sad. It is said that a manager accuses member of another trade union with the help of one union. Such practices do not benefit the private sector. Activities of trade unions and employers show that they are guided by a traditional mentality though the overall national political and economic situation has changed with time. Employers have not got rid of their bossy nature. Although the law mentions a proper procedure to hire employees, the regulation is not properly followed. But employers or proprietors have not followed the legal procedures, so, there is the problem. Similarly, workers too are overambitious. Due to political reason, and over ambition of workers, without understanding the financial condition of the industries and even the economy, workers always want to be benefitted and enjoy attractive facilities. World history shows extreme cases of exploitation of labour and industrialists too suffered a lot but we don’t have such a situation. Our situation is definitely better. Our law addresses almost every issue of the formal sector. Both the parties have their own standpoint, so, the private sector and investment is in dire straits. This has increased the chances of capital flight.

 What is the process of collective bargaining? How much have Nepali trade unions complied with the legal provision?

 Collective bargaining does not come under jurisdiction of the court. Agreements made based on collective bargaining are implemented equivalent to law. Though agreements made are implemented, in most of the cases the major problem is, agreements cannot be made. To resolve such issues, a dispute resolution body needs to be formed. As we are under the tripartite model recognised by the ILO, the personal disputes are resolved by the court while collective disputes are not solved through negotiation between employees and proprietor in the presence of Labour Office. After that, a mediator may be appointed through the consent of both parties who can settle dispute through mediation. In case the mediator fails to settle the issue, employees can file ultimatum to go on a strike. On the other hand, employers can lockup his/her business in case s/he has been unsatisfied by the complaint of employees. So, our labour law does not address effective mechanism for resolving collective issue. It is a lacuna in our law. In the absence of an authentic body to settle collective issues, the private sector is not moving ahead as it should have.

What are the legalities of industrial strikes? Do you see those legalities followed by unions as well as companies?

 The process of strike has not been followed at all. A negligible number of strikes are organised following the legal procedure. Most of them are organised all of a sudden. The process involves prior information about the strike. If the management does not settle the issues, then the issue is taken to the labour office where they can sit for dialogues. Even if the dialogues do not resolve the issue, a mediator can be appointed by the consent of both parties. In case, the mediator fails to settle issues or there is no understanding on appointing a mediator, labourers can go for strike but again a 30 days ultimatum should be given. When the management body does not listen to the demand within the ultimatum, strikes can then be organised.

It is said that judiciary has been making pro-labour decisions. What is your take on it?

 Labour issues are not criminal cases. An Indian pioneer on labour law, Gulzarilal Nanda said that if the labour cases are treated on the basis of whoever produces more evidences, you are not trying to give justice to the labourers. Likewise, if a convict gets the benefit of doubt and the judge maintains silence or acts like an umpire to see which party will produce more evidences, then the justice is denied. So, a labour court judge must find out the facts and evidences. The employer always looks to employ workers at minimum facilities and make higher profit. So, the labour law procedure is quite different in nature. In the labour court, a judge must be active enough to guarantee justice. Investors feel that they must have absolute power over employees to protect their investments. In cases against employers that do not fulfil the legal procedure, justice is given in favour of labourers rather than of the employers. In numerous cases it is found that workers are alleged of wrongdoings when actually they have not committed mistakes. Even if they have committed misconduct; they are not given a chance for clarification. In such cases, decisions made by managers are reverted by the court. Therefore, when employees win the case, the industrialists say that verdicts are being labour oriented but it is not true.

A voice for amendment of labour law is being raised. Do you think the amendment is really needed?

 Compared to the law of other countries, one thing that needs to be incorporated into the labour law is – making a provision of a tripartite committee or commission to sort out issues that are not resolved through the collective bargaining procedure. The law must mention a certain mechanism to resolve the collective disputes. In least developed countries like Nepal, there is presence of a strong informal sector. A huge number of employed people in these sectors are in the form of manual labours like agricultural workers and household workers. The workers are still working like bonded labours. Therefore the informal sector too should have certain rules and regulations. So, there should be a regulation that addresses their minimum wages, contract system, working hours and provision of social security. As we have moved into a democratic system and become the part of the network of the UN, we have to timely and properly address these issues and control inhuman activities too.

It is alleged that feeling of insecurity prevails in the labour court. To what extent is it true?

 In my tenure of three years, I have not felt any kind of insecurity as of now. Apart from minor arguments from labourers, there is no interference and threat seen till this day. But as the overall judiciary is said to be insecure at the national level being the part of the overall broad framework of the judiciary, labour court is also insecure from that perspective. As an individual entity, there are no such issues in the labour court.

‘Trade Unions Contributed only Six Per cent of the Total Strikes’

BISHNU RIMAL
President
GEFONT

How many members are there in your union and how do you manage them?

 There are more than 353,000 individual members in our union and 29 affiliates altogether. The affiliates recruit members on their own under our co-ordination and connect them with us but we do not subscribe direct membership. We have committees at the local and district levels. And at the entrepreneur level, they choose one male and female candidate each as our representatives. The committee of the registered union becomes our member in a national level. The affiliates are action oriented while the role of GEFONT is that of coordination.

Why are industrial strikes so recurrent in Nepal?

 Strikes were frequent between 2006 and 2008 but after 2008, the frequency of industrial strikes has gone down. If you follow the website www.nepalbanda.com, you will find that trade unions have contributed only six percent of the total bandhas in the last year while around 28 percent bandhas were called by employers and the rest was contributed by parties and other organizations. If you are confusing political strikes with trade unions’ strikes, it is a mistake. If counted, there are hardly three companies where unions called strikes namely Surya Nepal, Pizza Hut and Unilever up to now.

Do you think the trade unions in Nepal are following the right approach in collective bargaining?

 Since we do not call it collective bargaining across the board, I think the approach that we follow for collective bargaining is proper. We conduct bargaining at the central level committee for minimum standards like wage determination and finalize it there. Collective bargaining is for maximum standards and we do it according to the type of company in question. Multinational companies have high paying capacity so we demand more whereas we demand less from the less earning companies. Before getting into bargaining process, it is essential to find whether the company is in profit or not. There was a huge bargaining at local level when the Khimti Project was firing 89 workers. According to the law, it had to pay two per cent of the total earnings to the workers and the labors’ demand approach was correct.

Due to the violent strikes and vandalism, private sector employers in Nepal fear to hire Nepali workers. How do you view this?

 Violent strikes are rare as far as I know. The strike against Surya Nepal is the only example that I can give for vandalism in the private sector. Apart from that, strikes are usually seen at the government service and public sector. Recently, there was a strike at Unilever in Hetauda for a week and the problem was solved immediately after the negotiations. If we go through case-by-case, we may find some cases that nurtured vandalism but in general, employees are not feared to hire Nepali workers. Moreover, I have heard that employees in Nepal are longing to hire Nepali workers but they are not finding any mainly because of the scarcity of the workers in Nepal.

 What are the problems that the workers are facing in Nepali industries?

 Firstly, at the policy level, the main problem that we are facing is the ineffectiveness of the rule of law. Even the industrialists are not providing minimum wages to the workers while the minimum wage is Rs 6,200 only. Unless there is a labor inspection system, we cannot find out whether the rule of law has been followed or not. Our law says that after 240 days of working, a worker is permanent at the company but there are many outsourced labors working for years and the jobs are mostly informal. Secondly, the problem of meager pay has been on the rise. High productivity of the workers can be seen only if they are paid adequately.

 Besides, there is no social security in the companies. In any developed country, workers get pension after 20 years of service in a company but this social protection is rare in Nepali companies. More than Rs 200 million has been collected since the government has put one per cent tax on the companies for the social security of the workers. Accident insurance and medical insurance should be implemented but there are no schemes yet.

 The employers here fear that if the workers are made permanent, there will be less productivity. They believe that the workers are more productive when they work in fear. If there were no problems in permanent and temporary jobs, there wouldn’t be strikes in most of the industries. Workers are often agitated because there is low salary, no job guarantee and no social protection.

Experts are saying that over unionization of labors has affected industries badly. What are your views on it?

 Conflict results from the sour relationship between management and workers, not from unionization. It is true that there are more unions in in service sector companies while some companies that provide informal job opportunities do not have unions at all. Unions are not the problems in companies because they solve most problems of the employers. A union solves the problems of each and every worker in the company and in most organizations, union leaders maintain labor relations with the management. The number of the unions is not a problem for an employee or the employer as long as authenticity of the union or the members of the bargaining team selected by the workers themselves is maintained.

Intra-party/intra-union problems and power struggle are common among Nepali trade unions. You as the President of GEFONT may have realized that as well. What do you think could be the solution?

 Historically, there has always been a relation between Nepali political parties and trade unions. But it should be noted that Nepali trade unions are formed according to the law. Whether there is one or more than 20 unions in an organization, the employees should acknowledge that there should be a national election for an authentic union. For example, if there are four unions in an organization, the bargaining panel will be formed according to the votes in the election regardless of who the ruler of the union is. It’s only then that the multiplicity of the unions can be managed easily. Problems occur from the employers’ side too because their behavior changes according to the relationship with the union.

As the trade unions in Nepal are affiliated to one or the other political party, they seem busy in politics than in promoting workers’ interests. How can this be resolved?

 Unions alone are not affiliated to political parties, employers too are affiliated and involved with the parties. In a multi-party system, affiliation to political parties is common and ideologically, it is correct too.

From the perspective of the laborers, we are purely representing the laborers inside the companies. We are not indulging in any politics, however, our people are affiliated with different political parties.

Labor disputes and shutdown of the industries are perceived as a threat to the investors venturing into new businesses in Nepal. How is your union going about it?

 Had you gone through the document called ‘Doing Business’, you would find that the labor disputes are in the sixth number among other problems. Companies making high investments in Sunsari- Biratnagar corridor are demanding more labors. The report by World Bank has also put labor problems in seventh among others whereas the number one problem is government’s legal hassles and number two is the problem of taxation. No investor has withdrawn his investment because of the unions or the workers. Recently, we organized the third Labor and Employment Conference in Kathmandu where we jointly made a 15-points declaration regarding the welfare of the workers. We We shared that we do not have anything against the employers; rather, we had a common view that we lacked a proper government bureaucracy. Unions are often dragged between the ineffective government and the political parties which is not right. Investors say labour law is not good in Nepal but they have never blamed workers or the unions for being unfriendly towards investments.

According to the Central Bureau of Statistics, the country has about 11.7 million workforce and only 1.8 million are in the formal sector and around 3.5 million are in foreign jobs. Rest of them are either unemployed or in informal sector. What do you think should be done to attract more investments that help in reducing labor