The labor ministry had endorsed the draft prepared jointly by the government, employers´ organizations and trade unions in April and forwarded it to the law ministry and the finance ministry seeking their recommendations.[break]
The finance ministry has already approved the draft. But with the dissolution of the Constituent Assembly (CA) on May 27, the law ministry no longer felt the need to review the Act and make suggestions as the country lacks the parliament to approve it, an official of the labor ministry said on condition of anonymity.
“This will have severe implications on attracting both domestic and foreign investment,” Pashupati Murarka, vice president of the Federation of Nepalese Chambers of Commerce and Industry, said.
The early endorsement of the Act was considered crucial for attracting investment as it was supposed to pave way for introduction of controversial labor provisions such as ´no work, no pay´ and host of other measures aimed at bringing flexibility to the domestic labor market.
Flexibility in the labor market, which includes provision of extending wages only when work is performed, has long been the demand of employers and investors. However, trade unions have so far resisted such move citing lack of cushion for workers who are denied payment because of their inability to attend workplace due to reasons such as in-house strikes or other factors.
But since the Social Security Act had made it mandatory for employers to enroll every staff in social security schemes such as unemployment benefit, health insurance, workplace accident and maternity benefits, trade unions had started mellowing down on erstwhile unacceptable provisions like ´no work, no pay´, as the Act ensured payment in case workers remained absent from workplace.
“Now with the dissolution of the constituent assembly everything is in a limbo,” said Bishnu Rimal, president of General Federation of Nepalese Trade Unions (GEFONT).
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