Formal sector employers and their employees are forever at loggerheads over pay. This would be expected at a time the country has been reeling under double-digit inflation for a decade, and daily wage-earners continue to struggle to make their ends meet. The current minimum wage of Rs 6,200 fixed two years ago, in the belief of daily-wage earners, is grossly out of step with the fast-changing socio-economic realities. This is the reason trade unions negotiating on behalf of over 300,000 formal sector employees are demanding that minimum wages be doubled, to Rs 12,400. They have a valid claim. Prices of everything, from daily consumables like vegetables to monthly school fees and house rent, continue to spike with troubling frequencies and margins. Particularly in an expensive city like Kathmandu, even a monthly wage of Rs 12,400 for each spouse is far from enough for comfortable life. And yet, given the dire state of the economy, the employers’ case against such a dramatic hike is also credible.
In normal times, the employers would be under moral pressure to look after all the needs of their workers. Such a policy makes economic sense too: workers on half-empty stomachs can hardly be expected to be productive. But these are far from normal times. An acute shortage of power continues to burden businesses with extra operating cost. Industries ravaged during the 10 years of civil war are yet to recover as the country continues to grapple with a protracted political transition. The productive workforce is leaving the country in droves. The failure of successive governments to come up with a coherent industrial policy has crimped the business sector, greatly reducing their scope for expansion and revenue generation capacity, whose benefits could have spilled over to low-wage employees.[break]
Colin Cooper
Chances are that sooner or later, a middle-of-the-road solution will be found, with the monthly minimum wage fixed at around Rs 10,000. But ultimately, the question of minimum wages is secondary. The country has to first get its macroeconomic picture right. For this there has to be common minimum political understanding on the economy so that the engines of growth continue to churn, irrespective of the country’s larger political picture: divisive politics has been a big bane to businesses in Nepal. The revival of the industries ravaged by long years of political instability has to be among the top state priorities. An important first step towards this goal would be greater emphasis on vocational training to produce the manpower the country actually needs, rather than graduates with degrees that have no employment value. Nepal has so much going for it: its natural and cultural heritage continues to attract people from all over the world, even in these difficult times. If the political situation improves, there is scope for a great deal more expansion in the tourism sector. In a fully functional economy, employee wages will ultimately come to reflect the health of overall economy. But for now, there seems to be no alternative to some difficult, and at times even unfair, compromises.
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