In contrast, industrialists feel that most of labor has been badly infested by politics and hardly thinks anything good about the factories which employ it. Yes, it is an undeniable fact that heavy politicization of labor has been one of the major factors poisoning the industrial environment. There are numerous examples of factory owners being compelled to negotiate with political leaders to sort out disputes between the management and labor. And there are numerous instances where agitating laborers have returned to work without having their demands fulfilled following secret understandings between politicians and factory owners.
Not that labor alone is the spoiler; owners too are equally responsible. With the exception of a few cases, factory owners treat laborers not as colleagues or partners but as definitely second-class and to be kept at bay. It is shameful to note a large number of profit-making factories lack minimum standards of occupational health and safety.
Looking at the insufficient perks and benefits that a majority of labor has to get by, it doesn’t take much time to jump to the conclusion that Nepal has failed to realize laborers too have their lives, their dreams and family obligations. Let us be realistic. A family man can’t get by day in day out on just Rs 4,600 (US$62) per month. This does not mean that the benefits need to be doubled immediately, but one thing is for sure. As long as factory pay is kept unnaturally low, achieving a healthy industrial environment will remain a pipedream.
The questions are obvious: why is labor being paid so low, and why are factory owners dead set against raising the perks and benefits even when economy is sound? The answer has been repeated a hundred times - the labor market is not competitive because of rigid labor law, something which is turning away domestic investment, to say nothing of foreign investment.
As a result, the labor market is hardly expanding; in fact job opportunities are getting squeezed in real terms if the more than 300,000 fresh laborers that enter the labor market each year are taken into consideration. It’s high time everyone came together to educate the common people, and especially laborers on why and how some provisions of the Labor Act 1992 serve the interests of neither investors nor laborers.
For the investors, the law is discouraging in the sense that there are a number of provisions that prevents them from becoming competitive. As per the law, anyone working in a factory with more than 10 workers is entitled to become a ´permanent´ worker after a 240-day probationary period. And, once made ´permanent´ he cannot be fired unless he commits acts of criminal offence.
This provision became a recipe for a disaster for order-based industries like carpet and garments and season-based industries like tourism and hotel. Such provisions have greatly contributed to inflate the cost of production, making domestic products incompetitive even in the domestic market. So, need not to say a flexible labor policy that enables entrepreneurs to adjust their labor force according to the fluctuations in demand with due layoff compensations will be in the interest of investors.
For the workers, the job that they are into is not at all lucrative because they are unable to meet their basic needs from their earnings. In fact, they are least worried about losing their job – who cares about the job that doesn’t even ensures two meals in a day. As a result, the rigid law is barring the workers from widening their prospects to raise incomes, while investors are discouraged to make new investments. As a result, the job market is almost stagnant with no new opportunities.
Even those enjoying a permanent status in a factory have not seen their perks and benefits increased for years because the factory is hardly breathing due to its inability to compete and there is no competition in the labor market, hence no new opportunities.
What needs to be taught time and again is that a flexible labor policy not only brings opportunities for investors but more than that it ushers in opportunities for laborers to multiply their incomes. When market becomes competitive because of flow of new investments, laborers will no longer need to resort to strikes to raise their perks and benefits instead they will go up automatically.
More than that, competitive market pays more to the competent workers. India, which saw around 15 percent labor wage increase in 2007, is an example of how laborers can benefit when the government puts investor-friendly policies in place.
The outcomes of the bad labor policy are already visible: employers are already using ´innovative ways´ to circumvent the legal provisions like providing permanent status after 240 days. Like in most of the cases, workers are given contract for less than 240 days and another contract is issued with a gap of few days in between the termination and re-reward of contracts.
Likewise, a practice of hiring laborers on verbal contracts without providing appointment letters and hiring non-Nepali workers mainly Indian workers, who are unable to invoke local laws are some other ways to evade labor laws.
So, bear in mind that the unnaturally low pay for the workers is continuously fueling labor agitation. And enhancing competition in the labor market by reforming labor laws which ultimately will lure more investments is the best treatment of the sickness.
prem@myrepublica.com
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