Oct 26, 2013

What causes industrial conflicts in Nepal?

Frequent industrial conflicts, labor agitation, strikes and shutdowns are among the major hurdles to industrial growth and development in Nepal. Investors have time and again cited militant labor unions as a major deterrent to investing in Nepal and permanent closure of a major business because of labor agitation is not a news anymore for us. In the Economic Freedom of the World Report 2012, Nepal scores 3.33 out of 10 in the Hiring and Minimum Wage regulations, 4.13 in hiring and firing regulations and 2.05 in the mandated cost of worker dismissal which points out to a terrible scenario.

On the other hand, cases of exploitation, breach of employment contract by employer are time and again reported in the media. Many working people complain that Nepalese employers treat their employees as slaves. So what causes the industrial conflicts in Nepal, why do even petty conflicts lead to large scale conflict and shutdown of the businesses.

My colleagues at Samriddhi, The Prosperity Foundation have studied this issue from an institutional perspective. This paper delves into the various aspects that give rise to tenuous industrial relationships fraught with mistrust on all sides. The paper discusses how lack of accountability mechanisms within the trade union structure including the relative weakness of enterprise level unions in terms of negotiations, lack of grievance handling mechanisms in industrial settings and weak labor institutions created by the government, all contribute to the intense and antagonistic nature of industrial relations in Nepal. Do check it out! The authors would also love any comment or feedback.