Social security of workers has always remained a much-talked about issue in the domestic labour market. Amid improved labour relations, and both employers and trade unions agreeing on issues of social security benefits and on most points of the new labour law, it is expected that both Social Security and Labour Acts will be formulated soon. Ramesh Shrestha of The Himalayan Times spoke to Shekhar Golchha, Chairperson of Employers’ Council of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) about the latest developments of the two laws, provisions on them, social security and labour issues. 

Since the private sector is also a major stakeholder, could you please tell us why it is taking so long to bring the new Labour Act and social security law? 

We, for long, have been saying that both the social security and labour laws should come simultaneously as they are two parts of the same coin. Many issues related to benefits of workers and labour flexibility for employers are interlinked in the Acts. It is a reality that labourers always want better social security and employers want flexibility. To elaborate more, labour flexibility means that employers should have the right to cut their workforce and take disciplinary action. Social security of workers is the main demand of trade unions which is being addressed through the Social Security Act, while employers’ demands have been accepted in the new labour law. We are hopeful that the Acts will be tabled in the House soon after the government has completed all its formalities.

Do you mean to say that trade unions and private sector have agreed on provisions like ‘no work no pay’ and all other issues?

There is no confusion in social security to be provided to workers be it in the formal or informal sector. We, with five major trade unions on Friday, agreed to include 28 out of the 30 proposed points in the new Labour Act. To address the two remaining issues, we have urged the Ministry of Labour and Employment to listen to both employers and trade unions and decide on its own keeping both sides in a win-win situation. The two issues are about payment to workers for the period of protest days and sectoral bargaining. The private sector has objected to these two provisions, while trade unions want to include them. We do not want a provision which requires employers who bear losses and pay bank interests to release salaries despite no production due to protests. Similarly, provision of sectoral bargaining put forth by trade unions is impractical. For example, a new five-star hotel cannot provide salaries and benefits like that of an old hotel doing good business.

Would you please share about some new provisions included in the new laws?

Labour flexibility was one of the main issues among employers. Now based on the new labour law, employers will be able to take disciplinary action and remove a worker without taking permission from the government. Currently, it is easy to hire but very difficult to remove a worker, no matter how hard the condition of the employer is. Theoretically, both the laws that are in the offing are good but how they will be implemented is yet to be seen. In the new Labour Act, there will be restriction to keep bonded labour, child workers and there will be classification of employment type with clear description. There is a provision of social security benefits, compensatory leave, maternity leave, and medical and accident insurance, among others, for workers. 

And for employers, there will be a provision which will allow keeping workers at half salary for a certain period if the employer faces problems such as industry disruption due to natural disasters. Similarly, management staffs will not be permitted to take part in any protest of workers and collective bargaining agreement. Earlier, even managers used to protest. Now this will not be permitted and the management will have the right to frame related bylaws. The main thing is that now Nepalis will also be able to employ foreign workers.

It is said that the implementation of social security benefits for workers will help improve labour relations further and increase investment. Is it so?

Labour relation has improved a lot in recent years with both employers and employees understanding each other. Furthermore, Friday’s agreement is the biggest achievement, which has helped solve around 99 per cent of the issues related to labour. Both sides have been very flexible based on a spirit to increase investment and productivity in the country. From the employers part, there will be 20 per cent additional contribution for social security. This will increase contribution for social security schemes from the current one per cent to 31 per cent including extra 10 per cent from workers. With this, Social Security Fund will probably be the biggest fund in the country for workers’ security and its resources can also be utilised for setting up a labour bank. Both laws that are in the pipeline are very good; however, its impact will depend on how the government implements them and with what spirit.

Do you think that the new laws will help employment generation and retain workforce leaving the country for employment?

Well, it is basically demand and supply. People have multiple choices so till there is a mismatch in salary for workers with international market, people will tend to go there. But for sure, the new Acts will help increase investment and create employment, offering choices to work in Nepal. 

When it comes to social security plans, the government says that private sector is reluctant to provide details of their workers to include them for schemes. What is your say?

For enrolling workers in social security, there is a need for a social security number which is assigned by the government and not us. Once there is a law related to social security, a worker should approach the concerned government agency seeking his or her number. A worker working with us today can move to some other place later so there is no use of providing information from us. The worker is entitled to get social security benefits no matter where he or she works.

Published on: 13 October 2014 | The Himalayan Times