Employers have urged the government to create a link between work and wages so that salaries of employees can be fixed based on productivity.

Their request comes at a time when the Ministry of Labor and Transport Management is preparing a draft of the new Labor Act which will replace the old one enforced in 1992.

“The new act should at least mention that employees´ salaries will be determined on the basis of output they deliver,” Padma Jyoti, chairman of Jyoti Group, told an interaction organized by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) in Kathmandu on Friday. “If such a provision is included in the new law, we would be able to fix salaries based on the quality of their work,” he stated.

Currently, wages and salaries in informal and formal industries are fixed on the basis of bargain between the management and trade unions. Even the government´s minimum wage is fixed in this manner. Such bargain and consequent rise in wages without due tie-up with productivity, meanwhile, has only been fueling the price rise, without contributing any rise in output.

“If such practice continues, those who do not work will carry on getting rewards while being a liability for the company,” various businessmen said. “Ultimately this will hit labor productivity and put the country in a bad light in the international market.”

Employers have also said that employees´ right to collective bargaining, through which labor unions and management try to resolve various disputes, including pay-scale, should be limited at the central level.

“Currently, such negotiations take place at local level as well, which deteriorates industrial relation,” said Hansha Ram Pandey, director of Employers Council at the FNCCI, at the interaction which was also participated by Labor Minister Sarita Giri. Pandey also asked the government not to introduce a controversial provision, which will make it mandatory for employers in informal sector to abide by the new labor law.

Many expressed fears that such provision will politicize workers in small firms that employ less than 10 workers making them prone to protests and other disruptions. “Besides, if the new law becomes guardian to both formal and informal sectors, can the government create mechanisms to monitor both areas,” Pandey questioned.

There were also calls for creation of a separate law for export-oriented industries with provisions that ensure their production would not be affected throughout the year. This, businessmen said, should include industries that produce tea, jute, carpet, handicraft goods and readymade garments.

Published on: 21 January 2012 | Republica