__________________________________________ STRENGTHENING THE ROLE OF MINISTRY OF LABOUR FOR DECENT WORK AGENDA ___________________________________________ ILO Office, Kathmandu Prof. Dinesh P. Chapagain BISCONS, Development & Management Consultants 264, Adwait Marg, G.P.O. Box 1608, Kathmandu, Nepal Phone- 227470. [email protected] June 2002 STRENGTHENING THE ROLE OF MINISTRY OF LABOUR FOR DECENT WORK AGENDA Content_________________________________________ Acronyms 1. INTRODUCTION 1 1.1 Economy and Employment in Nepal 1 1.2 Development and Social Justice 2 1.3 Objective of the Paper 3 1.4 Scope and Limitation 3 2. DECENT WORK AGENDA 3 2.1Globalization and Competitiveness 3 2.2 Declaration on Fundamental Principles and Rights at Work 4 2.3 Decent Work Deficit 5 2.4 Decent Work Situation in Nepal 7 2.5 Challenges for the Government 13 3. WORK ENVIRONMENT IN NEPAL 14 3.1 Social Environment 14 3.2 Economic Environment 15 3.3 Political Environment 15 3.4 Legal Environment 16 4. LABOUR ADMINISTRATION IN NEPAL 17 4.1 Evolution of Labour Administration 17 4.2 Institutional Set up 18 4.3 Roles and Responsibilities 20 4.4 The National Labour Policy 21 4.5 Capacity Assessment 22 4.6 Organization Development Needs 24 5. OTHER SUPPORTING GOVERNMENT AGENCIES 25 5.1 National Planning Commission 25 5.2 Employment Promotion Commission 27 5.3 Council of Technical Education and Vocational Training 27 5.4 Ministry of Finance 28 5.5 Ministry of Industry, Commerce and Supply 28 5.6 Ministry of Culture, Tourism and Civil Aviation 28 5.7 Local Governments 29 5.8 Others 29 6. ROLE OF OTHER STAKEHOLDERS 29 6.1 Employers’ Organization 29 6.2 Workers’ Organization 30 6.3 Civil Society 31 7. ANALYSIS AND DISCUSSION 31 7.1 Strategic Elements of Decent Work 31 7.2 Environment for Decent Work 33 7.3 SWOT Analysis of MoL&TM for Decent Work Agenda 34 7.4 Major Challenges for MoL&TM 35 8. RE-ORIENTING MOL&TM FOR DECENT WORK STRATEGY 37 8.1 Strengthening Labour Administration 38 8.2 Restructuring of Labour Ministry 39 References Persons met Acronyms CLAC : Central Labour Advisory Committee CSIDB : Cottage and Small Industries Development Board CTEVT : Council for Technical Education and Vocational Training DECONT : Democratic Confederation of Nepalese Trade Unions DoCSI : Department of Cottage and Small Industries DoL& EP : Department of Industry EES : Employment Exchange Service EPC : Employment Promotion Commission FNCCI : Federation of Nepalese Chambers of Commerce and Industry GEFONT : General Federation of Nepalese Trade Unions HMG : His Majesty’s Government ILO : International Labour Office IPEC : International Program for Elimination of Child Labour I-PRSP : Interim-Poverty Reduction Strategy Paper LMI : Labour Market Information MoF : Ministry of Finance MoGA : Ministry of General Administration MoIC&S : Ministry of Industry, Commerce and Supply MoL&TM : Ministry of Labour and Transport Management MSE : Micro and Small Enterprises MWFC : Minimum Wage Fixation Committee NPC : National Planning Commission NTUC : Nepal Trade Union Congress OSH : Occupational Safety and Health i STRENGTHENING THE ROLE OF MINISTRY OF LABOUR FOR DECENT WORK AGENDA 1. INTRODUCTION 1.1 Economy and Employment People engage in gainful economic activities as employer, self-employed or employee. Work is a defining feature of human existence. All people work to sustain life and meet various needs not only of themselves but also of their families. They strive to earn more to achieve better quality of life for themselves, for their families, for the society in which they live and the people in the country and for the world. Development is necessary for generating more work. More work generates more resources, which in turn generates more work, and so turns the development cycle for making better life quality. In Nepal, the overall unemployment rate is estimated at 1.8% (1.7% female and 2.0% male) according to the first labour force survey carried out in 1999. It is surprisingly low. In the absence of unemployment insurance scheme, one has to work, even if for one hour and this too is considered as ‘employed’. However, the report also reveals that 27% of the currently employed population work less than 40 hours a week. These can be termed as underemployed. The underemployment is 178,000. 2.6 million work less than 40 hours a week. Although there is work, the work is not worth. Fetching water, collecting firewood, home-based activities, self-employed etc. are also considered as work1. The country has an annual GDP growth rate of 5.03% (as against the targetted 6.0%) at the end of 4 years during the Ninth 5-year plan (1997-2002).2 The employment growth rate is 2.9% and the employment elasticity 0.583. Employment growth depends on the pace and pattern of economic growth and the relation between the two is summarized by what is known as employment elasticity. There has been a slight improvement in the poverty scenario in Nepal with the percentage of population below poverty line decreasing from 42% in 1997 to 38% at the end of 1999/2000. The poverty line is defined here as an income of Rs. 4,404 per person per annum. The incidence of poverty is still quite large4. 1 Report on Nepal Labour Force Survey 1998/99 conducted by HMG/NPC/CBS. The survey defines a person as currently active if he or she is either employed for at least one hour during the previous seven days, or has a job attachment if temporarily absent from work, or is available for work if work could be found. 2 Discussion Paper on the Approach for the Tenth Plan, HMG/National Planning Commission, 2001 3 Employment in Nepal, ILO/SAAT, 1997 4 Interim Poverty Reduction Strategy Paper, HMG/NPC, 2001 1 1.2 Development and Social Justice With the restoration of democracy in 1990, Nepal got a new constitution that incorporates several provisions concerning labour matters including prohibition of forced labour; freedom of association, equality of citizens, promotion of social justice and eradication of the social evils and economic well-being of the people. These provisions enshrined in the constitution have been reflected in the national development plans. The basic policy thrusts of the Ninth Plan regarding the labour sector are protection of the rights and interests of the workers, social security, skill and technical orientation, self-employment, and promotion of employment opportunities both inside and outside the country. Nepal initiated a process of economic liberalization following the restoration of a multiparty democracy in the country. This virtually triggered a development syndrome in the country. This has been instrumental in creating vast employment opportunities in a wide range of areas such as aviation, tourism, exports, carpets, garments, educational and medical institutions, transportation, media, etc. This has given rise to a large number of workers in the micro, small and medium enterprise subsectors within the formal and informal economy, the home-based workers and the self-employed. The benefits of development should accrue to both the owners and workers of enterprises. Development without social justice cannot sustain. There has to be a balance between the two. In the productive development cycle, development enhances investment capability, and this, in turn, generates more employment. Poverty alleviation and development through increased employment is contingent to social justice to create motivated human resources in the country. The lack of social justice retards development causing an overall negative impact on the cycle. In Nepal, despite the strides made in its development, this otherwise positive cycle of employment-social justice-development-investment (ESDI) is exhibiting negative trends largely due to the lack of focus on the social justice constituent of the cycle. Development (+) (+) (-) (-) Social Justice Investment (Motivated Workers) (+) Capability (-) (-) (+) (+) Employment PRODUCTIVE DEVELOPMENT CYCLE Work integrated with social justice is decent work. Work should provide equitable income, security and dignity – work that is meaningful and that accelerates the development cycle. In Nepal, the Ministry of Labour and Transport Management (MoL&TM) is entrusted with the responsibilities of employment and protection of workers from injustice. The MoL&TM must develop capability to give impetus to the 2 development cycle to achieve the national goal of poverty alleviation through employment and social justice. 1.3 Objective of the Paper The main objective of the paper is to assess the decent work deficit in the macro- level work environment in the country. The other objectives are to assess the prevailing labour administration mechanism and to identify the roles that the MoL&TM can play to reduce the decent work deficit in the country. 1.4 Scope and Limitation This paper is intended to be only the source of information and the basis of the working paper prepared for the tripartite consultation at the national symposium. It is prepared on the basis of information collected through interviews with a cross section of people among the stakeholders – authorities in the MoL&TM, trade unions, employers etc. and literature reviews. 2. DECENT WORK AGENDA 2.1 Globalization and Competitiveness The process of globalization has encompassed virtually all countries in the world and Nepal is no exception to it. The process of economic liberalization started in the 1980s has set the environment for Nepal’s entry into the World Trade Organization next year. This would naturally bring about the pressure on the country to excel in every respect to be able to sustain in the highly competitive global economy. Competitiveness will be the driving force to reorient input-process-output system inherent to the production of all goods and services. And in the pursuit of enhancing efficiency and productivity, globalization cuts across socio-politico-economic barriers in the flow of financial, physical and human resources. Productivity enhancement will be the panacea to the survival of organizations.