Labour Act to increase employment and productivity

Kathmandu, Aug. 17: The employers and trade unions on Thursday said that the new Labour Act and Social Security Act would pave the way for better labour relations, higher productivity and increase employment opportunities.

Speaking at an interaction on the acts recently endorsed by the parliament at the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), private sector entrepreneurs and trade union leaders termed the two acts as a milestone in ‘improving relations between the employers and employees’.

FNCCI president Bhawani Rana said that the laws had provisions to protect the rights of both the employer and labourers.

“It has increased the confidence in developing better labour relations, which will ultimately contribute to increased productivity and employment opportunities,” she said.

However, she maintained that as the laws have direct impacts on a large number of small and medium scale enterprises and also the informal sector, implementation of the new acts could be challenging.

Vice-president of the FNCCI Chandra Prasad Dhakal said that the new legal provisions had systematised collective bargaining.

“The new laws also have provisions for health safety, performance evaluation and many others. Such provisions will help in increasing productivity,” he said.

President of General Federation of Nepalese Trade Unions (GEFONT) Bishnu Rimal said that since the two legal instruments were enacted after a long and tedious process, sincerity from all the stakeholders was needed for their implementation.

Similarly, chairman of Nepal Trade Union Congress Khila Nath Dahal said that the laws had provided a win-win situation for the employers and workers.

“It has addressed all three sectors of the labour market – formal, informal and self-employment. The Social Security Act has ensured social security of the employees, which creates flexibility in labour market,” he said.

Likewise, member of the International Labour Organisation (ILO)’s Governing Council Binda Pandey said that the enactment of the new laws had been possible due to the tripartite collaboration among the labourers, employers and the government.

According to her, it will have positive impact on the informal sector and inspire more businesses to formalise themselves.

Director of ILO Country Office in Nepal Dr. Richard Howard suggested forming a strong labour market institution to implement the laws.

Stating that formalising the informal sector was a challenging task, he said that the new legal instruments might inspire the SMEs to join the formal sector as they help in creating a conducive environment for the SMEs as well as the large enterprises and multi-national corporations.

The new labour act has provisions like hiring employee as a trainee for one year, keeping an employee under probation for six month, obtaining approval from the government to hire foreign workers, forming a labour court and conducting a performance evaluation before firing an employee.