National Welfare Fund
Rs. 500 m Idle Rs. 30 b Not Deposited
The National Welfare Fund, set up 10 years ago for the labourers’ welfare has collected Rs. 500 million but it is lying “idle”, according to sources. Moreover, though about 2,000 employer firms are required to contribute to the fund 109 have not deposited even a paisa in it yet. This has caused a shortfall of Rs. 30 billion in collections.
This information came to the fore after the government set up a committee headed by Sharad Adhikari, Director General of the Department of Labour, on December 18, 2006 , to look into the matter following complaints from various quarters.
According to Rishab Ghimire, Deputy Secretary of Nepal Democratic Confederation of Trade Unions and a member of the committee, only 73 firms have been contributing regularly towards the fund. Among the major defaulters is the state-owned high-profit Nepal Telecom while the honest contributors include banks and loss-making state-owned Nepal Oil Corporation, he added.
The Bonus Act 2030 requires that 30 per cent of the undistributed amount of the money set aside for bonus distribution by the employer be deposited in the National Welfare Fund. The remaining 70 per cent is to be deposited in the welfare fund set up by the employer firm itself.
According to Clause 14 of the law, every firm is obliged to inform the Labour Office about its bonus distribution within seven days by filling up the appropriate form failing which it is liable for a fine up to Rs. 5,000. The default is attributed to the low penalty
The Rs. 500 million collected in the fund is parked in accounts opened in Kumari, Siddhartha and Everest banks. Only one employee has been appointed to manage this amount and this is the major reason why the fund has not been managed properly, claims Ghimire.
But another member of the committee and director of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Hansa Ram Pande says that more attention should be given towards fund management rather than finding out how much is in the fund and how much should have been collected. “The current issue of mismanagement can easily be dealt with,” says he.
Another member of the committee, Bishnu Lamsal of the General Federation of Nepalese Trade Unions, says, “The fund should be managed as an alternative Provident Fund for the labourers by making the employer and employees contribute equally to the fund.”
According to sources, one of the recommendations of the committee is to use the existing “idle” money to set up a hospital for the labourers. Ghimire says the Hetauda Municipality has forwarded a proposal to provide land for that purpose but a decision has not been reached yet because the fund is still not sufficient for a hospital.
Venture Capital Company to be Set Up
Some prominent Nepali IT entrepreneurs have revealed that they are setting up a company in collaboration with a US party to take up venture capital business.
Being registered as Fortune Cookie Venture (P) Ltd., the company will initially operate as an incubation centre in accordance with the government programme of business incubation. The incubation centre of the company will be located in Bishalnagar, Kathmandu .
“Meanwhile, we expect the venture capital law to come into force as the government has already announced in the budget speech last July that a favourable environment will be created for venture capital,” said Rajesh Shakya, the CEO of Hi-tech Valley, and one of the investors in Fortune Cookie.
America ’s Intelligent Capital LLC, with a 20-year experience in this field, will provide the technical and managerial support while the Rs. 100 million planned to be invested during the next two years will be contributed by the Nepali promoters. “As we lack incubation knowledge, we want their advice and expertise,” says Dilip Agrawal of World Link, one of the investors in the Fortune Cookie.
Shakya says that the plan is to develop 20 to 100 IT businesses in Nepal during this period. The company will utilise the IT manpower produced in the country, says Sanjeev Rajbhandari of Mercantile, another promoter. According to statistics, more than 4,000 IT graduates are produced in the country each year.
Other promoters are Bijay Krishna Shrestha (Beltronics), Nabin Joshi (World Distribution) and Dipesh Pradhan (Yomari).
Historical Agreement
Hotel Association Nepal (HAN) and five trade unions signed an agreement on December 30 sending a message across the industry that the labour problems in the hotel industry would now be a thing of the past. Perhaps this also would serve as a benchmark for other industries as well.
Through the 20-point agreement, labourers have vowed never to strike again. Being implemented from January 1 of this year, the agreement came as a step to resolve the three-decade long dispute over the workers' demand for collecting tips at a fixed rate by including it in the bills to the customers.
The agreement has fixed the rate of the tips (called service charge in the agreement) at 10 percent of the bill and it is being implemented in all hotels, resorts, safaris and motels which are members of HAN. It will be levied on other services and foods under BB, AP and MAP plans from January 1, 2008 .
According to the agreement, 68 per cent of the money collected from the service charge will go to the labourers while the remaining 32 per cent will go to the management. It has been agreed that the service charge income will be distributed each month starting from July 1, 2007 .
Social Contract in Hotels
Main Points of the Agreement
1. Ten percent service charge to be collected in every member of HAN from 1 January.
2. Sixty-eight per cent of collections from service charge will go to labourers and 32 per cent to the management.
3. Distribution of the service charge collection among the employees from July 1, 2007 .
4. All employees of the hotels to get 5 percent grade increment annually.
5. From now onwards, no demand will be entertained from the employees for salary, allowance or grade increment. Other issues to be settled through collective bargaining every three years.
6. Trade unions not to interfere when the management takes disciplinary action against any employee.
7. The management to have full authority to make decisions on internal promotions or motivational allowances.
8. Management allowed to outsource security guard services. Security guards so hired not to be put parallel to the other employees. Hence, such guards not to be entitled for the share from the service charge collections. |
However, the charge will not be levied on bills to the shops, beauty parlors, massage centers, health clubs, casinos, and telephone services. Similarly, this charge will be exempt also on complimentary goods and services.
Both hoteliers and trade union leaders have hailed the agreement as historic and said that this is the start of a new relationship between hoteliers and labourers and that this agreement could be a lesson to the rest of the business sectors. "The three decade long dispute has come to an end easily," says Bishnu Rimal, vice-president of General Federation of Nepalese Trade Unions (GFONT). President of HAN, Prakash Shrestha says, "This as a historical agreement which will also help in solving labor problem in other industries."
Most noticeable point of the agreement is that it provides for collective bargaining every three years whereas the Labour Law has provided for collective bargaining every two years.
However, the trade union leaders have hailed it as this increases their take-home amount by at least Rs. 6,000 per month for even the lowest level employee.
The trade union leaders also say that with this system in place, the possibility of tax evasion by the hoteliers will be virtually zero as the employees will be alert to get the bill raised for each sale effected.
Surya Nepal Increasing Investment in Garments
Cigarette major Surya Nepal has announced plans for further expansion in the readymade garment business which it entered about three years ago by leasing production facilities and selling men’s garments in Nepal and India under the John Players brand.
Under the expansion plan, the company is setting up its own factory near Biratnagar at an investment of Rs. 250 million. The construction has already commenced and the new factory is to be commissioned in November this year. The initial capacity of the factory will be 1,200 units of trousers and 7,000 units of shirts in a single shift.
The company plans to expand it further to be able to increase the initial production capacity fourfold within the coming five-seven years and employ about 2,000 people, mostly women.
According to the company, at present, its John Players brand has occupied 5 percent of the Nepali market in readymade garments.
