Kathmandu, July 9: The government is expediting the process to set a new minimum wage for workers, as mandated by the Labor Act, 2074. The revised wage, effective from FY 2082/83, is in its final phase. A committee led by Joint Secretary Pradeep Koirala is set to finalize the recommendation by the end of Ashadh (July 16), with a key meeting scheduled for Wednesday. Disagreements persist between labor unions and employers. While workers demand wages sufficient for basic living, employers cite economic slowdown and suggest only modest increments.
Likely Range: Rs 18,000–20,000
Sources say considering inflation and recession, the minimum wage could range between Rs 18,000 and Rs 20,000. Past practices won’t be followed blindly, but inflation data and previous rates are still being discussed. A 15.3% increase, based on past models, would raise the current wage from Rs 17,300 to around Rs 19,946. If the government’s recent Rs 3,000 hike in employee allowance is used as a base, the new wage could be Rs 20,300.
Scientific Benchmarking Introduced
For the first time, the committee is applying scientific methods, said Gagan Singh Bista, the committee’s member-secretary. Discussions now revolve around establishing needs-based criteria instead of mere bargaining. However, disagreements remain on what constitutes a valid benchmark.
Union leader Janak Chaudhary stated they’ve proposed two consumption “baskets”—food and non-food (housing, health, education, transport, communication, recreation, and contingencies). Trade unions, referencing retail prices across all seven provinces, propose a monthly wage of Rs 30,443. But employers oppose including education and health in wage calculations, citing state provisions.
Employer representative Babukaji Karki argued that free state education and health coverage via the Social Security Fund should not be factored into wages. Labor representatives counter that education isn’t entirely free, and the fund doesn’t cover entire families—thus these should be considered in wage decisions.
Employers call labor’s proposal “unrealistic,” warning a jump from Rs 17,300 to Rs 30,000 means a 75–80% hike—unsustainable under current economic conditions. Karki stressed the need for a “reasonable” and balanced solution.
Middle Ground Expected
The committee expects a compromise between Rs 19,000–20,000, aligning with inflation data and recent public sector salary hikes. If consensus fails, the government will fix the rate using its legal authority. The upcoming meeting is deemed decisive.
The committee plans to submit its final recommendation by Ashadh-end, and upon ministerial approval, the new wage will be effective from Shrawan 1.
Systematic Criteria Underway
Previously, wage fixing was based on bargaining. Now, it’s guided by defined standards. The committee has agreed to use food and non-food consumption baskets. Non-food includes essential services like health, education, and communication.
Caloric needs are also debated. Labor wants uniform per-person calorie needs, while employers argue for category-based needs (men, women, children). Disagreement also exists over using retail prices (labor’s demand) vs. wholesale rates (employers’ view).
The cost of education and health remains another sticking point—labor wants them included, while employers argue these are already covered or should be excluded.
Household Income Consideration
The committee is also revisiting outdated assumptions—where one person supports a family of four. Recent data shows an average of 1.54 earners per household, and this will be factored in.
In the past, failure to reach consensus led the government to unilaterally fix wages. This time, however, the committee aims for a unanimous decision, said Karki.
The committee has studied wage structures in other South Asian countries. For instance, India sets minimum wages at the state level, with workers receiving additional benefits like housing and food subsidies. Despite Nepal’s lower GDP, it has one of the region’s highest minimum wages after the Maldives.
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