FNCCI president highlights challenges of wage policies, calls for private sector mobilisation

KATHMANDU: Federation of Nepalese Chambers of Commerce and Industry (FNCCI) President Chandra Prasad Dhakal has stated that economic transformation cannot be achieved without actively encouraging private sector.

Speaking at a workshop on formulation and implementation of an effective wage policy in Nepal, organised by the Ministry of Labour, Employment and Social Security (MoLESS) with technical assistance from the International Labour Organization (ILO) on Wednesday in Kathmandu, he shared his views on the matter.

Dhakal emphasised the importance of mobilising private sector to meet national goals for economic development and prosperity while ensuring that workers receive effective wages.

Highlighting challenges such as low economic growth, contraction in the industrial sector, and declining production and productivity, he observed that managing wage increases presents significant difficulties. He remarked, "It seems that the current rate of wage increase will raise the cost of the economy. Along with this, the capacity of employers to pay the wages required for labourers and workers will decline, and ultimately, employers may face situations where they are compelled to shut down business activities. I think this is a matter to be considered."

Dhakal also referred to the International Labour Organization's Global Wage Report 2024–25, which notes that average real wages in the Asia and Pacific region have risen faster than in other regions globally.

Acknowledging the International Labour Organization's role in global discussions on minimum wage determination, Dhakal said that Nepal complies with the principles and norms advocated by the ILO through Labour Act 2017 (2074) and Labour Rules 2018 (2075).

Discussing wage practices in Nepal, he pointed out the lack of detailed analyses regarding the effects of wage increases on production, productivity, and private sector efficiency. He underlined the necessity of sustainable wage policies that encourage private sector investment and foster an environment conducive to investment.

He added that employers have suggested wages should be set in a way that expands private sector investment, ensures reasonable returns, and avoids creating unlimited liabilities.

The three-day workshop was inaugurated by Minister for Labour, Employment and Social Security, Sharat Singh Bhandari.