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FEDERATION OF CONTRACTORS’ ASSOCIATIONS OF NEPAL (FCAN)

Construction workers in Nepal

Construction workers in Nepal

Presented by Umesh Upadhyaya, Representing GEFONT and CUPPEC Nepal in Construction Industry Network Meeting, Aug 27-29, 2006, Organized by BWI/KFCITU, Busan, Korea

 

1. Current Political situation

  • Retrogression by the constitutional king after a series of dramatic events on October 4, 2002 as a major turning point of the history of Nepal
  • Already declared General Election postponed with no dates fixed in 2002
  • The demand for all party government with full executive power and restoration of the dissolved parliament–the major slogan of the joint movement declared by the five major political parties of the dissolved parliament actually representing 84% of the peoples votes.
  • From May 4, 2003, the Joint peoples' movement started under five major political parties CPN-UML, NC, PF, NWPP and NSP
  • Major objective of the Joint Peoples' Movement was to protect the rights from the attack of the ultra left violence and rightist retrogression
  • The movement of the five political parties became more popular and king dissolved the cabinet under SB Thapa and asked the agitating political parties to give the consensus name for the post of PM in April 2004.
  • Parties could not give a consensus and hence a new coalition took the shape.
  • CPN-UML, NC Democratic, RPP and NSP joined hands in order to lead the country to the point of pre-regression. and supported Sher Bahdur Deuba who was formerly kicked out by the king.
  • Thus in May 2004, king came to negotiate and appointed Deuba as the Prime Minister and coalition government came into existence. NC and three other small parties are in the street
  • Peace talks with Maoists as the major agenda of the government could not become successful.
  • In February1, 2006, King grabed the power through mobilization of Royal nepal army and started his direct rule.
  • Political parties tried to negotiate with the king even though they were in street against king's unconstitutional autocratic move, but king tried to stabilise his autocracy in the name of maoist terrorism
  • King took side against peace and tried to go in a useless military solution working against all democratic norms negating the multiparty system in practice
  • Frustrated from the king's ambitious go ahead, seven political party Alliance started to talk with Maoists and after a long exercise of more than 7 months, successful negotiation with maoists in the form of 12 point understanding in Decenber 2005 could be reached to restore democracy and peace in the country.
  • From the beginning of the year 2006, the political environment of Nepal had been dominated by heavy tousle between King and mainstream political parties. The movement being launched by the seven party alliance  started to gain momentum and and suppression from the side of autocracy became more and more cruel.
  • The autocratic king moved on to hold the so called municipality election on February 8. Seven Party Alliance declared general strike and grand peaceful demonstration to be staged on January 20 and urged to people to come to the street. Arrests and brutal suppression became daily routine.
  • The municipal election was a total failure caused by the successfull boycott of the people. Even by casting fake votes as there was no one to oppose in the polling centers, the regime with its total efforts could cast lower than 20 % of the votes.
  • The 12-point understanding between mainstream political parties and CPN-Maoist developed after series of informal talks was welcomed by the People. People took it as the real road-map for the solution of Maoist problem as well as for the end of absolute monarchy. This could give a significant hope among the people. Therefore, the movement of SPA gained momentum and participation became more and more effective.
  • During this period, the international support to restore democracy, press freedom and release of political detainees has been highly significant. Human Right monitoring office of UN has played a very important role during this period.
  • April 2006 in the history of Nepal has proved to be big turning point.  The political environment of Nepal came to a decisive point with extreme tousle between King and mainstream political parties. The movement being launched by the seven party alliance gained incomparably high momentum and suppression from the side of king's autocracy became cruel at its extreme.
  • With increasing flow of people in the movement, arrests and injuries were maximum never witnessed in the history. The entire nation came into the street. From April 6, the movement in the form of general strike started for 4 days as declared in the beginning. Later on with nationwide success and heroic encounter by the armless people with suppressive royal force, the general strike became a routine for every coming day. This continued for 19 days. During these 19 days maximum mobilization of people was 8 millions in a single day on April 22. In Kathmandu during April 15 -22, half a million people came in the street everyday defying the curfew. The whole nation was under curfew but everyday people defied curfew. Because of incomparable mass mobilization, security force finally became frustrated with the king and only on         19thday,the autocratic king surrendered. He accepted the roadmap of seven party alliance in his formal declaration and reinstated the parliament to go ahead for peace and full democracy. New SPA government came to work in the democratic environment.
  • The reinstated parliament declared many things, among them is the election of Constituent Assembly and formation of new inclusive constitution. For this the seven party alliance government has appealed the Maoists to join the interim government. Dialogue with Maoists is in progress. Maoists are now in open and both way cease-fire has been declared. Terrorist tag and red corner notice against Maoists has been canceled. Though there a number of confusions and dilemas/disputes, positive and hopeful situation is gradually developing.
  • Based on 12-point understanding between mainstream seven party alliance and CPN-Maoist, new 8 point understanding is also conducted. Now the issue of management of arms is at height and UN has been formally invited to cooperate on this issue.
  • At present, Nepali sky is fully surrounded by achievements, hopes and confusions. People are happy, but confused whether this peace will be permanent or not.
  • Now the politics and so the entire nation has entered into a very complicated process of negotiation with Maoists basically on the management of arms, modality for constituent assembly and model of restructuring of Nepali state. SPA government is in power, but with consensus on management of arms, new interim government with involvement of Maoists will have to be formed.

     

2. Labour market & Union Movement

Unemployment, displacement of rural labour and out-migration

§  Declined Economic activities

§  Increased closures & high demand for exit policy by employers

§  The level of unemployment gone high up.

§  Displacement of families from rural areas

§  Pouring masses in District HQs & Kathmandu valley

§  Out-migration expanded more for foreign employment

Expansion of union activities in the informal sector

§  Expansion in construction sector

§  Expansion in agricultural sector

§  New initiatives for street vendors

Single union initiatives

§  Unity has become the most relevant agenda in trade union scenario with the increasing pressure of globalization, slackening economic activity, closures resulting into higher level of unemployment, violation of collective bargaining agreements & labour laws in enterprise level and employers continuous urge for hire & fire in addition to illegal threatenings of Maoists

§  GEFONT moves to interact with Non-NTUC public sector unions

§  GEFONT and NTUC initiatives

§  BWI Affiliates Committee Nepal in a number of joint activities

§  ICEM Affiliates Coordination Committee Nepal in a number of joint activities

 

Minimum wages revised with significant achievement in 2003 and 2006

§  In 2003 - Altogether 21% increase in the national monthly minimum wages and 25 % in national daily minimum wages (17% increase in basic wage and 29% in dearness allowance)

§  Revised again in 2006 – 29 % increase in national monthly minimum wages and 39% increase in daily minimum wages (29 % in basic and 28 % in DA)

 

 

3. Construction industry and trade unions

The construction industry in Nepal is significant as its contribution to GDP is about 10 %, which is one of the largest single contributions after agriculture. About 70 % of the national gross capital formation also comes from this sector.

Table-1: Composition of GDP in Nepal, 1994 to 2002 (in percent)

Description

1994

1995

1996

1997

1998

1999

2000

2001

2002

Agriculture

40.75

40.48

40.36

38.82

40.11

39.63

38.38

39.49

39.16

Non-agriculture

59.25

59.52

59.64

61.18

59.89

60.37

61.62

60.51

60.84

Mining & Quarrying

0.53

0.56

0.55

0.54

0.51

0.50

0.49

0.51

0.50

Manufacturing

9.31

9.38

9.21

9.31

9.19

9.16

9.02

8.09

7.91

Electricity, Gas & Water

1.36

1.50

1.65

1.51

1.40

1.62

1.78

2.02

2.15

Construction

11.0

10.90

10.86

10.52

10.08

10.21

10.06

10.43

10.36

Trade, restaurant & Hotel

11.59

11.83

11.33

11.62

11.91

11.71

11.33

10.05

10.14

Transportation, Communication & Storage

6.67

6.64

7.17

7.80

7.46

8.01

8.46

8054

8.76

Finance & real Estate

9.78

9.83

10.07

10.28

10.06

10.08

10.58

10.82

10.95

Community & Social Services

9.01

8.88

8.80

9.60

9.27

9.09

9.91

10.05

10.06

 

Source: CBS, National Accounts of Nepal 2003

 

Distribution of economically active population has increased significantly if we compare the statistics of two censuses

 

Table-2: Percent Distribution of Economically Active Population by Industry

 

Major Industry

1991

2001

Agriculture, Forestry & Fishing

81.23

65.70

Mining & Quarrying

0.03

0.16

Manufacturing

2.04

8.81

Electricity, Gas & Water

0.16

1.49

Construction

0.49

2.89

Commerce

3.49

9.94

Transport & Communication

0.69

1.63

Finance & Business Services

0.28

0.00

Personal & community Services

10.25

6.70

Others

0.38

1.65

Industry not related

0.96

0.22

Source: CBS, Population Monograph of Nepal, Vol. I, 2003, Kathmandu

Among the total labour force of non agricultural employment, construction workers have the share of 8.4 %, overwhelming majority of which is in the informal sector.

 

Table 3: Distribution of Labor force in Non-Agricultural Occupation, 2001

Occupation

Number

%

Mining and quarrying

16048

0.5

Manufacturing and recycling

872253

25.7

Electricity, gas and water supply

148218

4.4

Construction

286418

8.4

Wholesale and retail trade

863773

25.4

Hotels and restaurants

120889

3.6

Transport, storage and communication

161638

4.8

Financial intermediation

46765

1.4

Real estate, renting and business activities

29922

0.9

Public Administration and personal service

301024

8.9

Education

228381

6.7

Health and social work

61797

1.8

Other community, social and personal service

72575

2.1

Private households with employed persons

105139

3.1

Extra-territorial organisations and bodies

58273

1.7

Not reported

22395

0.7

Total

3395508

100.0

 

 Source: Central Bureau of Statistics, Population Census, 2001

 

Looking at the age structure of the construction workers in Nepal, extent of child labour seems little but not negligible, whereas more than 3/4th are in the age group of 15 to 44.

Table 4: Construction Workers by Age Group

Age-group

Number of workers

%

Below 15

8640

3.0

15-24

73855

25.7

25-34

84059

29.3

35-44

63688

22.2

45 and above

56178

19.6

Total

286420

100.0

 

Source: Central Bureau of Statistics, Population Census, 2001

The construction industry consumes more unskilled workers. A study conducted by GEFONT in 2003 has revealed the fact that 3/4th of the workers in this sector are unskilled. 

 

Table-5: Category of the Construction Workers by Skill

Category

Male

Female

Unskilled

23.5

58.8

Semi skilled

23.5

35.3

Skilled

41.2

2.9

Highly Skilled

11.8

2.9

 

Source: gefont, Search for Alternatives, 2003

 

Basic rights in construction:

The CUPPEC Survey of 2004 has shown a clear picture of basic rights in Nepali construction, the table below clarifies the reality

            Table 6: Provision of Basic Rights of the Workers

Basic Rights Availability

Yes

Appointment letter

4.8

Permanent Appointment after 240 days work

2.5

8 hours working hours

93.2

Provision of Overtime

82.1

Right of Collective Bargaining

30.5

Provision of OSH

60.9

Provision of Labour Relation Committee

36.1

Regulation (BINIYAM) of enterprise

30.0

Provision of PF, Pension & Gratuity

6.2

Fixation of Minimum Wage

4.9

Use of Foreign Workers

32.9

Job Security

4.9

Skill Development & Promotion

56.0

Leaves

Weekly

11.5

Public

11.5

Funeral

14.3

Home

6.5

Sick

15.4

Maternity

13.0

 

            Source: cuppec Survey, 2004

It can be easily concluded that only the administrative and technical workers enjoy most of the rights and the general workers are deprived from various rights.

 

Wages & discrimination in Construction Industry

 

 The wage rate of construction workers is normally above than casual workers of other sectors, but due to the entrance of large number of displaced people market rates have taken a downward trend. The Bhutani refugees almost from a decade have been in the labour market in disguise and they work mainly in construction industry in whatever conditions and rates.

Overwhelming majority of workers in construction work in daily wage basis while only a few in other terms and condition. About 10 percent construction workers in Kathmandu are involved in other activities as a secondary occupation like street-vendor, newspaper-hawkers, and casual workers known as kulli- kawadi, where local workers can be found engage in farm related occupation in morning and evening time. On an average an unskilled worker could draw about NRs 2470 per month where skilled worker earn NRs 4400 at the same time. In this sector, one working have to support up to 5 non-working family members.

                        Table 7: Percentage of Wage Earners in Construction Industry

Area/particulars

Construction workers among total

Non-agricultural

Workers

Nepal

35.3

Male

37.4

Female

23.1

Eastern Development Region

36.8

Central Development Region

26.6

Western Development Region

38.5

Mid-west Development Region

50.3

Far-west Development Region

47.3

Mountain

39.9

Hill

30.9

Terai

39.2

Rural

41.4

Urban

17.7

Poorest

53.7

Richest

12.2

 

                        Source: NLSS 2003/04, CBS, Kathmandu

The monthly per capita earnings of the employee in construction sector are far below than the average earnings of the workers in other sector. Agricultural workers have lowest earnings. Construction sector comes at the 14th rank.

Table 8: Average Monthly Per capita Earnings

 

Sector

Average Monthly Per capita Income (NRs)

Financial Intermediation

4,468

Extra Territorial Organisation

3,425

Real estate, renting and business

3,399

Electricity, gas and water supply

3,373

Public administration and defence

3,078

Hotels and restaurants

2,988

Transport, storage and communication

2,950

Health and Social work

2,948

Education

2,844

Fishing

2,827

Manufacturing

2,567

Other community services

2,561

Wholesale and retail trade

2,331

Construction

2,298

Mining and quarrying

2,073

Private household workers

1,519

Agriculture, hunting, forestry

1,246

 

Source: ILO, Decent Construction Work in Nepal

The monthly earnings in construction sector are low though daily wage in construction sector is usually higher than the nationally established minimum wage. The average daily wage in different ecological zone shows higher wage rate in the mountain and lower in the Terai. The wage rate varies largely from place to place and one season to another.

Table 9: Average Daily Wage in Construction Work by Ecological Zone

Category of Worker

Terai

Hill

 

Skilled

200

237

 

Semiskilled

150

157

 

Unskilled Male

104

132

 

Unskilled Female

80

112

 

 

Source: ILO, Decent Construction Work in Nepal

There is significant discrimination in wage by gender despite the legal provision of equal remuneration for equal work. The discrimination is more among females.

Discriminatory Practices

Gender discrimination is clearly visible in all construction companies, though the proportion may vary from one company to another or from one grade to another. It is surprising that gender discrimination is low in the non-graded companies. 

Table-10: Status of Discrimination
Between male and female by grade of construction companies

Grade of Companies

Yes

Grade-A

94.4

Grade-B

100.0

Grade-C

100.0

Grade-D

88.9

Non-Graded

60.0

Total

78.7

 

                        Source: cuppec Survey, 2004

High discrimination is evident in wage payment. Generally, females draw low wage compared to their male counterpart for the same volume and type of work. Besides gender discrimination, the construction workers are also equally discriminated on the basis of their origin - workers from Terai origin known as Madhesi (either from any parts of Nepal or from India) and from the hill origin as Pahade.

Generally the Madhesi workers are abused verbally by most of the Pahade employers. Mostly they are humiliated in every work place. The wage rate is comparatively low than the Pahade workers in all types of work though they work more than normal working hours. Delay in payment is another discrimination being faced by the Madhesi workers. There are few incidents, where the Pahade has been harassed similar way in the construction site owned or managed by Terai origin people.

Unions at work

 

The violent conflict has naturally affected the whole economic & business environment causing slackness even in the construction industry. However, union work is continuous and union activities have been expanding in construction sector in spite of all these difficulties. If the problems will be solved and permanent peace is restored, then union work as we hope will take new heights and speed.

At present owing to increased unemployment, construction sector is also affected. However, because of the physical destruction through explosives by Maoists, scope and necessity of additional constructions and maintenance-renovation work is highly increasing. As the infrastructures developed within the past years have been damaged by the Maoists, reconstruction is highly required, which will generate heavy employment opportunities in future.

Women workers' situation does not seem to improve immediately as there exist unemployment and slackness of construction industry. Construction through MNCs is not high in Nepal and there are no new mega Construction project at present.

Thus in a difficult political and economic situation, CUPPEC-Nepal is working as the biggest trade union of the construction industry. Other two federations CAWUN and NBCWU are also working. BWI affiliates committee has organized grand interaction, workshop and seminar on social protection of workers in construction industry. Proceedings have been published. Joint rallies have been organized. Lobbying and campaigning for social protection has gained momentum this year.

Additionally, CUPPEC Nepal has also organized a number of activities on social protection in grass-root level. Mobile health camps as a part of health protection campaign and counseling have been conducted. Saving Fund for its members have been introduced by CUPPEC.                                                                              

Looking back to the early days, Unionisation of workers in the construction sector started in 1970s while the government was constructing East-West High way. Some 25,000 workers of East-West High way had launched general strike demanding immediate settlement of their grievances, which later helped to strengthen newly launched National Federation-NIWU- Nepal Independent Workers Union.

In post-1990 periods, unionization became very fast in construction. In the beginning painters, plumbers, electro-workers and workers in carpentry & general construction were in NIWU. With the realization of the need of separate union, Central union of plumbers, painters, electro & construction workers of Nepal (CUPPEC- Nepal) came into existence.

The CUPPEC is working since 1991 (renamed as CUPPEC after amalgamation of three federations in1997) and has unionised 56,228 workers. Adding the unionized number estimated in the fold of all other unions of various small sizes, roughly 135,000 construction workers are union member in different parts of the country.

Based on CUPPEC estimates, nearly 1,050,000 workers are involved in construction work all over the country, which shows only 12.85 percent workers are unionized.      

Problems Faced by the Construction Workers

Majority of workers are not getting wage in time.  Their sickness is ignored and leave is denied. Their labour is undocumented even if the employer fails to supply necessary materials and equipment in time. Job security is major problem in this industry. No written agreement between workers and employer is entertained.

Above all there are multiple problems the workers in construction industry facing. Table below reveals few major problems.

            Table-11: Type of Problem Faced by the Workers

Problems

In percentage

Main Contractor

 

Non-availability of wage in time

86.7

No agreement of work

4.4

Non-availability of goods/equipment in time

2.2

No attendance card

4.4

Fire of workers

2.2

Petty Contractor

 

Non-availability of wage in time

86.1

No agreement of work

5.6

Fire of workers

2.8

Non-availability of goods/equipment in time

2.8

No attendance card

2.8

 

            Source: cuppec Survey, 2004

The minimum wage/remuneration fixed by the government covers formal manufacturing sector, agriculture and tea estate. Construction sector is not covered from the minimum wage provision. As a result they are exploited. Excess supply of labour compared to demand in this sector reduces their bargaining power.

Generally, the workers involved in this sector do not shift elsewhere due to lack of knowledge and skill required for other occupation. As a result, they are compelled

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