June 28: The private sector has warned the government that if it increased the wages of the workers to an unsustainable level, they will hand over the keys of their industries and businesses to the government.

Employers who participated in an interaction on minimum wages organized by the Federation of Nepaesel Chamber of Commerce and Industry in Birgunj of Madhesh Province on Tuesday clarified that the wages cannot be increased as the industries are running at less than half their capacity.

They expressed concern that the government is trying to increase the minimum wage at a time when the industries and businesses are facing all kinds of problems due to the coronavirus pandemic.

FNCCI’s Babu Kaji Karki claimed that if wages are increased unilaterally without the consent of the private sector, which contributes 85 percent to the total employment creation, it will cause an accident for the economy.

The interaction organized outside the capital to understand the views of the industries and entrepreneurs regarding the government's plan to increase the minimum wage in the next fiscal year shed light that the labour cost has been rising due to the increment in minimum wages and collective bargaining every two years.

Stakeholders said that the economic indicators do not show a comfortable economic situation at present. Due to economic contraction, the employers are not ready to take the burden of salary hike when they are forced to cut employment.

If forced by the government, entrepreneurs will have to give up the keys to their business, said Karki.  

The private sector is alarmed by the government’s of plans to double the current minimum wage of Rs 15,000 per month.

“Some say that the minimum wage will be increased to Rs 25,000 while others say it will go as high as Rs. If this is the case, the industries will be closed,” says Karki.

The private sector has warned that the practice of hiring Indian workers will increase if the salary burden becomes unsustainable.

Ganesh Lath, outgoing president of the Madhesh chapter of FNCCI, said that although the government is going to increase the wages of the workers, it seems indifferent about increasing the productivity. “Entrepreneurs turn to automatic technology when they cannot bear the burden of wages. The day may come when employment opportunities will be closed due to this," he said, who is also an advisor to the FNCCI’s  Employers Council.

Ashok Kumar Temani, president of the Madhesh chapter of FNCCI, demanded that the government should also contribute if the salary is to be increased. “Modality can be made in the form of contribution," said Temani.

The private sector says that wages should be increased at different rates depending on the geographical situation and cost of the city where the workers are employed.

"We have an unreasonable practice of setting same wages in all the places,” he added.

Anil Kumar Agarwal, president of Birgunj Chamber of Industry and Commerce, said that the industry and trade has shrunk.

"To overcome the crisis of coronavirus pandemic, we have to find many ways to cut expenses. If there is an increase in wages, there is no option but to close the enterprises," he said.

Hari Gautam, coordinator of the FNCCI Employers' Committee, said that although the economy is said to have recovered, the situation is not positive.