Few days back when I was reading this book Nepal 2030: A vision for peaceful and prosperous nation in which one of the concluding remarks by Dr. Sagar Raj Sharma in the beginning chapter lured me to craft this article. As he finished his chapter Building a bridge towards development: Nepalese Economy in 2030 saying, “Our future will depend not on what will happen to us, but on what we decide to become, and on the collective will to create it”, the pragmatist inside me could not stop myself from bringing one of the case studies from my 2012 reserves, and giving answer to what actually fails us to become what we are destined to as a prosperous country.
Back in 2011 when Surya Nepal Garment factory- a big employment generator- decided to permanently shut down its operations; a series of interpretations, news feeds and calculations emerged in daily basis over the next few months through different sources behind the reasons for collapse and its possible impacts on the economy. However, such stories neither brought the venture back nor any lessons from it were taken seriously to stop further collapses. So this is a high time to set back to prepare ourselves if we want to be served with the beautifully baked lamington-Nepal 2030 anytime in near future.
Established in 2004 in Biratnagar, Surya Nepal Private Limited (SNPL) garment manufacture unit (SNGU) was popular for its international brands like John Players and Springwood. The factory was installed with an investment of about 700 million and was responsible for 50 to 60 percent of Nepal’s garment export. It was the country’s highest tax paying company which had given job opportunity to around 600 workers, mostly women. Despite all these, the company had to permanently shut down its garment unit in August 2011 because of the continuous labor strike and cancellation of orders by importers.
Why did it happen?
The root cause of the labor unrest in SNGU is the March 24 agreement. The agreement had three major points- wage hike, ‘No work no pay’ for illegal strikes, and observing industrial peace year for next four year- and was signed by the three major trade unions – All Nepal Trade Union Federation (ANTUF) affiliated to UCPN-Maoist; Nepal Trade Union Congress (NTUC) affiliated to Nepali Congress; General Federation of Trade Unions of Nepal (Gefont) affiliated to CPN-UML; and the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). Following the spirit, the government hiked the minimum salary of workers from Rs 4600 to Rs 6200 and daily wages from Rs 190 to Rs 231 but failed to endorse other two later points of agreement. At the same time, ANTUF violated the agreement and stated that they were against ‘no work no pay’.
The violation of March agreement by ANTFU fell heavily upon the Surya Nepal garment unit. The workers demanded the wages for the six days of a strike that took place in mid-April. But the management refused to provide wages under the ‘no work no pay’ provision. This led to continuous labor unrest, strikes and bands. The faction between the management and the union grew stronger when the union locked some of the managers of the unit for 24 hours on June 14.This process went on until August when the SNPL decided to permanently shut down its garment unit because the unrest did not find a conclusion through negotiation and the unit was unable to export the demand of their clients which raised questions against their credibility.
The struggle between the owner and the labor is natural, as in Adam Smith’s words “the workmen desire to get as much, the masters will to give as little as possible”. These two position holders are always seen to be negotiating because in the law of exchange of commodities, the laborer sells his labor and looks for fair wage while the master purchases it and looks for profit. Therefore, the struggle is more likely to arise in the issues especially of wages, working hours, working days, where these two players are seen to be negotiating their exchange of commodities. But the story of Surya Nepal garment factory is different to what we think subjectively.
This collapse is not associated with the owner-labor profit sharing conflict but because of over politicization in the manufacturing sector. Trade unions, in case of Nepal, are irrationally backed up by the political parties in such a way that now it functions as the institution of collecting vote rather than speaking on behalf of the laborers about their problems. These trade unions are developing themselves as violent groups who are trying to manipulate the synthesized power that lies within the union. This culture is usually seen to be helpful for the leader of the union because he/she benefits both in his/her economic and political career. Likewise, the government is not fulfilling its desired role in cultivating industrial friendly policies, neither it bothers concluding the conflict between two parties through negotiation or any policy intervention. It is a common for laymen to expect the state to create a conducive environment for both foreign and national investment on private sectors. But in the case of Surya Nepal, the government remained silent. As a result, the country had to lose its major tax paying contributor, payment maker and leading garment exporter. The collapse of the garment unit was a huge revenue loss to the national economy.
Common people always have a tendency to react negatively when the news of industrial collapse come to them, and the blame blindfoldedly goes to the owner. It is true that any capitalists or entrepreneurs want to make money at all cost but ‘wanting’ does not necessary and usually make them exploiters. There are many instances when companies have become big time exploiters and labors have suffered a lot. However, the evidences of the SNGU case suggest very little about such exploitation. Some of the post collapse researches conducted with the labors maintained that the company used to offer every possible facility to its workers. It also used to pay double than the suggested minimum wage to laborers by the government.
But it is sad to end this article with the fact that the only reservation of the company for its implementation of ‘no pays no work for illegal strikes’ provision led to its own collapse. The collapse is not a capitalist exploitation over working men but the over politicization of the trade union and insensitivity of the government.
Only if we can offer a solution to ‘over politicization’, and only if leaders lead their vision not their greed, a pragmatist like me would believe in the vision of experts making Nepal a peace and prosperous country by 2030.