Saturday, January 5, 2013

Salary hike boon or challenge?

Employers may turn to less labor-intensive options

KATHMANDU, Jan 4: Over the years, the Nepal government has had the minimum pay for Nepali overseas workers in three countries- Saudi Arabia, the United Arab Emirates and Kuwait -raised. The minimum salary for workers employed in Qatar was already specified by the government a couple of years back.

With effect from New Year´s Day 2013, the Malaysian government set the minimum salary for both domestic and migrant workers, and this translated into a significant hike in their pay scales.

The moves by both originating and host countries to jack up the remuneration of workers are welcome, and are expected to ensure better earnings, and eventually higher savings. Nepali unskilled workers, who were paid meagerly, have benefitted from the rise in minimum salary.

Nepali workers are comparatively less skilled than those supplied by other countries, something which has weakened their bargaining power with their employers.

However, the demand for Nepali workers has not yet been badly impacted as employers in the host countries still want to hire Nepalis and get away with paying comparatively lower salaries. But foreign employment agents said the situation will not continue forever as major employing companies in the recipient countries are demanding fewer workers with higher skill levels and going for capital intensive mechanisms

“Though the hike in salary by both source and host countries would enhance the workers´ financial position, it will simultaneously have a negative impact on the demand for workers from countries such as ours which have been supplying mainly blue-collar workers,” said Kumud Khanal, vice-president of Nepal Association of Foreign Employment (NAFEA).

Nepal has been highly dependent on remittances sent by unskilled workers, who account for more than 90 percent of the total number of Nepalis leaving for overseas job destinations.

With the increasing demand for higher-skilled workers in host countries, given the massive shift from labor-intensive to capital-intensive industrial processes, Nepal faces a huge challenge coping with lower demand for blue-collar workers.

Foreign employment experts also said the raise in minimum salary effected by either the host countries or supplier countries might not always be beneficial.

“As a host country, it is natural for Nepal to seek minimum wages for its workers abroad and strengthen their income levels. But, it would be detrimental in the long run to jack up remuneration unilaterally without consulting employers in the destination countries,” said Dr Ganesh Gurung, who has long been researching foreign employment.

Dr Gurung said the source country governments also have to take into account the existence of rival countries supplying workers to overseas destinations, changing global labor demands, the required skills for workers and the salary scale prevalent in host countries, before seeking a minimum remuneration level for their workers.

“We have to give more priority to developing the skills of our jobs seekers before seeking minimum remuneration in labor markets so that our bargaining power for better pay will be strengthened in the long run,” he said.

The volatile international labor market with frequent changes in policies on migrant workers by the host countries has meant bleaker job prospects with lucrative pay for unskilled workers. Unskilled workers are always at the receiving end of any policy shift and or financial problems in the host countries. Massive layoffs of unskilled workers by countries impacted by the global financial crisis in 2008-2009 was a glaring example of how prone such workers are to losing their jobs.

“We have to focus on quality workers to drive up the per person remittance earning, given the gradual drop in demand for low-skill workers,” Gurung said.

Published on 2013-01-04 04:00:24

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