The Current Trade Union Situation in Nepal Dev Raj Dahal Introduction The population of Nepal is 23.2 million. The growth rate of the population is 2.27 percent. About 80 percent of the Nepalese work in agriculture, where growth depends on the vagaries of monsoon. The GDP growth rate of 3.1 percent roughly balances the population growth rate. The life expectancy is 59.7 years. Illiteracy and poverty rates are high--GNP per capita income is US$ 249. About 60 percent of its development budget comes through foreign aid. Adult literacy constitutes around 57.6 percent. Nearly half of the population is below the poverty line living on a dollar or less a day. About 54 percent of Nepal's population constitutes the labor force(aged between 15-64 years). Every year three hundred thousand persons enter into the labor market in Nepal. Five percent of the population is totally unemployed while the under-employment ratio is 45 percent. 41 percent of children aged 5-14 are economically active. Higher unemployment, lower paid jobs and unfavorable working conditions badly affect the workers.(for development indicators see, APPENDIX-1) Due to the decline of employment conditions in the country, there is an increasing trend toward the migration of Nepalese workers abroad. The Labor Department reveals that 242,005 Nepalese workers are employed in 48 countries, the bulk of them in the Gulf region, Japan, East Asia, Southeast Asia, Europe and America. Nearly half of them(104,039) migrated just last year after the declaration of the state of emergency in the country on November 26, 2001. Two hundred thousand Nepalese workers have applied for jobs abroad. In India alone, there are over 115,000 Nepalese ex-servicemen getting pensions and almost same number is serving in the Indian army. Due to the open border, seasonal migration of Nepalese workers in India and Indians in Nepal is enormous. The share of workers' remittances in the Nepalese GDP is about 9 percent. Growing regional inequality, economic stagnation and political instability at the national level easily fractured the country's security. The flow of capital, commodities and entrepreneurs from the periphery to the center, Kathmandu, left behind tattered social fabrics and a crumbling local economy. Both the agricultural and industrial growth rates in Nepal hover around 3 percent. The industrial sector is import substituting except in the case of the carpet and garment sectors. Both the sectors have shown a sign of decay since 1995--carpet due to negative advertisement of the use of child labor in Germany and garment due to gradual phasing out of quota under the WTO regime. Reduced trade barriers have allowed foreign goods to enter the country freely and at lower tariffs, applying pressures on native industries. Until 2001, Nepal's foreign investment portfolio included 554 enterprises worth Rs.65.94 billion, 23 percent of which is provided by foreign capital. Liberalization provided favorable ground for financial sector growth. Aside from the National Bank of Nepal and the Nepal Commercial Bank, liberal economic policies helped to establish 15 commercial banks, 8 development banks, 5 regional rural banks, 1 postal saving bank, 48 financial companies, 30 micro-credit banks and 39 NGOs involved in small scale credits. Most of these services are confined to urban nodes and are beyond the access of the needy poor. Reckless privatization of state-owned industries(out of 60 state-owned public sector industries, 17 industries have already been privatized and 8 industries are on pipeline for privatization), collapse of industrial enterprises(2 public industries are already liquidated), violent conflicts and lack of opportunities in Nepal have been propelling the workers to migrate abroad for livelihood security. During 2001-2002 alone 679 enterprises have collapsed having a negative impact on the job market of the 1