Nepal: Role of Trade Unions in Poverty Alleviation

Dev Raj Dahal

Head, FES Nepal Office


Poverty is one of the critical barriers to human progress. For many years, it has been accepted as a fate of the workers and structures, laws and ideologies were created to perpetuate it. According to the World Bank estimates more than one billion people in the world live in abject poverty with less than $ 1 income per day. More than 700 million of people are not productively employed. Now, this pervasive poverty and unemployment have grown to such an extent that they are assumed as one of the critical challenges to political stability, social cohesion and eco-balance. The South Asian countries share huge proportion of this poor people. Poverty presumably means that people do not have adequate access to income, education, resources, health care facility and nutrition. Politically, poverty means powerlessness or dehumanization. Such people live under constant fear and suffer from basic needs deficit.

Unlike any other region in the world, South Asian economies have experienced little structural transformation to make any significant impact on the level, intensity and directionality of poverty. The key knots of this problem are structural constraints, peripheral location of the region from the economic core of global political economy and limited export diversification. Most countries in South Asia, therefore, remain highly dependent on primary production and export. In bulk of the cases, a few commodities dominate export earnings and the export of low-value agricultural export commodities has left regional economies extremely vulnerable to volatility in commodity prices.

The share of South Asia in world trade is just about 2 percent. This region is, however, labor surplus and has high resource potential for takeoff if economic policies are equally mediated by the equal interest representation of the capital and the labor and structural barriers are removed by the fair social mobility of people. Social charter of SAARC, in this context, holds tremendous significance to provide social foundation for regional and global trade regimes and redistribution of economic growth for poverty alleviation. Nepal has often fallen to the attraction of development models and the policy makers are more attracted to their uncritical acceptance rather than creatively thinking about their cost, utility and application.

Traditional Strategies for Poverty Alleviation:

Nearly half of Nepal’s population lives below poverty line. Efforts towards alleviating poverty have been disappointingly slow and the relative gap between the richest and poorest people has continued to widen. The UN indicators of progress indicate that poverty, inequality, alienation and rebellion in Nepal increasing. Why did this happen? Public policies could not overcome the structural and cultural barriers. Similarly, the approach was either welfare-oriented or growth-focused and the poor, youth, women and socially marginalized people were treated as labor, not human beings.  This led to an unnecessary human suffering and an enormous squandering of human potential, especially those of workers.

In the fifties, poverty alleviation strategies focused on economic growth. Its assumption was based on the notion that if the national output expanded, social classes in society would be automatically uplifted up. It was assumed that growth incentives would go initially to those at the top of the economic ladder, but latter it would benefit those at the bottom of society by a "trickle down" process. With the increase in income, poverty declines and the conditions of health, education and infrastructure improve. This “trickle-down” thesis suffered its own fate, like modernization, growth, structural adjustment and financial globalization failed to deliver the desired outcome for poverty alleviation.

Poverty Alleviation through Social Dialogue:

Social contract between the capital and the labor gave birth to the constitutional welfare states of Europe. In Germany economic policies are co-determined by the representatives of employer and workers. The International Labor Organization (ILO) and its social partners, including trade unions, found that poverty and social exclusion are the cause and consequence of political conflict in many countries. Hence, a major work of the ILO throughout much of its founding is that there should be a linkage between economic, political and social policies. The ILO’s concern on issues of poverty dates back to 1944, when the Declaration of Philadelphia (which pertains the aims and purposes of the Organization) stated that "Poverty anywhere constitutes a danger to prosperity everywhere." It adopted a more systematic approach and unveiled that poverty at the individual level is the consequence of faulty nature of the system--national, regional and global. This means combating poverty requires the union’s all levels of works.

Poverty alleviation also requires the involvement of the workers and trade unions in the ongoing technological, social and economic transformations as they are entailing conceptual and structural adjustment. Are trade unions of Nepal prepared for this adjustment? One positive trend is that international financial and development organizations are trying to involve workers’ organizations in the country ownership of the poverty reduction strategy. The growing concern for country ownership, including through the involvement of trade union, is intended to reduce the risk of non-implementation of public policies, even polarizing effects between the capital and the labor thereby tearing apart the stability of the system.

Role of Nepalese Unions:

Trade unions in Nepal have accordingly participated in the reshaping of Poverty Reduction Strategy paper (PRSP), Millennium Development Goals and the Tenth Five-Year Plan documents. Trade Unions are basically applying social dialogue and consensus at the tripartite level and attempting to unleash the productive sectors of the economy, creating jobs and fostering social integration. In the macro-economic policy framework, unions are also trying to address the problem of conflict management and transformation by joining hands with the Business Initiative for Peace. Industrial democracy and free collective bargaining for productivity-related wage increase are the most direct contribution of trade unions to poverty reduction. Currently, they are organizing the unorganized sector, promoting gender equity, abolition of child labor, removal of bonded labor, workplace democracy, recruiting youth, women and agricultural workers in the unionization and building solidarity across the union network.

Trade unions pro-actively taking part on human development roles such as raising awareness about workers rights, promoting gender equity, providing education and training for members, improving national government accountability, aiding in conflict resolution and raising members’ awareness about health and safety conditions. Trade unions are also instrumental in pressuring the governments to adopt employment-intensive economic policies and adequate social safety measures and schemes.

The traditional role of trade unions lays down collective bargaining as a means of determining wages and other forms of working conditions, since workers are entitled to decent working and living conditions, better housing, health and safety conditions, education for the children, and fair income distribution. Nepalese unions are also laying stress on social development so that democracy, human rights and social justice grow hand in hand and dignity of labor as citizen and human being is established. Unions have sought to involve women in all spheres of the trade unions and trying to involve women at all levels of decision-making in society. Still, the struggle for gender and inter-generational justice has remained unfinished, which are also keys to poverty alleviation through empowerment measures.


Suitable policies are needed by the trade unions at this critical juncture in the alleviation of poverty. It is necessary to have an understanding of the nature of the linkages that exists between constitution, social dialogue and trade unions. The purpose here will be to identify the institutional incentives, rules and processes shaping dynamics of poverty alleviation, and assessing the constraints undermining their potential of efficient and responsive "voice" and “visibility,” and “participation.” It will also be an enabling mechanisms of negotiation and broad-based social dialogue of trade unions with other stakeholders of society for addressing not just the question of poverty but also sustainable development.

(Published in the Telegraph Weekly April 4, 2012). 

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I agree


  • Posted on - 2012-04-20    by     Valdei
  • Surenyou are right. JYOTI / JOTI has done very good job here. She has got a brain for analyzing ctlricaliy and objectively. Racism is very powerful issue itself. we need to learn how to express / share things with other people. Most people hide things that happens to them or happens in the community.Westerners, UN or other international organisation talk about such as Poverty, child marriage, Dowery, make negative comments about our religion ie muslim, hindu. But these foreigner never hesitate or shy to comment on this issue and we nepalese people never bother or dare to ask questions about the facts about their publications. So why, If JOTI made comments about RACISM in britain especially the White community, makes our people who been attacking JOTI's thoughts???As many of you live in USA, may have noticed that white racist people wanted to shoot Barak Obama? and openly make comments about him being MUSLIM ?Well done JOTI. I am with you.