Political Situation

Since the beginning of the year 2006, the political environment of Nepal has been dominated by the heavy tussle between the King and mainstream political parties. The movement launched by the seven-party alliance (SPA) gained momentum, and the suppression from the side of autocracy became more and more cruel.

In October 2005, the King had announced that the municipality elections would be held on February 8 just after a year and a week of his direct, unconstitutional rule. The SPA declared a general strike and called for a peaceful demonstration to be staged on 20 January 2006, urging the people to take to the streets. They came out in large numbers that exceeded 2,00,000 in the capital city. Prior to the peaceful demonstration, the SPA had been successful in organising a big rally of 1,50,000 people in Janakpur outside the capital valley. The government became apprehensive and arrested the leaders of political parties, mass organisations and civil society before the date of general strike.

More than 300 leaders and activists, including top leaders of the country, were arrested before 20 January. General Federation of Nepalese Trade Unions (GEFONT) Chairperson, Mukunda Neupane, and Secretary General, Binod Shrestha, were arrested early in the morning of January 19. Similarly a number of trade unionists, both from GEFONT and Nepal Trade Union Congress (NTUC), were arrested from the demonstrations and from their residences. The GEFONT Secretary General was detained for 29 days. Some were released just after the so-called election of February 8 and some were detained for one month. Top leaders were detained for more than 3 months. Even human rights activists were arrested. International pressure as well as the pressure from trade union movement of the world was highly significant. But the use of suppressive measures by the autocratic regime intensified.

The people successfully boycotted the municipal election. Even after casting fake votes since there was no one to oppose it in the polling centres, the regime got less than 20 per cent of the votes. The election was a total failure.

During this period, a 12-point understanding between the mainstream political parties, represented by SPA, and the CPN-Maoist was developed after a series of informal, behind-the-scene talks. People felt that the 12-point understanding could give them permanent peace and democracy. People took it as the road map for a solution to the Maoist problem and as the end of absolute monarchy. Therefore, the SPA movement gained momentum.

Through the imposition of ordinances, the autocratic administration amended the labour laws in order to have full control on trade unions. However, due to the heavy pressure exerted jointly by the working masses and the trade unions, the regime could not implement these ordinances. 

During the first quarter of 2006, the Maoists and the security forces have been frequently accused by human rights organisations and civil society organisations of violating the basic norms of human rights. The King`s cabinet became more hostile to the SPA and civil society. Hence, after the 12-point understanding with the Maoists, civil society and the human rights organisations mainly targeted the anti-peace, anti-democracy actions of the royal regime.

During this period, the support to the democratic forces and the continued pressure from the international community, including various governments and the UN agencies, to restore democracy, freedom of the press and the release of political detainees have been highly significant. The human rights monitoring office of the UN played a very important role during this period.

Economic Situation

The Institute for Development Studies, Kathmandu, made an ominous prediction. That is, if the situation continues, Nepal would be bankrupt before June 2006. The conflict-dominated situation, fuelled by the King`s attack on democracy, has produced damaging effects to the national economy. The slowing down of industrial activities, sharp deterioration in the tourism industry, declining exports of woollen carpets, and damaging effect of the removal of the quota system based on MFA on the ready-made garment industry are some of the major features in non agricultural sector.

A large number of people are entering India, through the open borders, to earn their livelihood. The flow of the unemployed workforce toward third world countries is also increasing sharply. The main destinations have been the Middle East, where working conditions are extremely difficult and dangerous. Dozens of young Nepali workers lose their lives every year in the Arab world.

As the flow of workers has increased sharply and significantly this year, the remittances from abroad have naturally become the most important source of income, placing foreign employment as a major livelihood option for the people.

Labour Market and the Trade Union Situation

The capacity of the Nepali economy and the labour market to create jobs and absorb labour declined further during the first quarter of 2006. Because the crisis intensified, enterprises under-utilised their capacity and had to silently close down. The King and his regime proved that they were against peace by blocking all possibility of talks with the Maoists. The business community were frustrated with the focus on the so-called local municipal elections. The demand for donations forcibly by the Maoists created horror among the investors and entrepreneurs, leading to disinvestments rather than investment.

Union membership, in the formal and informal sectors, did not increase. Union activities in rural areas were adversely affected by the extreme insecurity. The autocratic regime`s attack on the trade unions became more visible with the imposition of the anti-labour ordinance, amending the existing labour Act 1992. The arrest of union leaders and harassment at the local level increased during this quarter. The non-observance of trade union rights became rampant. Harassment and surveillance of the unionists and union offices by the security forces became the routine.

The practice of collective bargaining was restrained; and the officials delayed the dispute-handling procedures. Hurdles were also imposed on the registration and renewal of trade unions by the pressure from the Home-Administration.

The positive side to the autocratic pressure on the unions has been the significant progress in trade union unity.   For the first time in the history of Nepal, a national charter of demands has been submitted jointly by all three recognised trade union confederations GEFONT, NTUC and Democratic Confederation of Nepalese Trade Unions (DECONT). The national charter of demands is based on the discussions and conclusions of a wider National Workers` Conference, organised from September 10 to 12, 2005. The charter of demands was submitted by the joint delegation of the confederations, with an ultimatum of 35 days, on February 15, 2006. Workers and trade unions are in an upbeat mood and are ready to enter a decisive fight against the autocratic royal regime.