By BISHWAMBHER PYAKURYAL (The Kathmandu Post/ 12th Feb '07)
A strike is any concerted stoppage of work, slowdown or interruptions of operations by concerned stakeholders. In Nepal, the assessment of the characteristics of ongoing strikes indicates that work-related strike or strikes organized for industrial reason overlap with political strikes. This has happened since most of the unions were, to a greater extent, linked to anti-establishment political organizations. The indicator to identify the nature of economic or political strikes is therefore the
type of the demands of those who strike.
While the cost of a strike can be quantified, it is difficult to evaluate its consequences. It can safely be said that there are both the short-term and long-term damages to the economy from strikes. The fragility of post-conflict economy is already creating problems in meeting salaries, pensions and other public-sector obligations. The government has lost the ability to access emergency credit needs to the private sectors for their priority investment projects. The growth rate of budget deficit was 3.9 per cent in the year 1996/97, which reached 37.2 per cent in 2005/06. In monetary term, the deficit amount was Rs 14361.9 million in the year 1996/97 and reached Rs 24766.8 million in 2005/06. The stock of net outstanding external debt of the government in 1996/97 was Rs 13,086 million and it reached Rs 219,641.9 million in the year 2004/05. It indicates the severity of economic shocks to maintain minimum level of growth with continuing developmental interruptions through strikes. The question therefore is not simply if we can afford the strikes; it is the million-dollar question. "Do we want to spend whatever it takes to save the country?"
Even in developed economy with strong and reliable database it takes several months to calculate the cost of strikes. In Nepal, the data source is poor and no study has been done in developing the Consumer Confidence Index (CCI). CCI can help estimate unemployment and business activities through the proper analysis of consumer's confidence level. There have been rough estimates made to quantify the cost from strikes in Nepal. The Asian Development Bank's estimate reveals that the three-week long shutdown in April 2006 alone should likely cost Rs 10 to 15 billion. Some have cited the diversified areas of costs such as investors' costs in hydropower projects, impact on government revenue, the cost claimed by insurance companies, the cost of deploying the security forces and the cost of general strikes amounting to at least US $ 100,000 per day, which is roughly Rs 149.1 million.
Nepal experienced altogether 75 banda between 1990 and 2003. The total costs were estimated at Rs 80 million each day. Out of these bandas, UML represented 69 per cent (52 bandas), the Maoists supported 24 per cent and other parties organized roughly 7 per cent of total bandas. Such strikes had direct, indirect and long-term costs to the economy, but exact calculation for the same has not been done using the standard international methodology. However, available data indicates loss of production, decline in investment, both domestic and foreign, loss in goodwill and opportunities, and capital flight as the indirect cost of continued strikes. Reduction in physical mobility and travel affects livelihoods and slows down economic activity. This indicates the long-term impact. The most affected sector is service delivery.
Banda has visibly shown its adverse impact on health sector such as decline in patient flows, scarcity in essential medicines and lack of primary healthcare services. The quality of public schools has deteriorated because of the unavailability of educational materials. The teachers in remote districts report frequent closure has interrupted the annual academic calendar of educational institutions and created difficulties in retaining qualified teachers. Each time there is a strike, the tourism sector is severely affected, since this sector provides direct employment to 250,000 persons and involves one million in tourism infrastructure projects.
Closing retail stores also means hurting national economy. Restriction in the inter district movement of goods and services raises price of the consumption goods and decreases wage to fixed income group. Therefore, besides losses in businesses, the price rise in air travel has also affected the overall consumer price index from retail trade. The long-term impact has already been felt in the massive decline in foreign investment largely because of the uncertainty created by frequent bandas. The Kantipur has reported that in the central and eastern terai, the industrial loss alone accounts for Rs 500 million per day during the recent three weeks protest rally. However, in the absence of the use of standard statistical tools, such information is frequently based on what people think, not what empirical studies reveal.
Efforts should be made to find out the severity of strikes on country's top priority sector by calculating the disaggregated cost for each sector on the basis of at least the number of days strikes occurred in one year. The data for advanced countries is available. For example, the annual average strikes are
37.3 days for France and 38.5 days for Italy during the period 1998 to 2001.
In a recent Tube strike in London, as commuters faced travel chaos, the London Chamber of Commerce stated the disruption caused the companies at least Rs 1.25 billion per day. The business cost between Rs 31.24 billion and losses of Rs 46.86 billion was estimated a day in lost revenue because of the transit strike in New York city on December 16, 2005. Such costs can be significantly higher in Nepal if we add police overtime cost to prepare the streets for added traffic.
Nepal has opened its service sector. The added task is to assess the impact of regional integration through the functioning of SAFTA. Compliance with WTO rules necessitates member countries to reconsider the legalization of strikes in essential services such as in the transport sector, especially air transport or public health, during intensified international contacts and labor mobility. Harmonization of national legislation and practices between SAARC member countries is therefore, important to protect citizens adequately and in a homogeneous manner.
To conclude, there has always been a dilemma to reconcile between the strikes as an essential tool to improve employees' conditions and safeguarding the rights of ordinary citizens to pursue their daily lives unhindered. The economic impact of strikes should revolve around this crosscutting issue.
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