A Living Wage in Nepal

A Living Wage in Nepal
October 15, 2016 Katrina Bryant
In Ethical Manufacturing

Purnaa conducts an annual survey (download here) with each of our Nepali team members to measure how well we are accomplishing our social objective of creating good jobs that empower marginalized people to transformed lives. We publish this social impact report because of our commitment to transparency. The survey gauges quality of life in the above five areas.

 

Today we want to share our calculations for ‘A Living Wage in Nepal’ based off of our findings in the 2015 Social Impact Report. When we established Purnaa, despite many, many hours of digging online, meeting with government officials and INGO workers who work in economic development, we could not find any reports on what Nepal’s living wage (not to be confused with the minimum wage*) ought to be.  After running a company for 3 years that employs many who have little-to-no formal education and who begin as the lowest earners, we wanted to share what we are learning from their responses to our survey questions.

 

*The new minimum wage in Nepal is 9700NPR/mo. The World Fair Trade Organization defines “living wage” as 110% the minimum wage. 110% of 9700NPR/mo is 10,670NPR/mo. All Purnaa employee wages are higher than this.

 

Employee Demographics

Purnaa employed 35 Nepalis at the time of the survey:

A Living Wage

During their interview, each employee recorded an estimate of their monthly expenditures. Their responses allowed us to calculate a baseline living wage for our employees. We base our salaries on the approximate living wage for a single parent with children, though some of our employees have spouses who contribute income to their families. The wages indicated in the survey results include medical reimbursement and children’s school scholarships. They do not include the 15% profit-sharing bonus our employees receive annually.

* Expenses are in Nepali Rupees/month.
** See http://www.economist.com/blogs/economist-explains/2015/05/economist-explains-24 and
http://www.numbeo.com/cost-of-living/country_result.jsp?country=Nepal for more on what a living wage looks like.

 

Although last year we believed we were providing a living wage to even the lowest earners at Purnaa, we saw that our employees continued to have difficulty providing for their basic needs, especially those who joined our team with pre-existing debt.  

We recognize the need for some team members to grow in budgeting and responsible financial management. To assist in this area we continue to run trainings during work hours on how to develop these skills.

 

We have also chosen to respond with an increase of our wages and benefits. We raised our salaries by an average of 11% this fiscal year. We have increased our health care reimbursements to provide more for the dependents of employees.  And we have raised the amount we offer towards school scholarships for the dependents of our team members. Purnaa works hard to offer wages that promote holistic, lasting well-being.

 

We continue to research to ensure we are paying living wages.  Recently, the President of WFTO Asia told us that a study funded by the World Bank (to be published) found that the living wage in Nepal for a family of 4 should be 24,000NPR.  He also said the Nepal government’s official number is 31,000NPR for a family of 4. If that’s true, our 15,000 for a family of 2 is a little low. We are considering adding 500 rps more for each child.

 

In an effort to continue the needed dialogue around this issue, we share our findings publicly to serve as a data point.

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  1. […] Appallingly, a Bangladeshi worker can make as little as $0.05 per t-shirt, compared with $1.68 at Purnaa.  However, this is only an average as we don’t actually pay a piece rate, all of our employees earn a salary. At Purnaa the lowest wage is $125 a month and the average among sewers is $141. The Nepali minimum wage is $92. You can find more information about staff salaries in our post A Living Wage in Nepal […]

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