Working conditions in Nepal are largely unregulated. For the minority of the population working in the formal economy, labor laws allow for a 6-day, 48-hour week with 30 days of annual leave, 15 days of sick leave, basic health and safety standards, and some benefits. The amended Factories and Factory Workers' Act 1977, which set out these standards, was revised following the democratic transition in 1990. In the Kathmandu Valley, a 5-day, 40-hour week with 25 days of annual leave has been implemented. In 2000, unemployment was 14 percent, and underemployment 47.5 percent. The latter is a common feature of the agricultural sector, where work patterns are determined by the planting and harvest seasons, and alternate opportunities may be either unavailable or culturally unattractive. Skilled labor is severely limited in Nepal, and a quarter of the labor force is composed of Indians. This shortage has hampered the development of the industrial economy.
In practice, laws passed to protect workers have hardly been implemented. Working conditions in the family-run farms and businesses that drive the economy retain both positive and negative features of power structures within the family. So while arrangements may be more cooperative, women and girls bear the brunt of the drudgery, leaving the men to reap the benefits and have time for leisure. This is particularly true of rural Nepal. Larger farms which employ tenant farmers often maintain feudalistic structures of patronage. Safety and health standards in industry are also widely neglected.
The democratic change in 1990, especially in the light of communist success, has altered the dynamics of labor in Nepal. Labor unions, restricted prior to 1991 along with political parties, now operate nationally, over-seen by the General Federation of Nepalese Trade Unions (GEFONT). In 1991, labor union membership included 30 percent of non-agricultural workers. Workers regularly carry out strikes, and deadlocks in negotiations with government and industry have caused great inconvenience in urban centers such as Kathmandu. Strikes in recent years by public transport drivers and trash collectors are examples of this disruption. In early 2001, a dispute between workers in the tourist industry and the hotel association concerning the inclusion of service charges led to a temporary breakdown in services. Nepal's export-oriented industries have also had to adjust to the demands of Western consumers. In 1994, the Nepalese government responded to negative publicity in Europe over the prevalence of child labor in the carpet industry, and continues to work with non-governmental organizations to eliminate this problem.