Smaller businesses less likely to adhere to labour regulations, reveals labour market assessment

Smaller businesses are less likely than their larger counterparts to adhere to labour regulations, as revealed by a recent labour market assessment conducted by the Ministry of Industry, Commerce and Employment. The report evaluated compliance with labour regulations such as occupational health and safety, financial schemes like provident fund contributions, and sexual harassment policies, among others.

The Labour Market Assessment for 2024 studied how compliant businesses and firms of varying sizes are with labour regulations in the country.

The report showed that only about 30 per cent of small firms adhere to occupational health and safety standards, while compliance among larger enterprises is over 90 per cent.

Similarly, only 12 per cent of small firms have a sexual harassment policy in place, compared to 90 per cent of larger firms with the same policy.

Regarding financial schemes for employees such as provident funds and group insurance schemes, there is a significant gap in implementation between larger and smaller firms.

Less than 15 per cent of small firms reported providing these benefits, whereas over 90 per cent of larger firms offer provident fund and group insurance benefits to their employees.

Small firms also lack transparency in providing pay slips to their employees, offering written contracts, and defining clear roles and responsibilities for their employees.

Though the report states that the reasons for non-compliance are unclear, it suggests that economic constraints faced by smaller firms may be a contributing factor.

The findings reveal that most small firms fail to comply with the Ministry of Industry, Commerce and Employment’s ‘Regulation on Working Conditions, 2022’. These findings are particularly concerning considering that cottage and small industries comprise over 90 per cent of the total businesses in the country.”

Karma Samten Wangda

Edited by Sherub Dorji 

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