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Monday, January 26, 2009

10% service charge: A Motivation or Burden

After ending two-decade, long dispute in-between the hotel entrepreneurs and the related trade unions on a 20 point joint agreement on the December 31, 2006. The associations agreed to implement 10% service charge on food and beverages on every hotel bills effective from January 1, 2007. The provision then encompassed all the member hotel of Hotel Association of Nepal (HAN), starting from a non-star to five star categories, which would then distribute the collected amount among the management and workers in ratio of 32:68. The settlement of the agreement has already crossed its first stage of six-month, where the effectiveness and application of these rules seems to be scattered among the different groups and entrepreneurs.

Prasiddha Panday, 1st Vice President of Hotel Association of Nepal (HAN) said, "It is an experimentation which we tried where both the side management and workers have a win-win situation. This initiation was initiated to provide relieve to the workers. With this agreement, both the management and the worker have promise that from their side, they would perform better and be in discipline. If they are thinking that after getting the benefit, they would be in-discipline and have a push kind of attitude then they would certainly need to change. As due to these, kind of service charges the destination is certainly getting expensive so the only thing we could do is we need to develop better packages. We should communicate well and coordinate to provide better service creating new scope and role."

"This initiation is for the worker and by worker as it's all about earning your own salary so you need to perform effectively and efficiently. If they do not then there are no hard or fast rules and in different countries where it has been adapted, there are live examples where the rule has been cut off due to its lack of effectiveness. We have formed a joint action committee with the HAN and different trade unions to monitor and regulate rules and regulation of the service charge and it related issues," added he.

At times the HAN has been issuing notice condemning the act and behaviors displayed by the workers and unions against hotel entrepreneurs in performing their duties and responsibilities. The acts performed by some of the unions and workers in the premises of different hotels are against the rules and clause of the agreement, which the HAN condemns and should be stopped at once.

In same view, Bishnu Lamshal, President of Nepal Independent Hotel Worker's Union said, "This agreement is the result of more than 20 years of conflict. It is the hope and future of workers who work through their life and it is their right. Currently in major five, star hotels the benefit has been adapted according to the agreement but in major hotels, restaurants and bar both inside and outside the valley have not distributed the workers share, upon which the workers have their right. We are currently trying to deal the situation with holding talks but if the institutions are not flexible enough to share the worker's right then we would be bound to go on streets."

"Perhaps, it’s a motivational and hope factor for workers who perform better for this. It certainly gives them hope to stay in their country and work hard. At the end of the day when the main motivational factor for which they had worked hard is taken away, then it really becomes unfair towards them," added he.
He opined, "The 10% service charge is an effective system because it gives motivation for the workers to work more efficiently, 32% of the amount goes to the management so it is good for them as well and lastly government collects tax from the 10% service charge. So as a whole it is an effective system which benefits everyone."

Similarly, analyzing from a worker’s perspective Ram Bahadur Karki, a restaurant worker said, "We lower crew people don’t have any facility like such and we are just exploited by the management in every aspect. They do not provide us with any facility and the money which is being raised in our name is withheld by the management. So what are we supposed to do except to plea. Even then our demands are not met, we would go on strike. The 10% service tax was created to relieve the lower workers so that at least we could have something upon which we could see our future."

Though the 10% service charge has a limited approach within the major hotels and restaurants, a relative need of overall adaptation of the rule is in demand. Workers of the Casino's are also demanding for the implementation of the service charge on their services. Likewise, a contradiction of the adaptation of rule is laying hanging in-between the government registered and unregistered hotels and restaurants where the entrepreneurs and hoteliers are manipulating with the worker's right.

On contrary, Laxmi Bahadur Bhattarai, President of Regional Hotel Association of Pokhara (RHAP) said, "The current 10% service charge seems to create a negative impact upon the tourists and other visitors. As from the time, they enter the country, we charge them with different taxes and it seems as if they come here to pay the different taxes. Though it sound rude to the workers but reality is after providing them with services, we generally get our share of money and to charge them more is totally irrelevant. Looking at it from a long-term strategy, these sorts of taxes and additional charges are making our destination expensive. Rather than charging such taxes, we should provide with better services where they could be comfortable and feasible enough during their stay in Nepal."

Apart from that, according to the agreement, the service charge will expand its periphery from the limited items of food and beverages to the entire product from January 1, 2008. In today's context when only a handful number of hotels have distributed the service charge then the question of further implementation lays questionable against the agreement and its monitoring body.

Netra Bikram Thapa, President of Nepal Tourism Hotel Worker Union (NTHWU) said, "The 10% service charge is a system which is currently in use and adapted in most of the tourist destinations like Malaysia, Singapore, Thailand etc. We have just brought the concept to provide relieve to the worker. This is not a new system, as in a tea state, a worker gets a certain level of tea, and Nepal Telecommunication Corporation has provided its workers with telephone and Internet facility. Just like that this system relives a worker upon the right that he deserves."

"If we look from a worker's perspective then in the city, the normal life standard of a person is very high or expensive. It is very hard to afford the rent, schooling and other daily utilities of a worker. The service charge gives them a backup support to meet the daily need of life. Apart from that when a worker is financially strong, its certain that he would perform better," said he.

Looking at the context of destination getting expensive he said, "If the service charge becomes an unfavorable factor for the destination, we are ready to sort out or reduce the amount by holding talks with the affiliates."

However, the rule of 10% service charge seems to be well acquainted for the workers but reality is, if the tourists are ready to pay the money and if the workers are ready to provide better services, Then the question of objection seems vain. Nevertheless, the manipulation by the hoteliers and lack of supervision shown by the related hub organizations seems to raise question upon the service charge being a burden or motivational factor.

By Shreedeep Rayamajhi


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