Minimum Wage in Nepal 2025

The minimum wage in a country determines how much poverty can be reduced or even removed from the country. It is an amount set to cater to at least the basic needs of day-to-day life. Further, it ensures fair compensation and maintenance of industrial harmony. In Nepal, laborers are the backbone of the economy. Regardless of the nature of an industry, from agriculture to services and from manufacturing to construction, a standard minimum wage lets the laborers enjoy basic pay without too many compromises.

And while a small monthly wage may not sustain a higher standard of living, it helps avoid poverty and unemployment, which positively impacts the country’s economy. In 2025, the Government of Nepal decided to revise the minimum wage. This article takes you through the details of the 2025 minimum wage revision, the historical context behind this subject, and the advantages and challenges it has for the stakeholders.

Be sure to read till the end of this article to know more!

The 2025 Minimum Wage Revision: What Changed?

The minimum wage in Nepal was revised in 2025 and was made effective from 1st Shrawan 2082 BS (July 17, 2025 AD). The Government of Nepal raised the minimum wage to NPR 19,550 monthly. This wage rate is not inclusive of those involved in the tea estate sector.

The newly set minimum wage covers the following:

• Basic Salary: NPR 12,170
• Dearness Allowance: NPR 7,380

Initially, the minimum wage had been NPR 17,300 per month. This wage amount was set back in 2023. Therefore, there has been an increase of NPR 2,250, which is 13% higher than the older wage rate.

The wage rate for daily and hourly workers as of the current time is as follows:

• Daily Wage: NPR 754
• Hourly Wage (full-time workers): NPR 101
• Hourly Wage (part-time and casual workers): NPR 107

It took a tripartite agreement among representatives of the government, employers, and workers' unions to confirm the current wages. And, the wage rates conform to consensus and legitimacy under Nepal’s Labour Act, 2074 BS.

Historical Context of Minimum Wage in Nepal

Every increase in minimum wage in Nepal tends to align with rise in costs of living expenses, inflation, and socioeconomic condition of the working class. Nepal’s labor laws requires a minimum wage revision every two years.

The following is the pattern of minimum wage changes in Nepal in the past few years: 

Legal Basis for the Revision of Minimum Wage in Nepal

The minimum wage in Nepal was revised under Section 107 of the Labour Act 2074 BS. This Labor Act makes it compulsory for minimum wages to be changed every two years, as has been happening.

A Minimum Remuneration Fixation Committee (MRFC) that includes government officials, employer representatives (e.g., Confederation of Nepalese Industries, FNCCI), and trade union leaders (e.g., GEFONT) was formed for reviewing economic indicators and to recommend adjustments as necessary.

Moreover, this judgement was published in the Nepal Gazette on 21 July 2025 officially, giving it a legal status across Nepal.

Impact of Minimum Wage Revision on Workers

The minimum wage revision always has a positive impact on the working class people of Nepal. Intensity of impact may vary from person to person. Regardless, the following are the most common impacts of minimum wage revision on workers:

Better Earnings and Purchasing Power

While a small increase in paycheck may not seem as significant to change a person’s lifestyle, the gradual change makes better healthcare, education, clothing, and good food accessible. In Nepal, there are many families that live from paycheck to paycheck; these families may even be able to separate some amount from their income as savings after an increase in the minimum wage.

Rights Protection

There is a chance of exploitation of workers who are working in retail or as domestic help and day labor. The law takes into account the responsibility of rights each time it implements an increase in minimum wage in Nepal.

Such protection of a worker’s right requires employers to provide appointment letters, contribute to the Provident Fund and gratuity based on new wage levels, and to register workers for the Social Security Fund (SSF).

Increased Workforce Participation

When the minimum wage amount is attractive, there is a higher number of people who are attracted to the market, regardless of the industry. This also allows every market to become more inclusive as women and the marginalized sector of society become more inclined to work.

Challenges of Increased Minimum Wage in Nepal

While an increase in minimum wage aims at providing workers with fair wages, there is just as many chances of the wage rate increase causing layoffs or employers switching to automation. Some employers may even seek cheaper contractual labor.

Impact of Minimum Wage Revision on Employers

Though employers are going to pay more after the increase in minimum wage, there are both pros and cons to it for them. The following are the impacts of the minimum wage revision on employers:

Stable Workforce

High staff turnover, absenteeism, and labor disputes are likely to decrease after an increase in minimum wage. Hence, it leads to higher employee loyalty and better relations between employers and employees within the workplace.

Better Productivity and Improved Reputation

Employees work better when they are satisfied with their salary. Similarly, a business that pays its workers fairly will also have a good reputation in the market as they are compliant with the laws and considerate of employee needs.

Challenges of Increased Minimum Wage in Nepal

Employers are responsible for higher payroll expenses after minimum wage revisions. If the profit margins are thin, it leads to an increase in the price of goods and services, hiring reduction, and cuts in additional employee benefits.

They also have to undergo the “hassle” of updating salary structures, accounting and HR systems, correction of Provident Fund, SSF, and gratuity contributions, and to monitor part-time wages even more thoroughly than they already were.

Benefits of Minimum Wage Revision to the National Economy

Minimum wage revision makes a majority of nationals in Nepal interested in employment. Besides this, those who are already employed experience a better quality of life. The following are the major and most common benefits of minimum wage revision to the national economy:

Higher Consumer Spending

When there is higher disposable income in the country, the people spend more. This, further, creates an increase in the demand for all kinds of goods and services. Higher demand and supply, as such, can contribute to apparent economic growth.

Increased Social Security Contributions and Tax Revenue

After an increase in minimum wage, workers are officially registered, and government income tax and social security revenue will probably rise.

Better Relationship Between Employers and Workers

When wage adjustments are done through tripartite consultations, it fosters better relationships among stakeholders, and tripartite meetings lower the likelihood of strikes and industrial disturbance.

Minimum Wage Revision: Enforcement Challenges

Even when the law is set clearly, the following challenges take place in implementation:

• Employers in the informal or rural sectors who pay less than the minimum wage
• Employees who are not informed of their rights
• Absence of labor inspections, particularly outside of urban areas
• Worker registration delays with SSF

The government must invest in the following to overcome or lessen the aforementioned enforcement challenges:

• Stricter labor inspections
• Campaigns to raise awareness
• Penalties for failure to comply
• Making employer responsibilities simpler

Sectoral Impact of Minimum Wage Revision

Minimum wage revision of 2025 in Nepal is applicable nationwide. However, the impact of this revision varies from industry to industry. The impact also depends on the type of job, level of labor intensity, and formality of employment, certain industries will profit greatly while others would have difficulties.

The following are the sectoral impact of minimum wage revision with focus on four major sectors in Nepal:

Construction and Manufacturing

Construction and manufacturing sectors absorb most out of minimum wage revision. These sectors employ the unskilled and semi skilled laborers in Nepal which include millions of nationals.

Some reasons they benefit are:

• Worker Productivity: The workers become more motivated to work when they are paid higher than what they had been paid before. A higher pay enhances their way of life and keeps them present on the workplace.
• Worker Availability: Employers won’t have to face shortage of workers with minimum wage revision. Naturally so, the workers are available as long as they are satisfied with their salaries.
• Reduced Labor Turnover: Employees don’t leave their jobs after increment in the national minimum wage. They stay in the job as long as their needs are being met monetarily.

There are some challenges like increased project costs, contractor pressure, and SME Strain.

Agriculture and Domestic Work

Agriculture and domestic work fall under the informal economy. Wage enforcement is weakest, and agreements are not documented.

Some positive impacts of minimum wage in this sector are as follows:

• Legal Inclusion: Agriculture and domestic work are also covered by minimum wage increment laws. Hence, chances of legal inclusion increase.
• Female Workforce Protection: Working women are often exploited in this sector. The law strengthens their capacity to get paid according to their investment.

Some challenges include lesser awareness about the enforcement, fewer work hours, combining tasks, cutting jobs, seasonal challenges, etc. 

Service Sector

The service sector, including retail, education, and the hospitality industry, is one of the other sectors impacted by the minimum wage revision. They benefit in the following ways:

• Retention and Customer Experience: When the staff force is satisfied with their salaries, they work better. The employee retention rate improves along with the customer service they provide.
• Attraction for Skilled Labor: With employees getting decent salaries nationwide, the service industry will be able to hire laborers who are skilled enough to provide good-quality work.

Likewise, the challenges include tight margins and price sensitivity, division of urban and rural markets, and competitive hiring pressures.   

Tea Estates

Tea estates have always operated with separate wage agreements. Hence, minimum wage revisions are not applicable for these estates. The wage rates for the workers working in this sector are often below the minimum wage rate.

Conclusion

The minimum wage revision in Nepal as of 2025 has been implemented wisely. Since the amount has been made applicable for all sectors nationwide, it may work for some sectors while others may not see as many positives.

Regardless, the minimum wage revision can be taken as a diligent way to improve the country’s economy while still staying considerate of the employer’s budget.