Why is the Nepalese labor force so strong in a global context of decline? Shedding light on the unexplored characteristics of Nepalese labor relations

PurposeThe purpose of this paper is to shed light on the unexplored characteristics of labor relations in Nepal against the backdrop of social exchange theory as it relates to labor relations.Design/methodology/approachThe paper considers the psychological contract of promises and expectations from the social exchange theory on the ground in Nepal. To do so, the paper adopts an inductive method of investigation and reviews dispersed and unstructured archival data.FindingsIn terms of the psychological contract of promises and expectations, Nepalese workers and trade unions appear to have constituted a pressure group since they aligned themselves with Nepal's political parties. Consequently, the legal labor framework and behaviors of trade unions have produced highly politicized labor relations; very high and dense union memberships; vocal unions; a labor-supportive legal framework; union-influenced government and union-driven enterprise-level collective bargaining and collective dispute settlement.Originality/valueThe paper claims that although the system framework has flimsy prospects elsewhere in the world, it is strong in Nepal as a result of the recent Labor Act of 2017. For this very reason, the paper argues that Nepal's trade unions are in their sturdiest position ever and, therefore, that the country has evaded the crisis experienced in advanced and emerging economies in other parts of world. In theoretical terms, the article contributes from the social exchange theoretical perspective to the literature on the psychological contract of promises and expectations. It also has a bearing on emerging discourses and debates about the revitalization or reshaping of traditional industrial relations.