Some of my friends in private sector firms always complain about their salaries. "We are the real kamaiyas. We work hard, even sacrificing our evenings and weekends. We make money for our firms. But all of it goes to our bosses, while our salaries barely rise to keep up with increases in prices. What's more, we often don't get paid for months."

Do they have a valid complaint? The answer depends on who you ask and on one factor: incentives or disincentives that Nepal's labour laws allow employers to view their employees as investments, not as costs.

Take the case of publicly listed private sector companies such as joint-venture banks and multinationals. By law, they have to share 10 percent of their annual net profits with their employees. As such, the way these firms recruit entry-level MBAs is by offering a base monthly salary that, in these times, ranges anywhere from Rs 13,000-18,000. They spice up the offer by dangling the prospect of earning year-end bonuses that add up to multiples of the salary.

The bonuses are paid out as a measure not of individual performance, but of how well the firm does in a given year. In our seniority-obsessed workplace, senior managers, claiming privileges, have every incentive to tilt the scale in their favour by paying themselves disproportionately bigger bonuses, regardless of how much money they individually make for the firm.

Still, those managers remain under pressure from shareholders to post a higher profit every year. And to do that, they pay just enough to keep their junior officers motivated. Meantime, those junior officers have to put in anywhere from 7 to 15 years of work to slowly rise up through the ranks before their compensation packages start exceeding those of their local counterparts at INGOs. (Is it any wonder, then, that to any Nepali MBA looking to maximise her income in the short run, starting her career by working for an aid-supported INGO is preferable to working for a publicly listed company?) True, owing to increasing industry-wide competition in sectors such as print media and banking, staff's promotion rates and salaries have gone up. But in most cases, the story of juniors slogging for years at low base salaries remains the same.

One such case is the small-and-medium-business sector. Here, employees are at the mercy of employers who exploit the fact that for most positions, labour supply exceeds demand. Unless competent 'knowledge workers' are what they require (say, dental clinics needing certified dental technicians), they have no incentive to try to keep their replaceable employees. Indeed, it's often the employees, such as my complaining friends, who hold on to their jobs because, short of leaving for jobs abroad, other alternatives are not attractive.

The challenge for employees is to acquire specialised skills to make themselves continually marketable. But ultimately, it is the government that can push for further economic reforms to reduce the costs of starting and running businesses. After all, it is only a rise in the number of rivals that forces existing firms to start getting serious about making the best of the available resources. And one happy consequence will be that employers will start treating their employees better.