In the Hindu feudal system, Dalits are considered to be at the bottom of the social ladder and are oppressed in every sector of life. They have been paying the ‘caste penalty’ since time immemorial. Likewise, various ethnic groups have been deprived of their culture, language, and representation in a form of internal colonialism. Furthermore, Nepal’s patriarchal structure did not allow women to grow on an equal footing in every sector of their lives. Differently-abled people too are not treated in a positive manner. Consequently, these groups remained excluded from modern development initiatives and state governance.

The decade-long armed conflict brought to the fore the fact that the monopolistic behaviour of the state has deprived many groups even of their identity. The domination of a few castes in state governance produced not only dictator-like bureaucrats but also a predatory state. As a result, not only people but the whole nation is in deprivation. Moreover, the state has remained weak in nation-building. In this regard, the 2007 Interim Constitution of Nepal recognised the spirit of diversity and attempted to ensure inclusiveness through the proportionate representation of all ethnic groups and under-represented castes.

Examples from elsewhere

Our southern neighbour India internalised the need of inclusion since independence and introduced reservations for under-represented castes and tribes in the constitution. Workforce diversity has since made significant contributions to India’s prosperous growth along with comparatively strong nation-building.

Similarly, in the US, diversity in the workplace was first promoted in the 1960s and 70s. In 1961, then US President John F Kennedy established the President’s Committee on Equal Employment Opportunity with the goal of ending discrimination in employment by the government and its contractors. The Civil Rights Act of 1964 went further, prohibiting discrimination in any federal program or activity. In 1971, the Nixon Administration issued a revised order requiring contractors to develop an Affirmative Action programme.

But employers soon found that simply hiring a more diverse workforce did not necessarily result in the expected benefits. During the 1980s and 1990s, organisations increasingly recognised that diversity should not only be legislated, but also be valued as a business practice. Diversity management is now more focussed on the corporate benefits of a diverse workforce—in other words, diversity as a business imperative. Diversity gives businesses a competitive advantage. This cooperative atmosphere leads to improved retention rates, productivity, and morale.

But there have always been disputes over inclusiveness v sustainability. However, several studies have proved that diversity promotes sustainability. Organisations that want to generate ideas need to hire employees from diverse backgrounds. Several studies have demonstrated that the standard of living and life expectancy in a country improve significantly when women enter the labour force and are treated the same as men. It is also believed that severe restrictions on women in Islamic countries have contributed to tremendous difference in the economic success of the Islamic world and the West. The US Joint Economic Committee has calculated the loss of GDP in the United States due to racial discrimination to be about four percent each year.

Diversity and disparity

It has not been studied how much Nepal loses due to its pervasive social exclusion. However, a recent Global Human Development Report enlisted Nepal as the second last country in the Saarc region due to its exclusion and disparity. The same is probably true of business firms. In the US, the incremental sales growth of companies with multicultural teams was eight percent higher than companies utilising teams consisting only of white males. Thus, it is now an effective business strategy as well as an exercise of corporate social responsibility to have a diverse workforce.

Similar research done on cooperative organisations in Nepal has explored the issue of diversity vs sustainability. Cooperatives as organisations become sustainable through the continuing presence at the grassroots level and their management capacity, financial and economic resources, human resources, and external relations. Sustainability comes from both directions: a sustainable organisation is needed to alleviate poverty and empower women, the poor, and other excluded groups like Dalits; but sustainability is essential in the long run for its own sustainability as an organisation. Research has revealed that the higher the social inclusion factor the higher the profitability of the cooperative. This justifies the argument that diversity promotes productivity.

No losers

However, organisations face resistance to applying workforce diversity due to the culture of a monopolistic attitude. This problem can be solved by changing the culture of the organisation so that employees understand the value and importance of diversity and of focussing on the goals of the organisation, rather than individual needs, which promotes the sustainability of the organisation. Thus, workforce diversity plans should be based on Pareto Optimality or Economic Efficiency of modern welfare economics, as the ‘welfare state’ is the fundamental objective of modern democratic government. According to this theory, any reorganisation or reallocation of resources should make people better off without making any others worse off. Doing this does not limit opportunities as people might think, rather it creates multiple opportunities by providing more choices. There will be no losers.

Therefore, it should be understood that diversity increases productivity and then promotes institutions’ sustainable growth, which can be a foundation for nation building. Development effectiveness is increasingly being understood as inclusive development for the advanced wellbeing of the people. In this context, inclusivity can be the foundation of development effectiveness, which in turn can contribute to building an egalitarian society in a more dynamic way.

BK is a Joint Secretary for the Government of Nepal and holds a PhD in economics