After months of debate between employees and factory workers, the Myanmar government on Saturday approved its first daily minimum wage of 3,600 kyat, or $2.80.
Announced in the state-run Global New Light of Myanmar, the wage will be for a standard eight-hour day and will take effect on Sept. 1. It will also apply across all sectors and will apply “to all workers other than small and family-run businesses with a workforce comprising less than 15 people.”
The approved amount, which adds up to roughly $67 a month for a six-day week, was adopted after the government carried out a survey of 22,000 households in more than 100 townships to determine the average living costs of a low-income worker, the announcement added.
Myanmar has seen a raft of changes to its garment sector since its nominally civilian government began a slow transition to a democracy in 2011. With the majority of sanctions lifted by the U.S. government, major international brands like Gap and H&M started sourcing from the developing country. Exports surged to about $1.5 billion in 2014, with the Myanmar Garment Manufacturers Association targeting $2 billion for this year.
Since the government passed a law two years ago calling for the setting of a minimum wage, workers from various sectors, including the garment industry, have staged protests across the country over higher pay and better working conditions. While workers have said that 3,600 kyat a day is still too low, employers themselves have also opposed this amount, arguing that productivity in Myanmar is still too low to justify it.
Reached by telephone on Monday morning, U Myint Soe, MGMA’s chairman, expressed defeat at the government’s decision, but said his members are prepared to abide by the new wage tomorrow. Previously, he had told WWD that the minimum wage should be about $40 to $45 a month.
“This discussion is over as this is what the government has said already so we must follow it. We will do what we can do,” Myint Soe said. “Everything is discussed already with our members on how to cope with the 3,600 kyat [daily wage].”
While there have been some factories that have previously threatened closures over the new wage, Christopher Land-Kazlauskas, chief technical advisor of the International Labor Organization’s freedom of association and social dialogue program, said that the government hopes the installment of a national minimum wage would bring about more industrial peace.
“It is always difficult to guess at or anticipate what the effect of the minimum wage will be. We have heard government officials, workers and employers express hope that it will lead to fewer labor disputes, which would seem logical given the proportion of disputes in the garment sector focused on wages,” Land-Kazlauskas said, adding that while the number of labor disputes is difficult to obtain, ILO’s research has concluded that the majority of it took place within the garment sector. “Many international buyers are looking for stability and predictability in their sourcing decisions, which the minimum wage helps to ensure.”
Gap Inc., the first major U.S. clothing brand to begin sourcing from Myanmar last year, welcomed the installment of a wage that raises “the quality of life for garment workers,” said Debbie Mesloh, vice president of Gap’s global public and government affairs department.
She added that it should be reconsidered annually in a process that is “based on transparency, inclusiveness and peaceful negotiations.”
Ida Stahlnacke, a press representative for Swedish retailer H&M – which buys from 13 factories in Myanmar – also praised a fixed minimum wage set across all industries.
“If the garment industry wage level is lower than other industries, the garment industry will not be able to attract and retain a skilled labor force, which is necessary to be able to develop and grow into a thriving economic driver,” she said.
Neighboring Vietnam, a major apparel producer, has a minimum wage that ranges from $95 to $137, depending on its province. Cambodia, another significant garment producer whose wage is $128 a month, has expressed concerns about the competition it would face from Myanmar once its garment sector becomes more developed.