World Economy

Myanmar Factories Warn Gov’t Against Wage Reform

Myanmar Factories Warn Gov’t Against Wage ReformMyanmar Factories Warn Gov’t Against Wage Reform

Myanmar’s garment manufacturers say dozens of companies will be forced to close down, if the government approves a proposal that would set the daily minimum wage at 3,600 kyat ($3.21) and the hourly minimum wage at 450 kyat ($0.45).

The project’s sponsor is the parliament-appointed National Committee for National Wage, which spent 18 months holding consultations with various stakeholders across the country. The proposed wage hike is also a response to the poor conditions of factory workers, Global Voice reported.

The new proposed minimum wage is a compromise between the 4,000 kyat demanded by trade unions and 2,500 kyat offered by the business sector.

Earlier this month, the Myanmar Garment Manufacturers Association  warned that many companies cannot afford the 3,600-kyat minimum wage proposal, saying the reform could affect the jobs of 200,000 factory workers. At least 90 factories operated by Chinese and South Korean companies have already signaled that they will close their doors, if Myanmar passes the wage reform.

Myanmar garment workers are among the lowest paid laborers in the Asia-Pacific region. If the wage increase is implemented, Myanmar workers would earn slightly more than their counterparts in Bangladesh, but still less than workers in Cambodia and Vietnam.

Meanwhile, some global clothing networks have come out in support of Myanmar’s proposal to raise the minimum wage. Ethical Trading Initiative issued a statement urging the government to improve the living standards of workers.

Fair Labor Association, whose members include companies like as Adidas, Gap Inc, and Tesco, disagreed with the assertion of Myanmar’s garment manufacturers, who say the wage hike would negatively affect the country’s investment prospects.

Clothing company H&M didn’t say if it agrees with 3,600-kyat proposal, but it did advise the government to agree to a uniform minimum wage increase across all sectors.

Some trade unions have accepted the wage increase proposal, but there are other labor groups, like the All Myanmar Workers Union Network, that continue to campaign for a 4,000-kyat daily minimum wage. According to trade union activists, companies will cut costs by reducing the other benefits workers receive, in order to offset the higher minimum wage, prompting some to advocate a daily minimum wage set at 4,000 kyat.