Gap and H&M back Myanmar path to labour reform
Efforts have been welcomed to improve labour rights and conditions in Myanmar’s garment manufacturing industry
Myanmar is set to become a more attractive garment sourcing and investment destination after plans were agreed on labour law reforms in the country – with Gap and H&M coming out in support of the proposals.
Details of a timetable and approach to achieving labour law reform in Myanmar – which have been in the pipeline since last autumn – were shared with just-style by an official at the International Labour Organization (ILO).
Steve Marshall, ILO country liaison officer in Myanmar, confirmed that an agreement has been struck at a meeting to implement the Initiative on Labour Law Reform and Institutional Capacity Building to improve labour rights and practices in Myanmar.
The ILO Labor Capacity Building Forum meeting took place in Yangon on 18 and 19 May and included some 200 representatives of business, civil society and labour groups – but details of their agreement is only now emerging. Also involved are the United States, Japan, and the European Union, with a special role played by Denmark.
"The single most important outcome of the forum was an accord between all stakeholders as to the need for labour law reform and agreement on the way forward," Marshall says. He notes that the forum agreed to address labour reform in three separate phases:
- Firstly - continuing support offered to Myanmar’s government in achieving legislative reform. "Phase one has started, with the government already introducing some essential new laws and with activity now taking place for further legislation to be introduced to parliament this year," Marshall says.
- A second phase is expected to take 18 months and will require developing a comprehensive labour standards law that will "provide the basis for a modern, efficient and responsive labour market based on sound industrial relations structures and compliant with international standards."
- Finally all existing Myanmar labour laws will be consolidated into a single labour code.
Whilst recent developments appear encouraging, Marshall emphasises that labour reform is inherently complex and requires a combination of policy development, legislative drafting, training and capacity support.
"Such a complex exercise would in any country take between three and five years; during that time, of course, the world does not stand still, so parallel actions to meet the contingencies of the day as they arise are necessary," he says.
Gap and H&M hail reforms
H&M and Gap Inc, who were among the first to start sourcing from Myanmar following the easing of economic sanctions by the US and EU, have reaffirmed their support for efforts to improve labour rights and conditions in the country’s garment manufacturing industry.
A joint statement from the two retailers – who are also founding members of the BSR Myanmar Responsible Sourcing Working Group – explains: "We are committed to working with our suppliers and other stakeholders in Myanmar to secure continued progress towards the widespread implementation of global best practices so that the garment sector can play a meaningful and helpful role in Myanmar’s continued economic, social and democratic development."
Gap Inc became the first American retailer to source garments from Myanmar in June 2014 following a "rigorous due diligence process," starting with outerwear for its Old Navy and Banana Republic Factory brands from two South Korean-owned factories.
Before it made the move, it engaged with US government officials, industry and union representatives as well as international and local NGOs. It also hired independent monitoring organisation Verité to carry out more detailed assessments of the two factories before they were approved for production.
The initial assessments were carried out in November 2013, with a follow-up audit in January 2014 at each facility before the factories began cutting fabric. Two more audits were conducted in March and June, with additional checks last September and December.
This process identified a catalogue of compliance issues around working conditions, health and safety, the retailer says, including a lack of worker training on handling cleaning chemicals, exposed electrical outlets and wires, missing warning information, and ventilation or air circulation issues.
While no evidence of child labour was found, both factories had employed under-age workers in the past. "At one factory, several workers stated they were 19 years of age but had worked at the facility for 3-5 years," Gap says, adding that it also encountered inconsistent policies on the minimum hiring age, a lack of proof of age verification, and signs that some age verification documents had been tampered with.
Verité also found that working hours regularly exceeded the permitted limit of 60 total hours (including overtime), and "workers did not take one day off in seven days," the report said.
Not only did workers not understand how to calculate their wages, but factories did not consistently pay required premiums for overtime hours. And in terms of annual earned and paid leave, the factories either had no policy on this, or ones that conflicted with Myanmar law.
The audit teams also found that both factories did not have disciplinary policies, leading to inconsistent disciplinary practices and punitive fines. "Workers reported cases of verbal abuse and inappropriate behaviour by supervisors," while line supervisors at one factory had taken unofficial disciplinary action or collected fines from workers without a clear basis for action.
Gap said the factories have since been helped to develop corrective action plans with regular training programmes and follow-up meetings.
But the retailer found it "takes time for workers and management to understand and retain information and make adjustments to customary practices and behaviour."
It also cautioned that: "Due to Myanmar's isolation and lack of exposure to international practices, [local managers and supervisors] have limited experience with adopting new business methods or complying with current international standards."
For its part, H&M placed test orders in Myanmar in 2013, started sourcing from a small number of units in 2014, and opened a production office in early 2015 in Yangon – where the factories it sources from are located.
Before entering the country, the retailer also conducted a thorough risk analysis with external stakeholders, both locally and globally. It also says it has also created a minimum level for its suppliers consisting of defined social and environmental factors, and monitors all suppliers in Myanmar to ensure they follow its Code of Conduct.
Impediments to investment
Myanmar has set a target for garment export earnings of US$2bn by 2016 – up from around $1.5bn last year – from around 275 large, typically foreign-exporting garment factories.
Investors are being attracted to for a number reasons, not least because of its attractively low labour costs, but impediments include labour rights and worker safety issues, the lack of a minimum wage – although one is promised this year – environmental policies and procedures, land disputes and corruption.
With additional reporting by Leonie Barrie.
Click on the following links for further insight:
- Gap audits reveal compliance issues at Myanmar factories
- SOURCING: Gap's Myanmar move highlights country's potential
- Myanmar garment sector experiencing rapid growth
- Myanmar Code of Conduct a first step in compliance
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