The new wage is based on five-days work at eight hours per day, and Saturday work at four hours per day

The new wage is based on five-days work at eight hours per day, and Saturday work at four hours per day

Myanmar has approved the country's first minimum wage for garment workers of MMK3,600 (US$3.2) per day, setting it at the level first proposed two months ago.

The wage for a standard eight-hour work day and effective immediately, is aimed at boosting investment in the country's garment industry. It will apply to workers “across all sectors and industries", for businesses employing more than 15 people.

At this level, Myanmar's minimum monthly pay would be around $70, based on five-and-a half days' work a week.

This represents an approximate doubling of the average base pay for new workers. According to the Myanmar Garment Manufacturers Association (MGMA), salaries for sewing operators previously ranged from $40 to $180 per month, with the lower end of this range representing the base pay of unskilled workers.

It also means Myanmar garment sector wages will be on a par with Bangladesh at $68 per month - but will be more cost-competitive than Cambodia ($128 per month) and Vietnam ($88.7 to $126).

Minimum wage talks have been ongoing for around a year, with the original deadline of last December missed following calls for further research into the cost of living. A minimum wage law was passed in late 2013 outlining the strategy for how it will be set and enforced.

Swedish fashion retailer Hennes & Mauritz (H&M) welcomed the wage move, which it said was “essential” for the sustainable economic development not only for the textile industry but for the country as a whole.

The retail group is calling for an annual review mechanism to be put into place, inclusive of key stakeholders, aimed at laying the foundation for tripartite industrial relation and wage level negotiations based on “transparency, inclusiveness and peaceful negotiation”.

This, H&M said, has been addressed in letters to the Government of Myanmar. The retailer has also met with the Ministry of Labor and expressed its expectations about setting minimum wage levels and an annual review mechanisms.

“H&M’s role is to contribute to a working environment in the factories where a skilled workforce has their wages annually reviewed and negotiated,” H&M noted. “We believe that meaningful collective bargaining is very important and are looking at ways to strengthen it. That is why we have set industrial relations as one of our main sustainability focus and will launch a project to strengthen industrial relations in Myanmar in 2015.”

Implementation of the minimum wage, however, has caused consternation amongst Myanmar's garment industry, which in July warned of possible shut-downs if the wage was introduced.

Around 200 members of the Myanmar Garment Manufacturers Association (MGMA), and scores of Chinese and South Korean factory owners, voted to pay no more than MMK2,500 (US$2.21) per day, claiming it would cripple the sector’s growth. Meanwhile, the Myanmar Trade Union Federation (MTUF) was calling for MMK4,000 (US$3.55).

The country has been working hard to become a more attractive garment sourcing and investment destination, and in June, plans were agreed on labour law reforms – with Gap and H&M coming out in support of the proposals.

According to the MGMA, Myanmar's garment sector employs more unskilled and low-skilled workers than any other industry in the country. Jobs were created during 2014 at a rate of roughly 5,000 per month.