The Myanmar Government has begun its bi-annual review of the country’s minimum wage with a view to a potential increase later this year.
The National Tripartite Committee on the Minimum Wage is understood to have started the process last month, and will be conducting research into areas such as living wages, survey data, and business sentiment, amongst others.
The Committee, which is composed of employers’ organisations, trade unions and the Labour Ministry, usually holds at least three meetings before reaching a conclusion. According to the country’s Minimum Wage Law, the minimum wage must be reviewed once every two years, and usually involves an increase in the same timeframe.
The last minimum wage was set at MMK3,600 to MMK4,800 (US$3.5) per day in May 2018 – a 33% rise on the previous wage. The next increase is due to be implemented during May 2020.
Jacob Clere, team leader of SMART Myanmar – a European Union funded initiative aimed at promoting ‘Made in Myanmar’ garments and sustainable practices – says it will be interesting to see if the National Tripartite Committee considers any regional variance mechanism, similar to that in Vietnam.
Myanmar already has a three-tier system established for tax incentives, which is based on regional development criteria. “It would not be too difficult to translate that system into a three-tier system for wages,” he adds.
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Clere says the last increase was “quite a jump” in percentage terms, and “shocked many factory investors.”
“Some trade union leaders have already mentioned a figure of MMK7,200 (US$4.9) per day as their target figure, which they derive largely from member interviews and cost-of-living assessments they’ve conducted. But, this would be a 50% increase and it’s hard to imagine businesses could handle such a rapid increase. And this would burden smaller enterprises the most.
“It’s important to observe that with nothing similar preceding it, Myanmar built a quite successful tripartite mechanism for setting and adjusting the minimum wage. Overall, it has worked well on two previous occasions.”