An announcement is imminent on the minimum wage for garment factory workers in Myanmar

An announcement is imminent on the minimum wage for garment factory workers in Myanmar

Long-delayed details on a proposed minimum wage for garment factory workers in Myanmar should be released by the end of this month, just-style has been told.

Within the next week the Ministry of Labour, Employment and Social Security is due to announce a figure for the minimum wage of somewhere between MMK3,200 per day and MMK4,000 per day, including the full wage structure and any regional variances. At present exchange rates this would equate to a figure between $2.66 and $3.33 per day.

After this there will be an additional 60-day period for comments – and minor adjustments – before the amount becomes law.

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

However, Myanmar pays double for overtime and overtime kicks in at 44 hours per week rather than at 48 hours, as in most neighbouring countries. Hence, a higher base pay has a larger add-on effect when factories operate on an overtime basis.

Based on a five-days work at eight hours per day, and Saturday work at four hours per day, the proposed minimum wage comes in at $58 - $73 per month.

Myanmar currently has the second lowest garment sector wages in South and Southeast Asia, with Bangladesh the lowest at US$68 per month. But the changes may mean that while Myanmar will still have more cost-competitive labour rates than Cambodia ($128 per month) and Vietnam ($88.7 to $126), it could be higher than Bangladesh.

Talks on the minimum wage have been dragging on for around a year, with the original deadline of last December missed following calls for further research into the cost of living. Business associations, labour unions and the government are all involved in the discussions.

A minimum wage law was passed in late 2013 outlining the strategy for how it will be set and enforced, but has been delayed due to the cost-of-living assessments.

One of the biggest challenges has been to set a wage that ensures Myanmar remains competitive as a sourcing destination, but reduces the likelihood of strikes by ensuring workers have enough to live on.

But there is also a political game at play too. While President Thein Sein's office has been keen to push the discussions forward and announce a wage before the general elections scheduled for October this year, there are others who would prefer to postpone until afterwards.

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.

Progress on labour law reforms in the country have also taken a major step forward, with plans shared with just-style yesterday (24 June) by an official at the International Labour Organization (ILO) and supported by Gap and H&M.

Click on the following link for more details: Gap and H&M back Myanmar path to labour reform.