• The Myanmar Government approved a 33% increase in the country's minimum wage rate across all regions in March, which took effect from today.
  • SMART Myanmar has welcomed the move but questioned whether international buyers will absorb the increase.
The Myanmar Government approved a 33% increase in the countrys minimum wage rate across all regions in March

The Myanmar Government approved a 33% increase in the country's minimum wage rate across all regions in March

An industry body that works to promote 'Made in Myanmar' garments and sustainable practices has questioned how much of the country's minimum wage increase will be absorbed by international buyers as it comes into effect today (14 May).

The Myanmar Government in March approved a 33% increase in the country's minimum wage rate across all regions, following a period of consultation and despite objections from labour groups and employers. As of today (14 May), the daily wage increases from MMK3,600 to the new rate of MMK4,800 (US$3.53).

Employer representatives have claimed the rate increase is too high, while labour representatives say it is too low.

SMART Myanmar – an EU-funded initiative aimed at promoting 'Made in Myanmar' garments and sustainable practices – said the increase was at the lower end of the range anticipated by industry analysts and observers.

Speaking to just-style today, Jacob Clere, team leader for SMART Myanmar, said the wage is certainly more challenging for SMEs in the garment sector to bear, as it eats significantly into their profit margins, For larger factories, which are mostly foreign investments, he believes they will handle the increase, but there is still worry about the pace of the increase.

Nevertheless, he adds: "It's been two and a half years [since the first minimum wage was introduced] and it was past time for an increase. One of the big questions now is how much of this increase the buyers will be willing to absorb? Several of the more responsible buyers in the industry seem to have already negotiated with their long-term suppliers about payment increases for orders. Buyers need to be absorbing the majority of this wage increase rather than expecting their suppliers to bear it all."

Region and state committees held a series of discussions with employers and labourers to reach the new wage figure, and it is understood the decision was made after the fifth meeting.

Clere explains: "In terms of the overall process for setting the minimum wage, it's healthy and it's working. Through tri-partite discussions, the country set a minimum wage in 2015 and via the same effective dialogue process they ultimately agreed on an increase to MMK4,800. This is particularly encouraging as it follows a recent tri-partite collaboration to develop an occupational safety and health guide.

"Although there are several frictions and disagreements, stakeholders in the Myanmar garment industry are learning that tri-partite and bi-partite dialogue can ultimately be of benefit for both businesses and workers. This sort of cooperation sends a healthy signal for future industrial development and investment."

Research carried out by the International Labour Organization (ILO) into the Asia-Pacific Garment and Footwear Sector, published in November, found that while wages in developing Asia's garment and footwear industry have increased in recent years, they continue to remain low overall – particularly for women.

The ILO estimates that average earnings were less than US$200 per month in eight of the 12 countries with available data.