The government of Myanmar has approved the country’s first national minimum wage after several months of long, hard, bitter negotiations between employers and labor groups.
The wage has been set at 3,600 kyat (2.81 USD) “for a standard eight-hour work day” and will take effect from Tuesday 1st September 2015, the state-run media Global New Light of Myanmar newspaper reported on Saturday.
Under the newly-established level, Myanmar’s minimum monthly pay would be around $67 a month, based on a six-day work week, giving it a distinct competitive advantage over thriving garment makers in the region such as Vietnam and Cambodia where the monthly minimum wage ranges from $90 to $128, according to the International Labor Organization.
It will apply to workers “across all sectors and industries” with the exception of small businesses employing fewer than 15 people.
It is one of many political and economic reforms introduced under the government in response to rising interest among foreign investors to move into the country where most international sanctions have now been dropped. The focus of this minimum wage policy is the garment sector.
One of the main driving forces behind this change is the growing garment sector. With exports of over US$1.5 billion worth of clothes and materials in 2014 (a 66% increase in two years), the garments sector is one of the fastest growing in Myanmar.
The huge amount of workers in this sector has been fighting for better pay and conditions ever since a quasi-civilian government took office in 2011.
Myanmar’s government has targeted the garments sector for rapid growth, and this new change will surely help spur this by providing more clarity on the law and labor costs to global apparel brands buying clothes form Myanmar.
Additionally, there are corporations that had a hand in bringing this law about. Companies that have pushed for creation of a minimum wage include giant Swedish retailer Hennes & Mauritz, which works with 13 factories in Myanmar, and U.S. retailer Gap Inc, which buys from two. According to these Western manufacturers, poor pay was counterproductive and thus they pressured the country to adopt a fair minimum wage.
Race for the Lowest Wages in Asia
Once a thriving industry, Myanmar’s garment sector was hit hard by sanctions imposed by the United States, stripped of trade benefits and abandoned by brands that feared the risk associated with the former junta.
In a bid to change this, Myanmar lawmakers passed a minimum wage law in 2013, but negotiations between employers, trade unions and the government were delayed by the garment workers’ strikes and threats from garment factory owners – many from China and South Korea – to close if the minimum wage was set too high.
Even this relatively low agreed minimum wage has been strongly opposed by some employers who claim that low worker productivity in Myanmar meant they could not afford to pay more.
In Myanmar, low pay is one of the main reasons why many of the locals leave their home country to seek better livelihoods. Those who received education find themselves working in better conditions for better pay in a better country and rarely have a second thought about doing it.
However, there are those that did not receive a proper education and these people go on to be immigrant workers in neighboring countries where the minimum wage is a lot higher than what they would be able to earn back in their home country.
One of the neighboring countries that is famous for having a large number of Myanmar nationals working is Thailand. With a national minimum wage of 300 baht, which is thrice the newly implemented Myanmar minimum wage, Thailand is home to an estimated two million Myanmar nationals that form a large migrant labor force.
With this minimum wage policy in place, Myanmar hopes to be able to compete effectively with neighboring countries and be able to keep more of its local workforce in the country.