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.

One of the main driving forces behind this change is Myanmar’s 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 country’s fastest growing.

The huge amount of workers in this sector have been fighting for better pay and conditions 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.

Additionally, there are corporations which helped bring this law about. Companies which have pushed for 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. Garment factory owners, many from China and South Korea, threatened to close if the minimum wage was set too high.

Even this relatively low minimum wage was strongly opposed by some employers. They 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 locals leave their home country to seek better livelihoods. Those who receive education find themselves working in better conditions for more pay in other countries.

But those who did not receive an education go on to be immigrant workers in neighboring countries. Conditions are often poor for migrants, and they sometimes work illegally.

Thailand is one neighboring country which is known for having a large number of Burmese nationals. With a minimum wage of 300 baht, three times the newly implemented Myanmar minimum wage, Thailand is home to an estimated two million Burmese.

With this minimum wage policy, Myanmar hopes to compete effectively with neighboring countries and keep more of its local workforce.

 

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