Myanmar govt. proposes daily minimum wage of 3,600 kyats; factories call for lower pay, unions & workers protest - includes statements by intl. brands

Employees of the Tai Ye Shoe Factory camp out in Rangoon’s Hlaing Thar Yar Township demanding higher wages, Feb. 19, 2015. (Photo: Sai Zaw/ The Irrawaddy)Photo: Sai Zaw/ The Irrawaddy

On 29 June 2015, the government of Myanmar announced a minimum wage of 3,600 kyats (about 3 US$) per day following a year of consultations between unions, government and employers. Both unions -including the International Trade Union Confederation (ITUC) - and employers have criticised the proposal. Local unions call for higher pay - 4,000 kyats- while employers say that the proposed minimum wage is unsustainable for business – they say they cannot afford more than 2,500 kyats per day. At least 90 Chinese and South Korean garment manufactures have threatened to close down their factories if the proposed minimum wage is set. We have asked five international brands with suppliers in Myanmar (adidas Group, Gap, H&M, Marks & Spencer and Primark) their position on minimum wage in Myanmar and whether the factories they are sourcing from are oppose to the proposed minimum wage. Adidas, Gap, H&M and Marks & Spencer have responded; Primark referred us to the statement by the Ethical Trade Initiative (ETI). On 15 July, ETI on behalf of its member companies (including Gap, H&M, Marks & Spencer and Primark) and the Fair Labour Association (FLA) and 17 of its affiliated companies (including adidas) sent a letter to the Myanmar government supporting international calls for the proposed minimum wage to apply to the garment sector.

On 1st September 2015 the minimum wage of 3,600 kyats per day come into effect.  

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20 July 2015

Intl. brands speak against factories demands of two-tier pay system, but decline to endorse US$3.2 rate - Intl. Business Times report

Author: Cole Stangler, International Business Times

"In Myanmar, Garment Factories That Source Popular Brand-Name Clothing Retailers Aim To Defeat A 40-Cent Hourly Minimum Wage", 17 July 2015

Factories in Myanmar that supply major Western clothing companies are fighting a government proposal to set the country’s first-ever minimum wage at roughly $3.25 a day. At the same time, the brands...-Gap...and H&M...among others -have declined to say where they stand on the proposed rate...The Myanmar Garment Manufacturers Association...says the government’s proposed wage is too high and will force employers out of business...“In terms of the membership, they’re all saying they can’t afford to pay it.”...[This] contrasts...with the repeated public assurances of brands that say they are committed to improving labor standards in Myanmar...Western companies, especially Gap and H&M, have trumpeted their support for improved working conditions, voicing concerns over issues such as forced labor, unfair overtime demands and unpermitted subcontracting, while backing the idea of a national minimum wage...When asked by International Business Times for their views on the proposed rate and the opposition from subcontractors, both Gap and H&M distanced themselves from factory-owner demands to create a two-tier pay system, but declined to endorse the $3.25 rate...Jeffrey Vogt [of the International Trade Union Confederation] says all foreign retailers should endorse at least the proposed wage, if not a higher rate backed by trade unions. “They definitely have a responsibility to speak out for a higher wage, a livable wage for workers,”...Irene Pietropaoli, a researcher with the Business and Human Rights Resource Centre...says there’s no question Gap and H&M could influence the wage debate if they felt so inclined. Since Burmese authorities are so committed to attracting foreign investment, they tend to listen closely when high-profile companies sound off on the business environment. At the very least, she says, Western brands could encourage factories they source from not to fight the government proposal.

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17 July 2015

Fair Labor Association & 17 member companies send letter to govt. opposing garment workers' exemption from minimum wage

Author: Fair Labor Association (FLA)

"17 FLA Affiliates Sign a Letter Opposing Garment Workers' Exemption from the Minimum Wage in Myanmar", 15 July 2015

[T]he Fair Labor Association sent a letter to the Ministry of Labor in Myanmar standing against efforts to exempt the fast-growing garment sector from paying their workers the country's new minimum wage.  The letter was signed by the FLA Vice President of Programs and 17 FLA affiliates. The letter responds to efforts by trade associations in Myanmar to lobby the government for an exemption to the 3,600 kyat ($3.21) per day minimum wage proposed...  The FLA and its affiliated companies strongly support inclusive minimum wage negotiations in all production countries, in pursuit of fair compensation for workers. The letter to the Myanmar government specifically disputes the suggestion made by trade associations that a higher minimum wage for garment workers in Myanmar will discourage international investment, pointing out that brands committed to paying living wages in their supply chain would be encouraged to source from Myanmar, rather than deterred. "Our concern is that any exemption negotiated for the garment industry would lead to hundreds of thousands of garment workers not having a wage that meets their basic needs," states the letter...

The FLA...17 affiliates that signed the letter...are: adidas Group; Best Promotions, Chenfeng Group, ChicoBag, College Kids, Kathmandu, Kranos Corporation, Mountain Equipment Co-op, National Memory Project, New Balance, Outerknown, Patagonia, Public Identity, Santa's Workshop, SEAsTra/SE Asia Trade, Top of the World, and Widget Wah.

Full text of FLA letter

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17 July 2015

Yangon Region Committee on Minimum Wage receive hundreds of complaints from both factories & unions

Author: Nyan Lynn Aung, Myanmar Times

"Minimum wage plan prompts hundreds of complaints", 16 July 2015

[T]he government...proposed a K3600-a-day minimum wage and opened a 14-day window for lodging any complaints over the amount. More than 200 factories from the Shwe Pyi Thar and Hlaing Thar Yar industrial zones, as well as 21 labour unions, submitted objections to the amount. Employers, largely from foreign-owned garment factories, suggested the minimum wage would be unsustainably high and will force them to close down. Unions harangued the government from the opposite end of the spectrum, holding out for the K4000-a-day wage they have been lobbying for...Minister for Labour U Aye Myint has maintained that the proposed wage is a fair starting point, and has suggested factories should be willing to accept it on a trial basis. But neither factory workers nor their bosses seemed willing to budge. “We can’t pay K3600 as the minimum wage,” said U Myint Soe, chair of the Myanmar Garment Manufacturers Association. “If the central committee fixes K3600 as the minimum wage we will have to reconsider our garment factory business...” The wage hike will also force factory owners to cut benefits currently being provided to the workers, such as meals, transportation and a bedroom, U Myint Soe said. Workers, many of whom earn a basic wage as low as K30,000 a month, said K3600 would not be enough to cover basic living expenses for a single-person household, let alone a family...The Yangon Region Committee on the Minimum Wage confirmed that the K3600 figure had been greeted with disappointment from both sides...

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16 July 2015

Ethical Trading Initiative & its members support calls for proposed minimum wage to apply to garment sector

Author: Ethical Trading Initiative (ETI)

"ETI supports calls for new Myanmar minimum wage to apply to garment sector", 15 July 2015

ETI and its members support international calls for Myanmar’s new minimum wage to be applied countrywide. We have articulated this stance in a letter to the Myanmar government, urging it to resist the request for an exemption from the country’s garment manufacturers. Our letter was sent on behalf of ETI member companies that are currently sourcing from Myanmar, or considering investing in the country, and wish to see garment sector growth being underpinned by the provision of decent employment for Myanmar workers...Myanmar’s garment factory owners unanimously voted against the proposed minimum wage, which has been broadly welcomed by trade unions. We wish to counter the claims of Myanmar’s garment manufacturers and employers associations that higher wages will dissuade foreign investors. A minimum wage that has been negotiated by all parties will attract rather than deter international companies from buying garments from Myanmar, particularly companies such as ETI members that have committed to upholding international labour rights standards in their global supply chains. If Myanmar’s garment industry wage levels are lower than other industries, the sector will not be able to retain the skilled labour force it needs to play its part in driving economic growth. Decent working conditions and stable industrial relations are also key conditions that would allow our member companies to build long-term trade relations with Myanmar. An exemption would mean garment workers being unfairly denied a wage that meets their basic needs, and could lead to work stoppages and industrial unrest – conditions that are far more likely to see international brands reconsider their investment in Myanmar than payment of a national minimum wage. 

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Company response
15 July 2015

Marks & Spencer response on minimum wage in Myanmar

Author: Marks & Spencer

We are part of the BSR Myanmar working group and as such support the letter sent to the Minister for Labour Employment and Social Security and Chair of National Committee on the Minimum Wage from the group calling on the Government to enact a minimum wage level that is uniform across all industries. 

In addition as a member of the tri-partite stakeholder organisation the ETI, we have also signed a similar letter to the same Minister for Labour Employment and Social Security and Chair of National Committee on the Minimum Wage to support the government-set uniform minimum wage level. This letter will be sent this week.

15 July 2015

Myanmar govt. calls on garment workers & factory owners to accept proposed minimum wage on trial basis

Author: Joshua Carroll, Fulton News

"Myanmar wants minimum wage accepted on trial basis", 13 July 2015

Myanmar’s government has called on garment workers and factory owners to accept a proposed minimum wage on a trial basis in order to “break the deadlock between both sides over the issue,”...Aye Myint, the minister for Labour, Employment and Social Security, made the plea as hundreds of demonstrators marched in the commercial capital of Yangon Sunday to demand a daily wage of at least 4,000 Kyat, roughly US$3.50...Gap...responded to a request from a rights group about its position on the minimum wage and whether or not its Myanmar supplier was opposed to the proposed minimum wage. “Gap Inc. partners with factory owners who share our commitment to treating garment workers with dignity and respect, and provide a safe, healthy place to work,” read the statement published by the Business and Human Rights Resource Centre. It added: “We have been an active supporter in the establishment of a minimum wage in Myanmar. We support efforts to raise the quality of life for garment workers.” Gap’s statement did not mention its suppliers’ position on the proposed wage, but the company said: “we encourage suppliers to pay competitive wages to their employees.”

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14 July 2015

Hundreds of workers rally for higher minimum wage, ask for US$3.5 per day

Author: Associated Press (AP)

"Myanmar workers demostrate for higher minimu wage", 12 July 2015

Several hundred workers in Myanmar rallied...for a higher minimum wage despite a warning by factory owners that the demand might put them out of business. The workers protesting in a northern suburb of Yangon...want the daily minimum wage of 4,000 kyat ($3.54) instead of the 3,600 kyat ($3.18) proposed by the National Minimum Wage Committee...following prolonged negotiations between the government, employers and employees. The current daily minimum wage is 3,000 kyat ($2.65). Small businesses employing fewer than 15 employees are not affected. Factory owners say a wage hike would affect their ability to operate, and some Chinese and Korean-owned garment factories have threatened to shut down if it is implemented. 

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14 July 2015

Ministry of labour says factories threatening to close over proposed minimum wage face legal action

Author: Aung Gyi, Democratic Voice of Burma (DVB)

"Foreign garment firms could face legal action", 13 July 2015

Garment factories threatening closure over proposed minimum wage adjustments could face legal action if they fail to obey official procedures, warned Burma’s Ministry of Labour, Employment and Social Welfare. The warning comes after the Myanmar Garment Manufacturers Association said in late June that around 30 Chinese and 60 South Korean-operated factories would shut down operations if the minimum wage of 3,600 kyat (US$3.00) per day proposed by the government-led National Committee for Minimum Wage is approved. The labour ministry responded by saying foreign investors working in Burma should be aware of employment laws in the country.

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Company response
13 July 2015

Gap response on minimum wage in Myanmar

Author: Gap

Gap Inc. partners with factory owners who share our commitment to treating garment workers with dignity and respect, and provide a safe, healthy place to work.

While the workers in the factories do not directly work for Gap Inc. or our brands, we encourage suppliers to pay competitive wages to their employees. We also require that they provide compensation for any overtime hours worked, all of which must be voluntary.

We have been an active supporter in the establishment of a minimum wage in Myanmar. We support efforts to raise the quality of life for garment workers, so that these women and men cannot only ensure their basic needs are met but also begin to build better lives for themselves.

The minimum wage should be reconsidered through an annual review mechanism, which is inclusive of key stakeholders, and is aimed at laying the foundation for a vibrant tripartite industrial relations and wage level negotiations process based on transparency, inclusiveness and peaceful negotiation.

We will continue working in Myanmar as long as the vendors meet our Code of Vendor Conduct, the country meets our sourcing requirements regarding quality product and delivery expectations, and Myanmar continues its path to democratic reform as outlined by the US Government.

Company response
8 July 2015

adidas Group response on minimum wage in Myanmar

Author: adidas Group

[adidas Group has] two approved footwear suppliers, but the basic wages they are paying to their workers are already above the government’s proposed minimum wage, so the new minimum wage should not materially affect them. [adidas Group's] general position as a company is that we fully support the development of a legal minimum wage in Myanmar and have met with government on several occasions to encourage the development of a robust minimum wage-setting mechanism for the country.