Myanmar garment factories may fire more workers

07 Sep '15

2 min read

With the coming into force of the new minimum wage on 1 September in Myanmar, many labourers working in garment factories woke up to the nightmare of losing their jobs. As factories implement the new minimum wage of K3,600 ($2.80) per day, they are likely to reduce manpower, say media reports in Myanmar.

According to the Ministry of Labour of Myanmar, thousands of workers have already lost their job since the implementation of the new wage rate.

In the past, low wages in the country have spurred strikes and protests by the labour unions and workers. But, clothing retailers like GAP and Hennes & Mauritz that work with factories in Myanmar came out in support of a stable minimum wage.

The first minimum wage at K3600 ($2.80), for an eight-hour work day, came after two years of negotiations, and was supposed to bring relief to the workers. However, the new wage rate was not received well by the factory workers of Myanmar, who expected a bare minimum of K4,000 ($3.11), the reports said.

On the other hand, garment factory owners were also not delighted by the announcement. According to the Myanmar Garment Manufacturer's Association, the new minimum rate is a 4.5-fold increase for some factories for entry-level workers. As a result, employers are now cutting down benefits like transport allowances and stipends, and even reducing the workforce. Decline in orders and lack of productivity are also being held as reasons leading to unemployment in garment workers.

The upside is that the minimum monthly pay of $67 per month can give a reasonable advantage to garment manufacturers of Myanmar, since it is still lower than countries like Vietnam and Cambodia, where the minimum wage ranges from $90 to $128, according to the International Labour Organization.

Moreover, the clarity on labour costs may attract global apparel retailers to invest in the fast growing garment sector. Myanmar exported $1.5 billion of clothes and other material in 2014, as per Global Trade Atlas.

The minimum wage is applicable to workers across all industries, except small or family-operated businesses comprising less than 15 individuals. (HO)

Fibre2Fashion News Desk – India

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