Myanmar businesses mull cost of new minimum wage

YANGON — Many workers in Myanmar are in line for a raise following the sudden introduction of a long-discussed minimum wage. For businesses, however, the government announcement has generated concerns over staffing costs and export competitiveness with rivals in neighboring economies.

Since Sept. 1, Myanmar’s workers have been entitled to a mandatory minimum wage of 3,600 kyat. That works out to about $2.82 for an eight-hour day, or around $76 a month. Businesses with fewer than 15 employees are excluded, but managers running small and midsize enterprises employing more than that number say they must now find ways to absorb higher costs.

One such company, Power Maw Shan, produces pickled tea leaves, which go into the quintessential Myanmar dish lahpet thohk (tea leaf salad). At one of its factories, at Bayinnaung market in northern Yangon, a workforce of mainly young women sorts and packs clumps of pickled leaves — as well as green tea for drinking. Most earn a basic daily wage of 2,500 kyat.

Workers package green tea leaves at Power Maw Shan’s factory in northern Yangon. © Simon Lewis
Managing director Nay Che Myat Htun told the Nikkei Asian Review that the family-owned company considers itself a good employer, offering bonuses and benefits to its staff of about 80, and paying higher wages than competitors. But raising salaries by the equivalent of nearly $1 per day for many of her workers, as the new rule requires, could push expenses unbearably high.

“I would like to pay them that amount,” she said, “but it might mean I can only employ 60 people.”

One effect of the new minimum may be that businesses like Power Maw Shan are pushed to automate production more quickly. Even before the minimum wage was implemented, the company was setting up a new factory elsewhere in Yangon and investing in machinery.

“We won’t need so many workers,” Nay Che Myat Htun said of the company’s new factory, “but I’m worried about those people [who will have to be laid off] as it’s hard to find jobs.”

Initial confusion

Myanmar’s minimum wage was announced just three days in advance, in a circular carried in state-owned media. Days after the rule took effect, small business owners attending a workshop in Yangon were still unsure whether their businesses would be affected, despite the government’s insistence that no sector would be immune. “Is this just a draft, or is it actually happening?” asked one owner.

“Most companies are telling us they haven’t done anything yet; they are waiting for more information,” said Emmanuel Maillard, country director at Building Markets, a U.S.-based nonprofit group that organized the workshop. It is helping small and midsize enterprises in Myanmar to take advantage of the economic growth that has emerged since a quasi-civilian administration launched reforms in 2011.

Source: Nikkei

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