As foreign investors in the garment sector trickle into Myanmar/Burma, local research companies and the International Labour Organization (ILO) are undertaking a study that could prompt the country’s parliament to pass a minimum wage law by December this year.
The study, for which one local participant is the Myanmar Marketing and Research Development Co (MMRD), will look at how local factories are struggling to cope with a labour shortage, partly attributed to low available salaries.
Dr U Aung Win, vice-chairperson of the Myanmar Garments Manufacturers Association, described the current labour shortage as a “big problem.”
“Foreign investors are recruiting garment workers from locally owned factories by paying them higher salaries. This saves them from having to train workers, but it means that local factory owners must train new workers every month – or sometimes every day,” he told just-style.
He added a significant number of mainland Chinese and Hong Kong-owned factories have opened recently in the country.
Dr Aung Win expressed concern about demands made by garment sector trade unions across Myanmar – which currently number around 40 – claiming they are impractical.
“Unions are demanding that workers be paid US$5 a day, or about US$150 a month, and US$200 including overtime. There are so many jobless graduates who can speak some English yet can’t even find a salary of US$80 a month. These demands are simply unrealistic,” he added.
He said the average skilled worker at a garment factory earns approximately US$110 a month, at present, with a maximum salary of US$150 counting overtime. Meanwhile, an “unskilled helper” earns US$70.
The association has met with union representatives and factory owners for “constructive engagement” and he added: “We’ll continue to meet and hope that workers will begin to understand the practical limitations on wages.”
Minimum wages could differ by sector and geographical region, suggested Dr Aung Win, with the commercial capital of Yangon commanding the highest rates. “Investors are already setting up factories 20 miles outside Yangon because it’s cheaper,” he said.
Encourage foreign investment
Nyan Lynn Aung, director of the advisory firm FiNE9, which connects foreign and domestic investors in Myanmar, and most often in the garment sector, said that establishing a minimum wage will encourage foreign investment.
“Investors will know what they are getting in for – but it’s important to remember that a minimum wage will only be a minimum. Foreign owners are generally wealthier than their local counterparts and can pay more if demand for labour outstrips supply.”
Peter Witton, director of Anthem Asia, an independent investment and advisory group promoting sustainable business in Myanmar and other frontier markets across Asia, told just-style: “An officially-sanctioned minimum wage sends a signal about expectations…However, wages are just one issue in Myanmar at this time.”
He explained that local garment workers lack skills and experience, which can compound the chronic labour shortages. “Garment factories need to train staff, and smart ones will pay a decent wage to keep hold of the people they have invested time and money in training.”
However, he added that a minimum wage alone cannot solve current labour problems.
“If a [garment worker] gets the same [salary] wherever they work, then the employer who provides the best environment and benefits will be the preferred place to work.”
Source: Just Style United Kingdom