Researchers study impact of Myanmar minimum wage rise
As part of an ongoing programme to improve labour conditions in the garment industry, a European multi-stakeholder initiative has started a research project on living wages in Myanmar.
The Southeast Asian nation's legal minimum wage increased from MMK3,600 to MMK4,800 (US$3.5) per day in May, and now Fair Wear Foundation and Dutch trade union Mondiaal FNV want to determine the impact of this increase on workers and businesses.
Their research is being carried out as one of the activities under the 'Strategic Partnership for Supply Chain Transformation,' a five-year effort led by FWF, Dutch trade unions Mondiaal FNV and CNV Internationaal, and the Dutch Ministry of Foreign Affairs.
FWF argues that buyers are responsible for meeting the additional cost associated with the increased minimum wage, especially as they will have a very limited impact on retail prices
The group's logic is that as the national minimum wage increases, the labour minute cost of manufacturers goes up accordingly. Isolating the labour component in the labour minute cost should enable manufacturers to identify the new overall minute price which they quote to buyers. This new labour minute price would then be multiplied by the given standard allowed minutes on any garment style, taking efficiency into account, to arrive at the manufacturing cost of the garment.
A recent research mission to Myanmar saw discussions held with the management of three factories to collect information on the cost breakdown and increase in labour minute costs caused by the minimum wage rise – and following that, the increase in CMT/FOB prices of garment items produced in Myanmar.
There were also consultations with relevant stakeholders, including ILO and the Myanmar Garment Manufacturers Association (MGMA); training for unions and labour NGOs on labour minute costing; and a seminar on social dialogue, gender-based violence and wages.
Myanmar's minimum wage remains the lowest in Southeast Asia, yet there has been opposition to the new minimum wage from both employers and workers.
Workers do not believe it is enough to sustain themselves and their families. Employers warn that it could cause small- and medium-sized industries, which comprise the bulk of businesses in Myanmar, to close.
Results from the research are expected in later this year.