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Myanmar sets $2.80 daily minimum wage in bid to boost investment

08/29/2015 | 06:47am US/Eastern
Workers tailor and arrange clothing at a garment factory at Hlaing Tar Yar industry zone in Yangon

Myanmar has set a minimum wage of 3,600 kyat ($2.80) for an eight-hour work day, a move likely to boost investment in the fast-growing country's garment industry.

The decision on a minimum wage, which follows two years of often acrimonious debate between garment factory owners and labor unions, was announced on Saturday.

Myanmar's government has targeted garments for rapid growth, and Saturday's statement may help spur this, as it gives clarity on the law and labor costs to global apparel brands buying clothes from Myanmar.

Companies that have pushed for creation of a minimum wage include giant Swedish retailer Hennes & Mauritz (>> H & M Hennes & Mauritz AB), which works with 13 factories in Myanmar, and U.S. retailer Gap Inc (>> Gap Inc), which buys from two.

Once a thriving industry, Myanmar's garment sector was hit hard by sanctions imposed by the United States, stripped of trade benefits and abandoned by brands who feared the reputational risk associated with the former junta.

In a bid to change this, Myanmar lawmakers passed a minimum wage law in 2013, but negotiations between employers, trade unions and the government were delayed by garment workers' strikes and threats from garment factory owners - many from China and South Korea - to close if the minimum wage was set too high.

COMPETITIVE ADVANTAGE

Under the newly-established level, Myanmar's minimum monthly pay would be around $67 a month, based on a six-day work week, giving it a competitive advantage over thriving garment makers such as Vietnam and Cambodia where the monthly minimum wage ranges from $90 to $128, according to the International Labor Organization.

Myanmar's announcement only stated the wage-rule for a "standard eight-hour work day". It did not mention overtime compensation.

Saturday's statement comes less than three months before Myanmar's first free elections in 25 years. Nobel laureate Aung San Suu Kyi's National League for Democracy is widely expected to comfortably win the poll.

The approved wage would apply to workers across all sectors, but exclude small and family-run businesses that employ fewer than 15 people, National Minimum Wage Committee, a forum comprising all negotiating parties, said in state-run Myanma Ahlin newspaper.

The wage will come into effect on Sept. 1.

Myanmar exported $1.5 billion of clothes and materials in 2014, up from $1.2 billion the previous year and $947 million in 2012, according to the Global Trade Atlas.

The World Bank has projected that Myanmar's economy will expand about 8 percent in the current fiscal year.

(Reporting by Timothy Mclaughlin and Aung Hla Tun; Editing by Richard Borsuk)

Stocks treated in this article : Gap Inc, H & M Hennes & Mauritz AB
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