FWF researches impact of recent minimum wage rise in Myanmar

date: 07/06/2018

FWF has started a research project on living wages in Myanmar. In March, the legal minimum wage in Myanmar increased from Kyat 3,600 to 4,800 per day. FWF and Mondiaal FNV want to determine the impact of this increase on workers and businesses.

Increased minimum wage, who pays?
FWF argues that the responsibility is with buyers to meet the additional cost following the recent statutory minimum wage increase, particularly when the very limited impact on retail prices is considered. Here’s the logic:

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.

Research mission in Myanmar
FWF’s country manager Koen Oosterom undertook a research mission to Myanmar in May. Joining him were two FWF experts, Mr. Doug Miller and Mr. Klaus Hohenegger, both of whom have been working with FWF on living wages for several years.

The team visited and held discussions with the management of three factories. The aim was 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.

Stakeholders and suppliers
During the visit the team also conducted consultations with relevant stakeholders, including ILO, MGMA and CARE. A training for unions and labour NGOs on labour minute costing was arranged together with FNV and Apheda. Participants were very interested, especially as this was the first time they learned about this topic.

Finally, FWF held a combined stakeholders/supplier seminar in Myanmar. Participants included representatives from relevant stakeholders, factories and brands. The focus of the seminar was on social dialogue, gender-based violence and wages. Mr. Wouter Jurgens, Ambassador of the Kingdom of the Netherlands, opened the seminar.

Initial reactions in Myanmar
Myanmar’s minimum wage remains the lowest in Southeast Asia. Opposition to the new minimum wage has come 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 this research are expected in later this year. In the meantime, find out more about FWF’s work in Myanmar here.

This research project is conducted as one of the activities under the Strategic Partnership for Supply Chain Transformation, a five-year effort led by Fair Wear Foundation, Dutch trade unions Mondiaal FNV and CNV Internationaal and the Dutch Ministry of Foreign Affairs.

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