Saturday, August 19, 2017

New minimum wage sees workers sacked and struggling

After almost two years of arguments and negotiations, Myanmar has set its first minimum wage at K3600 (US$2.80) per day. The milestone was met with ambivalence by factory owners, and trepidation by garment workers, who fear many jobs will be axed to afford the move.

Factory workers from the Shwe Pyi Thar industrial zone in Yangon protest for a K4000 minimum wage in July. (Aung Myin Ye Zaw/The Myanmar Times)Factory workers from the Shwe Pyi Thar industrial zone in Yangon protest for a K4000 minimum wage in July. (Aung Myin Ye Zaw/The Myanmar Times)

The government officially announced the figure’s approval on August 29 with the law set to go into effect on September 1. Despite garment factories’ calls to be excluded, the new minimum wage will apply across all sectors and businesses that employ 15 or more people.

Myanmar’s wages were previously among the lowest in the region, triggering discontented workers and labour unions to stage strikes, sit-ins, rallies and protest marches. The campaigns for better pay were met with police crackdowns and mass firings, as well as the arrest and detention of dozens of workers. Protesting workers and factory labour unions said K3600 was not good enough to be a living wage, and suggested K4000 was the bare minimum they could survive on to keep up with inflation.

Big-name clothing giants that source from Myanmar, such as GAP and H&M, supported implementing the minimum wage to stabilise the industry, but factory bosses called for the floor to be set much lower, around K2500 per day, citing productivity and overtime pay concerns.

According to the Myanmar Garment Manufacturers Association, for some factories the new minimum represents a 4.5-fold increase over what unskilled, entry-level workers currently earn.

To make up for the gulf between the old and new earnings, factories have begun slicing into the meagre benefits provided, according to workers.

“Employers are getting ready to remove the various supplementary payments before the minimum wage of K3600 per day comes into effect,” Ko Nay Linn Aung, head of the All Myanmar Workers Union Network in Hlaing Tharyar township’s Shwe Lin Ban industrial zone, told The Myanmar Times.

Previously, factories offered various stipends and benefits to the largely young, female and out-of-town workforce. Bonuses were given to workers who didn’t take leave; some were provided an allowance for board, transportation to and from the factory, pocket money, and a subsidy for electricity.

Employers say such discretionary supplements are no longer viable, while workers claim with the benefits cut, the boosted salary will not make much of a difference to their salaries in the end, as the trade-off will still leave them struggling to get by.

Factories have also pushed to restructure the overtime pay, which at double the basic rate of pay is currently the highest in the region. But amending the overtime regulations requires overhauling labour laws, which will take time and more heated arguments. As a stop-gap, factories have cut straight to reducing the payroll. Already, hundreds have been sacked in preparation for the new wage.

“They are reducing the workers. There are nearly 300 workers who were fired in Hlaing Tharyar,” said Ko Nay Linn Aung. “We have to watch through the first week of September for more.”

In July, the legal compensation for fired workers was amended. Previously, one months’ salary had to be paid to workers with up to a year of employment. Two months’ was needed to sack a worker with up to two years of work history, and three months’ for workers of a longer term at the company. Additional compensation was also required if employers did not inform the worker of the lay-off with advanced notice.

According to the new compensation guidelines – amended less than 60 days before the minimum wage proposal was approved – workers with less than six months experience can be fired without a compensation package. Labour unions reported that workers with four or five months’ experience are quickly getting dropped.

“It’s convenient timing. Since the compensation was reduced, employers can now fire the workers without having to use much money,” said U Htay, a lawyer representing factory workers.

After months of heated argument, and factory owners threatening to shutter facilities, some were still fervently refusing to accept the government’s new wage.

Industrial Zone’s Entrepreneurs Association released a letter to members instructing them to boycott the wage and further negotiate the amount with the National Minimum Wage Committee. A lot of employers said they don’t want to accept the new minimum wage, said U Khin Maung Aye from Let War garment factory.

“Employers are not united with each other,” he said, adding that it would be best to accept the minimum wage for a six-month trial period.

Translation by Thiri Min Htun


U Tun Tun Naing,
executive member of the Cooperation Committee of Trade Unions

We are willing to accept the minimum wage, even though some objections remain ... First, however, the government must make clear the meaning of the minimum wage law and who it applies to.

The government must also check that the employers pay the fixed minimum wages properly and follow up on the labour situation. Otherwise there may be more disputes between the workers and the owners if they do not pay the minimum wage.

Ma Nwe Yin Win,
a worker at Tai Yi footwear factory

We welcome the standard that is being set by establishing the minimum wage because we have not had that standard before. We will have to continue discussing with employers about other situations such as overtime fees, employee contracts, payment for leave, cost of living allowance, etc.

However, we disagree with the minimum wage statement that workers who just started and are in probation have to receive only 50 percent of the minimum wage, while interns have to receive 75pc of the minimum wage. We disagree on those divisions and will file a complaint soon.

U Soe Lwin,
owner of Sein Trademark noodle factory

The fixed minimum wage is appropriate for me because the workers at my factory already receive more than K3600 per day.

As far as I know, the dispute about wages has happened mostly in the garment sector and has not affected other industries like foodstuffs.

Nonetheless, all factory owners need to follow the law and should think about how best to manage their factory without having it collapse.

Nyan Lynn Aung