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CESD Participates in Tripartite Workshop on Minimum Wages in Bago

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Gracing an invitation extended by the Bago Regional Minister of Planning and Finance and Chair of the Regional Minimum Wage Committee, the Executive Director of the Centre for Economic and Social Development (CESD), Dr. Zaw Oo, along with a team of researchers participated in a Tripartite Workshop on Myanmar’s minimum wage held at Bago on 6th September 2017
Dr. Zaw Oo and the CESD are part of the Union level committee on setting the National Minimum Wage and therefore, this tripartite workshop gave the opportunity to understand the perspectives about the minimum wage from key stakeholders involved in the establishment of the minimum wage and how better discussions could lead to more improved, efficient and effective decision making processes that benefit workers across all sectors and regions in Myanmar.

The half-day session kick-started with an inaugural address by the Bago Region Minister for Labour, Population, and Immigration who emphasized the interdependence of employers and employees using the Burmese proverb ‘ကုုိင္းကႊ်န္းမွီ ကႊ်န္းကုုိင္းမွီ’ (kaing-kyun-me-kyun-kaing-me)and how this interdependence should be the basis for negotiations about minimum wage. Following the address, the employees and their representatives from a wide variety of sectors had the opportunity to present their opinion and perspectives about the Minimum Wage.

Based on data through a survey conducted in Bago Region during 2015, a President of one of the Worker’s Union president said that a minimum wage of 6000 Kyats can barely cover the basic expenses of one worker excluding those dependent upon him/her. This led to further debates about the minimum wage where many representatives argued the possibilities and challenges for a flat minimum wage rate and how it undermines farmers’ considerations. Representatives from sectors such as construction and infrastructure were quick to counter argue how most employers tend to gravitate towards cooperation with bureaucrats and so worker’s interests were not fulfilled adequately.

More specifically, workers’ representatives from the garment sector cited how inflows in the form of Foreign Direct Investments (FDIs) have been helpful for garment factory workers, yet the prices of commodities (inflation) need to be regulated in order for workers to be able to afford basic essentials/commodities. The underlying viewpoint of the employees and their representatives postulated that there needs to be more consideration of employees’ needs and how productivity can be tied up to incentive mechanisms yet still keep a healthy balance.

From the Employers’ perspectives, one Korean employer commented that the current situation of Myanmar is a common phenomenon in countries undergoing transition. Speaking on behalf of the garment sector, he pointed out that all raw materials are imported from other countries and when this combined with the long bureaucratic processes it makes operations difficult with a high cost of production. He proposed that minimum wage rate should be based on regional differences in cost of living as conflicts arise due to wage hike leading to layoffs which in the end does not benefit anyone involved. One employer representative from a plywood factory suggested the 3,600 Kyats be maintained. His argument is that raw materials for plywood are transported from the remotest part of the country and the cost of production reduces Myanmar’s competitiveness in the international market for this sector.

An employer representative from the forestry sector said that flat rate is more practical since there will be internal migration to places with higher wages which can then affect the uniform development of the country.

Another employer representative, a member of the Union level Minimum Wage Committee from the garment sector said that after two years, the 3,600 Kyats rate should be changed with the proposal of 8 hours/day with 2/3 hours overtime that has a pay which is twice the hourly rate. He specifically mentioned the high cost of transaction incurred from problems with container/shipping and recommended that garment sector should have a different rate suggesting different rates per sector.

After hearing the opinions and concerns of both employers and employees, the CESD and its Executive Director, Dr. Zaw Oo were requested to provide technical inputs based on their previous experience with regards to the setting up of the national minimum wage. Dr. Zaw Oo, on behalf of the CESD, raised several key questions such as how should the stakeholders approach the changes that were discussed/proposed and highlighted the importance of evidence-backed data collection in order to ensure streamlined and informed policy formulation. Such data collection would involve using the current minimum wage of 3,600 MMK as a baseline in order to proceed ahead, collect township-level data through surveys and field interviews and organize more dialogues among stakeholders which will help in reducing direct confrontations and thereby reduce lost opportunity costs incurred.

He further highlighted that the report published by CESD in cooperation with the International Labour Organisation (ILO) documenting the elimination of forced labour was key in the lifting of the economic sanctions imposed by the USA in 2016 that resulted in the garment sector attracting FDIs worth USD 2 billion over the past 2 years. Factors such as inflation, usage of infrastructure/electricity, effective law enforcement, monitoring compliance and ensuring transparency and understanding of the limitation of the Government Ministries were also crucial in order to ensure that there is a more market-friendly approach that benefits all the parties equally and addressing their respective needs.

In light of the above mentioned factors, the aspect of flat/flexible rates can pose difficulties for implementation. Calculation of Overtime and incentives linked to productivity/performance needs to be strategically approached and studied to ensure that these mechanisms will (likely) reduce the possibility of workers mentality to have more overtime and focus on their skills improvement and productivity, at the same time, it will have positive social impacts on workers. He concluded that such mechanisms need to target regional and other international standards for inspiration and deeper studies need to be conducted to ensure operational feasibility with a quicker turnaround of benefits.