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CESD Participates in Minimum Wage Workshop in Yangon

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In September 2015, the Myanmar government for the first time in history set a minimum wage at 3,600 MMK ($3 at that time of exchange rate) a day, lowest in ASEAN but slightly higher than Bangladesh. A year and a half after implementation, robust discussions continue between unions, worker representatives, businesses, and the government about the impacts and possible changes in the minimum wage level. On November 4th, CESD was invited by the Ministry of Labor, Population, and Immigration to arbitrate a workshop between worker representatives and government and policy-making figures seeking updates from workers, open a policy dialogue, and support future changes to the minimum wage.

 

Workers representatives began the workshop noting that in their perspective the aforementioned initial minimum wage was agreed to as a baseline. Workers expressed their expectations of a minimum wage increase as the policy was, in their view, low. CESD research found the minimum wage law has been successful in increasing worker wages, conditions, and establishing worker’s rights; especially in key labor-intensive industries such as garment manufacturing and food processing. The minimum wage law also improved the public sector’s profile, ultimately increasing foreign direct investment (FDI) from the west via an uptake in demand and outsourcing. The government saw increased government revenues and taxes, especially from small and medium enterprises (SMEs) as a result of the minimum wage law.

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THE WORKSHOP UNDERWAY AT THE UNION OF MYANMAR FEDERATION OF CHAMBERS OF COMMERCE AND INDUSTRY’S HEADQUARTER IN YANGON

However, while setting the initial rate was hugely beneficial for all parties, recent inflation and low growth rates have greatly increased the cost of living. Worker representatives echoed the need for an increased minimum wage, justifying the increase with internal surveys demonstrating that the increased cost of living had all but canceled out any gains workers achieved from the minimum wage. Economist and member of the National Council for Minimum Wage, Mr. Khin Maung Nyo, responded to these statistics skeptically, stating that worker organizations should let independent bodies, such as research organizations, conduct the surveys to avoid bias. To negate any potential prejudice, CESD is working with worker groups to accurately conduct and analyze surveys from their workers. Finally, worker’s representatives communicated their desire to continue the tradition of these workshops and consultations as the dialogue is critical to the betterment of workers.

Following worker’s representatives’ presentation, Dr. Zaw Oo presented his current assessment of the minimum wage law. He agreed that continued workshops and consultations are key to opening and fostering dialogue seeking to bridge shareholders’ many perspectives. Dr. Zaw Oo discussed the merits of creating a minimum wage, noting that the initial minimum wage was beneficial to all parties. However, he cautioned any change the minimum wage may lead to negative effects on all parties. He affirmed worker’s representatives’ statements that costs had risen across the board in Myanmar and eliminated the increased income from the minimum wage law. Dr. Zaw Oo presented his assessment on the impacts of increasing the minimum wage, comparing the context of the 2015 minimum wage setting to the current economic situation. In 2015, prices of consumer goods generally were rising due to the economy overheating, however, more recently economic disruptions such as trade sanctions, foreign direct investment shocks, and low tourism revenues have culminated in low growth and high inflation, or stagflation where rising prices are not caused by the underlying strength of the booming economy but the opposite. Though workers are largely no better off than in 2015, an increase in the minimum wage will spillover into non-labor sectors causing a contraction in the labor market and worsen inflation. Dr. Zaw Oo concluded a substantial increase in the minimum wage would cause overwhelmingly negative externalities for workers, government, and businesses. Though a modest adjustment of the minimum wage may be advisable, Dr. Zaw Oo identified certain public service deliveries which could be targeted at the factory level to raise workers’ standard of living without causing negative shocks. These initiatives, such as a provision of preventative and primary healthcare services under social security provisions, transportation arrangements for workers, engaging in increase dialogues on worker rights, and looking to increase productivity are key to helping all parties continue to improve their current standing, which are also highlighted in CESD’s recent report “Impact of Minimum Wage on the Workers from the Food Processing and Garment Factories in Hlaing Tharyar Industrial Zone in Yangon, Myanmar.”

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DR. ZAW OO ADDRESSING WORKER REPRESENTATIVES DURING THE WORKSHOP.

Some discussion topics raised during the workshop included the need for more effective workplace training mechanisms and improving worker conditions. Ms. Khine Zar Aung, Confederation of Trade Union of Myanmar (CTUM) Representative, called on the forum to devise measures to incentivize training and stipends for workers. CESD’s report, “Impact of Minimum Wage on the Workers from the Food Processing and Garment Factories in Hlaing Tharyar Industrial Zone in Yangon, Myanmar” found that workers see in-house and offsite training as disproportionately important and calls for businesses and the government to provide more of these training. Secondly, regarding workplace conditions, another worker representative also emphasized improving workers’ conditions is a win-win for workers and businesses alike as good workplace safety is a prerequisite to supplying high-end markets.

 

Overall, all parties in the discussion were greatly appreciative of the dialogue and feedback from the workshop and stand committed to continuing the tradition.

 

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