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Myanmar Officials Proposed a Minimum Wage and Factories are Already Fighting It

Grant Whittington headshotWords by Grant Whittington
Energy & Environment
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Garment factories in Myanmar, the Asian country formerly and perhaps better known as Burma, aren’t happy with the government’s proposal to institute the country’s first minimum wage — a measly $3.25 per day, equating to just 40 cents an hour. The big-time clothing companies these factories supply, like Gap and H&M, have yet to publicize where they stand on the suggested rate.

While $3.25 doesn’t sound like much of a victory for the Myanmar government, it’s still a 225 percent increase from the current starting pay nearing $1 a day. The Myanmar Garment Manufacturers Association isn’t pleased with the proposal, suggesting $2 a day would serve best for the workers and the companies struggling to stay in business.

For U.S. companies, Myanmar is an open door to cheap, yet reliable, clothes. When the country overcame decades of military dictatorship in 2011, President Barack Obama lifted sanctions restricting U.S. involvement in the country, thus allowing free trade for any American company to any Myanmar factory. Gap was the first to jump the bandwagon, publicly signing the deal on the circumvented idea that the increased workload “will play a key role in helping to fuel the economic prosperity of the country.”

The underlying problem remains that the workers, through buckets of sweat and countless injuries, remain empty-handed. Garment factory bosses have seemingly taken on the disputed “trickle-down approach” by denying reasonable wages. Job scarcity in the once war-torn country leaves the factory workers with little choice but to show up day-in and day-out.

Gap and H&M have maintained good public relations since relying on the Eastern world to develop their clothes -- openly committing themselves to improve working conditions, particularly forced labor and unfair overtime demands. Yet these companies that supposedly champion labor reform are suddenly unwilling to voice their opinions on the newly proposed minimum wage.

Business and Human Rights Resource Center researcher Irene Pietropaoli said Gap and H&M could easily influence the wage debate if need be. Burmese authorities are deeply committed to enticing foreign investment, so they’d almost undoubtedly oblige the opinion of such large-scale companies. Companies have next to no legal obligations to improve labor conditions, but profitable businesses would be smart to avoid standing up for unlivable wages.

As of now, it’s hard to compete with Myanmar’s affordability. Companies are increasingly licking their lips when looking at Myanmar as a prospective factory location. Stacked next to Eastern rivals, Myanmar is far and beyond the most appealing, cost-effective place to set up shop. Even with the proposed wage of $3.25 a day, or $65 a month, Myanmar would remain a heavy player in the garment-making industry.

Poor working conditions in Southeast Asia were spotlighted in 2013, when the Rana Plaza factory collapse killed more than 1,000 garment workers in Bangladesh. Although the area received national media attention, wages and way of life for workers in the region remained unsettled, even with powerhouse companies like Target and Walmart signing contracts with factories there.

Of the 172 countries documented by risk-analytics firm Verisk Maplecroft, only one had lower labor costs than Myanmar: Djibouti, on the Horn of Africa, a nation of around 900,000 people compared to Myanmar's 53.3 million. Outsourcing to Myanmar instead of neighboring Thailand saves Western manufacturers around $18 per worker per day because of the high — in relative terms, of course— wages Thailand workers receive.

Along with generally cheap labor per individual worker in Burma, health regulations haven’t been updated in the region since 1951. The country is still new, only existing without British control and military dictatorship for four years, so the standards are likely to increase year-in and year-out. But in the meantime, Myanmar seems to be the best place to outsource on a strict, surplus basis.

Myanmar officials are faced with the challenge of creating working standards for the country or minimizing costs to attract foreign businesses. Gap and H&M’s silence on the issue can’t last forever, and ultimately the companies’ reaction to the wage spike will speak louder than any press release statement. Only time will tell.

Image credit: Flickr/ILO in Asia and the Pacific

Grant Whittington headshotGrant Whittington

Based in Washington, DC, Grant works as a program assistant at SEEP Network, an international development nonprofit. A proud graduate of the University of Maryland, Grant spent four months post-grad living in Armenia where he worked for Habitat for Humanity and the World Food Programme. Grant is passionate about humanitarianism and finding sustainable approaches to international development. He enjoys playing trivia with friends but is still seeking his first victory - he ceaselessly blames his friends lack of preparation.

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