Garment industry gears up for rise in minimum wage

With Burma’s new president sworn in late last month, one document awaiting his signature is amended legislation that would increase the minimum wage by 33 percent.

Last year a review committee made up of labour groups, independent experts, unions and government officials reviewed the 3,600 kyats ($2.70) minimum wage that was introduced in 2015 and this year the committee agreed to raise it to 4,800 kyats per day.

But for some workers, fears have been raised that this baseline salary increase may come at the cost of other existing benefits.

Nineteen-year-old garment worker Ohn Mar, who works in a factory that makes vests, says she’s worried that factory owners will cut target bonuses, for meeting a quota, long-term employment incentives or travel allowances.

The workers’ advocacy group Action Labour Rights says this potential levelling out of bonuses upon the introduction of the new minimum wage is a real risk. It is calling on unions to help workers ask for new contracts that stipulate other benefits are not to be taken away.

“Increasing the minimum wage does two things: It catches up what has been eaten away by inflation in the past couple of years, but it also sets it [take-home pay] a bit higher in real terms,” says Jacob Clere, the Burma country director for the European Union-funded project SMART. He admits that in 2015 many factories did try to offset the added labour cost burden by reducing all workers’ wages to the new minimum wage — for some more experienced workers meaning a pay cut — or simply refused to comply with the new mandated rate.

“It didn’t work well for factories that tried to cut benefits; factory workers felt cheated. I am hoping factory owners learnt their lesson and that they basically have no choice but to absorb the cost.”

Clere adds that when wages are increased, the responsibility to adjust to the new labour market conditions shouldn’t just fall on factory owners but on the shoulders of buyers as well.

Wages in Burma are still one of the lowest in the region after Bangladesh and three times less than in China.

Garment industry grows, fire and safety risks rise

In 2017, Burma’s exports of garment and footwear goods totaled $3 billion, growing 25 percent from 2016.

Factories have expanded from Yangon’s Hlaing Tharyar industrial zone to rural regions, many chasing a tax holiday of seven or five years meant to encourage operations in less developed parts of the country. The size of garment manufacturing operations is also increasing from a mean size of 750 employees to factories up to 5,000 to 7,000 workers.

In theory, newly built factories should provide better safety and more comfortable working conditions.

However, last year a garment factory operated by Pan-Pacific International Company, which produces for GAP, Old Navy and O’Neill, caught fire and caused 720 million kyats ($527,000) in damages. The fire broke out after 4 a.m. and luckily no workers were injured or killed.

The factory’s general manager, Min Han, faces charges under section 285 of the Penal Code for negligence and could face up to three years in prison. Meanwhile Pan-Pacific has been able to continue operations.

At least five fires in new factories have occurred in the past five years. Questions have been raised over compliance checks, poor management and factory owners cutting corners with shoddy wiring.

“The Bangladesh risk” is a lesson for new factory owners racing in, says Clere, referring to the Rana Plaza factory collapse that killed 1,134 workers in 2013.

Challenges as factories expand

Chinese-owned factories accounted for 45 percent of total foreign investment in the garment sector last year, followed by Korean and Japanese firms. One issue with foreign-owned factories is the lack of integration of locals at the top levels of management, says international quality-control auditing group AQM.

When asked about communication inside a joint-venture factory between Chinese and Japanese owners, 18-year-old Wai Wai Lin says the biggest problem is the lack of a Burmese interpreter.

Given that women make up the majority in the garment sector, gender equality is an important issue. Action Labour Rights points has found that men often make up management roles and line supervisors which creates a power relationship between men above women. Barriers to gender equality in terms of equal pay, equal career advancement and the potential for harassment when there are weak laws beg for closer attention.

Thandar Ko, director of the NGO BusinessKind, which aims to educate workers in their rights, says there is a lack of education around what is harassment in the workplace.

“I think a lot of sexual harassment happens in factories but nobody voices it as they are afraid to lose their jobs,” Thandar Ko told DVB. For many garment workers who send their families at least half of their salaries, if they experience harassment she says they may not wish to speak up as the responsibility to remit some of their income is too great.

Catherine Vaillancourt-Laflamme from the International Labour Organization has recently been compiling a report, “Ending violence and harassment in the world of work,” in 16 foreign-owned garment factories in Yangon, and says that on the whole addressing sexual harassment at work has been neglected.

“While the overall reform of the labour law in Myanmar has been a priority for the government, the issue of sexual harassment and discrimination at the workplace hasn’t been part of the discussions related to the reform,” says Vaillancourt-Laflamme.

Some of the interesting cases reported in the surveys include women discussing harassment by other female employees, touching on grey areas around the line between teasing among friends and co-workers, and bullying or other non-consensual behaviour.

Other cases include garment workers reporting that they feel unsafe traveling home from work late at night.

Helen Gunthorpe, co-founder of BusinessKind that includes a women-in-crisis shelter, says many women travelling late after their shifts, often in the early hours of the morning, have reported harassment from drivers of motorbike taxis or their four-wheeled equivalent. Although some factories offer organised transport from the factory to dormitories, when workers are putting in overtime they miss these organised trips and are forced to make their own way home.

One worker in a leather factory, 32-year-old Ei Ei Soe, says she has experienced unwanted sexual advances by drivers, and other workers have reported physical abuse and robbery.

This is echoed by Vaillancourt-Laflamme in her report. “Workers tend to send an important part of their wage home to their family. … This also reduces their ability to make the right choices, such as securing housing and transportation.”

Without an anti-harassment component as part of any existing labour laws, and with factories not required to include a gender policy, women remain at risk of harassment and discrimination.

Vaillancourt-Laflamme concludes that female garment factory workers continue to face vulnerabilities when they don’t know their rights and their responsibilities at work aren’t clear: “This is an important component of sound and productive workplace-industrial relations, which — if addressed correctly — could benefit Myanmar as a whole and propel the country in the direction of fair and sustainable development.”

Challenges for businesses and management

All too often garment managers are painted as the bad guys says Suzanne Tym, one of the directors of Aung Myin Hmu. “Businesses want to improve workers skills, so they can earn more, have a better quality of life and we believe the real investment is through trainers,” says Tym.

In a building out the back of a rundown “skills centre” operated under the Ministry of Labour, stands a new well ventilated training that smells of a fresh lick of paint. Inside the Aung Myin Hmu centre supervisors not only learn sewing, quality control and monitoring, but also communication.

After 10 years working as a machine operator, Ni Ni Soe knows what it is like to toil at the bottom of the ranks. “I was so desperate for a job I offered to be a helper if I didn’t pass the test to work a machine,” she recounts. When she did receive her first job at age 14, she says that she was only paid 15,000 kyats every 30 days. Looking back at her working conditions for a pittance, Ni Ni Soe says a lot has improved compared to her entry wages as a machine operator. However she agrees that it does need to keep rising to meet inflation and rising living costs.

One of the biggest issues she faces is stress. With the demands of fast fashion, customers want more clothes faster. To meet the tight deadlines managers put pressure on supervisors to make sure their staff are working productively to meet the deadlines. “A lot of times working in the factory workers didn’t finish the quota and I would be called into the manager’s office and he would yell at me. After the third or up to sixth time quotas aren’t met successfully the manager would ask me to fill out a contract saying I would leave voluntarily.”

Now working as a trainer of supervisors she says the biggest message she tried to convey is “patience and to work with staff. Don’t yell at them all the time, although sometimes Chinese foreign-owned factories think shouting makes workers more productive.”

Hong Kong Businessman who previously worked as a manager in an apparel factory in Myanmar, Terry Shun, says another headache from a business perspective is high absenteeism and a lack of interest from foreign-owned factories to invest in well trained local supervisors. “Slowly Chinese owners are understanding that it isn’t enough to go through a translator to give instruction. It’s not just about translating instructions through an interpreter, if they train supervisors they can explain to workers the specifics as they understand the skills needed.”

He warns that the industry does have to realise the raising of the minimum wage will affect overseas investment but that businesses will have to face the fact that they will have to find other ways to absorb costs by perhaps providing better training for local staff so that they are more productive and capacity building of local supervisors and managers that could then save the hiring of interpreters.

Overall though he agrees that the minimum wage should be raised and simply states, “Myanmar workers deserve better.”