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Negotiations are currently being held in Rangoon which may pave the way for an official minimum wage in Burma.
A workshop between employees’ representatives, international labour organisations, government officials and the parliament-appointed National Committee for National Wage (NCNW) began on Sunday at the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) and was expected to continue through Wednesday.
On the first day of the workshop, workers’ leaders urged the NCNW to propose a basic minimum wage of 4,000 kyat (US$4) per day across the board. In response, employers’ representatives suggested varying minimum wages dependent on work category.
Based on consensus from the workshop, the NCNW is due to recommend a minimum wage plan that should become official after approval by the government and parliament.
According to official accounts, Burma’s legal minimum wage is currently set at 15,000 kyat (US$15) a month for salaried public employees and 500 kyat ($0.50) per day for day labourers. However this is widely ignored throughout the country, and little if any enforcement exists to guarantee employers will pay minimum wages.
Neighbouring Thailand has a fixed minimum wage of $9.14 per day, but Thai businesses are widely known to underpay Burmese and other migrants in sectors such as construction, agriculture, fisheries and factory work. Some two million Burmese work in Thailand.
Speaking to DVB on Tuesday, Steve Marshall, the country liaison officer for the International Labour Organization, which has been providing technical support to the Burmese government as it wrestles with the issue, said, “It is important when considering the concept of a minimum wage to understand that it is a social protection floor mechanism designed to provide an acceptable baseline income to the most vulnerable in the workforce for performance of a standard eight-hour day’s work. It should not be regarded as a generally applied paid wage and should take no account of matters such as routinely worked overtime or ability to earn production-related bonuses.”
According to a report published last June by business think tank Thura Swiss, the minimum wage for day labourers in Burma was languishing at 500 kyat a day. But following several strikes by garment factory workers last year, the minimum salary was temporarily increased to 56,000 kyat per month, which can be calculated as around 2,000 kyat per day, given that most factory workers have to work six or seven days a week.
In March 2012, the minimum wage for civil servants was increased by 20,000 kyat to 210,000 kyat a month. The pay hike was ratified without dissent by parliament, days after being publicly challenged by Finance Minister Hla Tun.
But it is the wage of unskilled labourers such as factory workers and the endemic cycle of poverty that is most contentious.
In November 2013, a report by several labour rights groups pointed out the dire conditions in which factory workers invariably live.
Titled ‘Modern Slavery: A Study of Labour Conditions in Yangon’s Industrial Zones’, the report describes a typical working day:
“Workers in Yangon’s 13 industrial zones work in unsafe, hot, overcrowded factories, typically for around 11 hours per day, six days per week,” it said. “A complex system of bonus pay for punctuality and non-absence pay as well as a meagre daily wage leaves most workers needing to work overtime to make money.
“This cycle is completed by the need to go to pay-day lenders at the end of the month to make up for the shortfall in meeting their basic needs. Thus they have no choice but to continue working as many hours as possible to pay off this debt. The living conditions are also squalid, and transportation between factory-provided hostels or rented spaces shared with many others can add hours onto a day and for many women leave them vulnerable to sexual harassment late at night.”
One interviewee for the report, a 24-year-old woman working in a garment factory, said she earned a basic salary of 18,720 kyat per month – less than US$20. However, by working 13 hours a day, six days a week to make bonuses, she was able to take home a much more impressive 80,000 kyat.
Still she was unable to make ends meet. Although the report did not say whether she supported a family, it noted that her monthly outlays included 50,000 kyat for food, 10,000 for housing, 5,000 for travel costs, 5,500 for creams, soap and thanaka (traditional sunscreen/ make-up), and more than 10,000 in other expenditures. In total, her personal outlays came to 82,500 kyat, and so she, like many of her colleagues, had to rely on loans every month to make it until pay day.
Vicky Bowman, the director of the Myanmar Centre for Responsible Business (MCRB), told DVB on Tuesday that workers need to be protected, and that any minimum wage must be transparent and enforceable.
“The minimum wage needs to be set at a level which protects workers from exploitation and businesses from unfair competition but doesn’t result in wider negative social impacts in the country such as significant inflation or businesses laying off workers,” she said.
In response to fears that international investment would be affected by the introduction of a strict minimum wage, Bowman said that, in fact, reputable firms tended to view the better-paying factories favourably because of their higher-quality produce.
“What MCRB has found is that retailers who have commitments to responsible sourcing – mostly brands from the US and Europe – are avoiding buying from factories that pay a very low wage,” she explained. “This is partly because they are concerned that workers should be receiving a decent wage, and also that basic health and safety requirements are in place. But it is also because factories that pay higher wages also tend to produce to better quality.”
Nyantha Maw Lin, the managing director for corporate advisory firm Vriens & Partners Myanmar, told DVB on Wednesday that a higher minimum wage is unlikely to deter foreign investors.
“A moderate rise is unlikely to deter foreign investment, but it would help if the government could demonstrate that it is making investments in education and training so that investors would have some assurance that productivity could increase,” he said.
During his monthly radio address to the nation last month, President Thein Sein confirmed that plans were afoot to set a national minimum wage by June. However he warned that if the minimum wage were too high, it would increase production costs and consequently block foreign investment, while if it were set too low then workers who are struggling to survive will inevitably take to the streets to protest.
Neither the president nor his senior ministers will be involved in the minimum wage talks this week; they are hosting an economic summit in Naypyidaw where the five nations involved – Burma, Thailand, Vietnam, Laos and Cambodia – have each affirmed a commitment to promote trade and investment within the region.