Myanmar sets $2.80 daily minimum wage in bid to boost investment

Sat Aug 29, 2015 6:47am EDT
 
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YANGON (Reuters) - Myanmar has set a minimum wage of 3,600 kyat ($2.80) for an eight-hour work day, a move likely to boost investment in the fast-growing country's garment industry.

The decision on a minimum wage, which follows two years of often acrimonious debate between garment factory owners and labor unions, was announced on Saturday.

Myanmar's government has targeted garments for rapid growth, and Saturday's statement may help spur this, as it gives clarity on the law and labor costs to global apparel brands buying clothes from Myanmar.

Companies that have pushed for creation of a minimum wage include giant Swedish retailer Hennes & Mauritz (HMb.ST: Quote), which works with 13 factories in Myanmar, and U.S. retailer Gap Inc (GPS.N: Quote), which buys from two.

Once a thriving industry, Myanmar's garment sector was hit hard by sanctions imposed by the United States, stripped of trade benefits and abandoned by brands who feared the reputational risk associated with the former junta.

In a bid to change this, Myanmar lawmakers passed a minimum wage law in 2013, but negotiations between employers, trade unions and the government were delayed by garment workers' strikes and threats from garment factory owners - many from China and South Korea - to close if the minimum wage was set too high.

COMPETITIVE ADVANTAGE

Under the newly-established level, Myanmar's minimum monthly pay would be around $67 a month, based on a six-day work week, giving it a competitive advantage over thriving garment makers such as Vietnam and Cambodia where the monthly minimum wage ranges from $90 to $128, according to the International Labor Organization.   Continued...

 
Workers tailor and arrange clothing at a garment factory at Hlaing Tar Yar industry zone in Yangon March 10, 2010. REUTERS/Soe Zeya Tun