The Myanmar government has published several clarifications on the new minimum wage regarding the timeline for implementation and requirements for severance pay for laid-off employees.
The main facts are:
• Minimum wage of 3,600 kyats per (8 hour) work day took effect from September 1st. The minimum hourly rate, as such, is 450 kyats.
• There is no regional variation or industry-specific variation of the wage. 3,600 kyats is the basic minimum for all industries and regions within Myanmar for all enterprises employing more than 15 employees.
• There is, however, an allowance for training and probationary employment. Unskilled workers receiving on-the-job training may be paid 50% of the minimum for a maximum of 3-months. Hence, 1,800 kyats per 8 hour workday during training. The following 3-month probationary employment period may be compensated at 75% of the minimum wage: 2,700 kyats per 8 hour workday. After training and probation, the regular minimum rate must take effect.
• Any employees who are laid-off/terminated are entitled to the severance package to which they are legally allowed, as outlined in their contract and shall not be less than the amount required by the presiding laws of the Republic of the Union of Myanmar.
Government announcements and details:
(Myanmar Language) 3600 MMK for 8 Hours
(Myanmar language) Public notification on minimum wage 29.8.15
Salary Compensation details from Ministry of Labour, Employment and Social Security (Myanmar language)
Due to disturbances caused by the recent floods, the MGMA and SMART Myanmar are extending the deadline for applications for the ‘SMART Award 2015’ up until August 15th.
This award is designed to honor achievements in social compliance and responsible business practices. One winner will be selected for “most improved factory” and several others will be honored for specific achievements (such as “excellence in new factory set-up” and “excellence in workplace safety”).
The SMART Award 2015 will be presented during the MGMA’s 2nd Annual Factory Awards Dinner at Summit Parkview Hotel on October 24th. For questions related to sponsorship and purchasing tickets contact: [email protected]
Award applications and information are available here:
Call for application (Myanmar language)
SMART Award 2015 Call for application (English)
SMART Award 2015 _ application form (English)
SMART Award 2015 _ application form (Myanmar language)
On June 29th the Ministry of Labour, Employment and Social Security announced its intention to set a minimum wage for Myanmar at 3,600 kyats/day. ($3.25 USD at the current official exchange rate).
The Myanmar government has invited comments on this rate during the first two weeks of July before details are finalized, including any regional variance mechanism. A final figure is expected to be submitted to parliament for approval in two months time.
The newly proposed minimum wage figure represents a more-than doubling of the industry average introductory wage for unskilled workers. For some factories, 3,600 kyats represents 4.5 times what is normally paid to unskilled workers who are participating in induction training. As such, this represents a colossal change for the garment industry. The impact of the proposed wage on potential investment has been much debated.
Myanmar has the highest overtime pay in the region, with workers entitled to receive 200% remuneration for overtime hours. As well, Myanmar’s overtime pay kicks in after 44 hours per week instead of 48 hours. 48 hours/week is the norm for manufacturing jobs in all other countries in the region. As such, a higher minimum wage in Myanmar produces a larger add-on effect when factories operate on overtime.
The garment sector employs more unskilled and low-skills workers than any other industry in Myanmar. MGMA’s member factories presently employ approximately 230,000 people and jobs were created during 2014 at a rate of roughly 5,000 new jobs added per month.
On June 20th MGMA is hosting experts from TÜV SÜD for a seminar on the “Restricted Substances List in Apparel Industries – Introduction & Current Trends“. See attached flyer (Myanmar language). This training will be in English with simultaneous translation to Myanmar. Myanmar slides will also be available. This course is useful for factory Quality Control Managers and Factory Managers & Owners.
MGMA RSL Lecture Info English
Also, the 4th Annual Garment & Textile Machinery Exhibition will be taking place from June 26th to June 29th (9:00am-5pm). All visitors are welcome to participate in this event at Myanmar Event Park.
On June 26th from 6pm-8:30pm MGMA is hosting a networking reception at Padonmar Restaurant for any companies interested in business-to-business linkages. Tickets are on sale in the MGMA office. You may also RSVP and pay for your ticket at the door by emailing [email protected] or by calling MGMA at +95 1-214829. Participating companies include a couple dozen garment factories, several brands and various suppliers.
June 26th Monsoon Meet-up information
As reported by Just-Style.com, United Parcel Service (UPS) – the world’s largest package delivery company, also specialized in supply chain management services – is expanding its operations in Myanmar. UPS has offered air and ocean freight services in Myanmar since August, 2014. New services include the introduction of contract logistics and express delivery.
Read the full story here:
The Canadian government re-instated GPT and LDCT (General Preferential Tariff and Least Developed Country Tariff) entitlements for Myanmar on March 13th, 2015.
Canada first announced its intention to re-instate GPT and LDCT entitlements for Myanmar in an announcement in the Canada Gazette on November 8th, 2014. This announcement allowed for a 30 day public comment period on the proposed change. The Canadian Embassy stated that only supportive and favorable comments were received in response to the proposed policy change.
Similar to the United States, Canada previously enjoyed robust trade in garments with Myanmar before a period of Western sanctions and international isolation provoked a collapse in orders starting in 2002. In 2001, Canada imported $29.5 million (USD) worth of garment products from Myanmar, but this fell to practically zero after Canada imposed sanctions on Myanmar in 2007.
Even without preferential trade incentives, Canada’s garment imports from Myanmar rebounded in 2014 to reach $4.2 million (USD). However, with the re-instatement of GPT and LDCT Myanmar has suddenly become a very attractive sourcing location for Canadian importers of apparel products who wish to take advantage of this zero-tariff trade policy.
“By eliminating tariffs on imports from Myanmar, the Government of Canada aims to increase trade and build stronger ties between our two countries” wrote Canadian Ambassador Mark McDowell in a letter sent to the Myanmar Garment Manufacturers Association explaining the new policy.
Canada has now followed the European Union in promoting duty-free & quota free trade with Myanmar. The EU included Myanmar under its “everything but arms” scheme in mid 2013 to boost imports from Myanmar into the EU. The EU’s abolishment of tariffs and quotas for Myanmar has contributed to a massive uptick in orders from EU brands and retailers resulting in a near doubling of garment exports from Myanmar to the EU in the period from 2012 to 2014.
For news coverage on this topic: Canada Abandons Tariffs for Myanmar Imports
Over a dozen European brand representatives speaking with MGMA factory members at a meeting on the new Code of Conduct.
On March 24th over one dozen European brands visiting Myanmar as part of an EU trade delegation organized by SMART Myanmar participated in a discussion with MGMA’s manufacturers on next steps for the MGMA Code of Conduct. Input from international buyers was appreciated and generally was very supportive. Lars Doemer, Global Sustainability Manager for Lindex called the Code’s voluntary status “a positive thing because it shows ownership”.
This statement was issued as an outcome of the discussion:
MGMA Statement about CoC Discussion
On March 17th The Myanmar Garment Manufacturers Association delegation to China of 19 factory owners and managers met with approximately 70 members of the China Chamber of Commerce for the Import & Export of Textiles and Apparel in Shanghai. After a short presentation on investing in Myanmar by MGMA Executive Board Member Dr. Min Gaung Oo, the two groups met for business-to-business networking and informational exchange.
The MGMA delegation in China has been partly sponsored by CBI – a Dutch organization dedicated to promoting imports from responsible manufacturers in developing countries. In addition to the meeting with CCCT, MGMA’s delegation is attending the InterTextile Exhibition as well as visiting several textile factories.
On March 11th-13th MGMA represented Myanmar’s garment industry and its several hundred producers with an exhibition booth at the Bangkok International Fashion Fair & Bangkok International Leather Fair.
With exhibitors present from about one dozen countries, MGMA promoted Myanmar as an increasingly competitive location within ASEAN for buyers seeking high-quality, ethically sourced garments. A random sample of products was on display from MGMA’s 300+ member factories. Products exhibited included: casual trousers, skiwear & performance outerwear, padded jackets, organic wool sweaters, men’s suits, ladies 3/4 length coats and different styles of undergarments.