How Can Myanmar Arrive at a Fair Minimum Wage?

By The Irrawaddy 15 February 2020

Ye Ni: Welcome to Dateline Irrawaddy! This week, we’ll discuss the minimum wage in Myanmar. General Secretary U Thet Hnin Aung of the Myanmar Industries, Craft and Service Trade Union Federation (MICS) and Assistant General Secretary Daw Phyo Sandar Soe of the Confederation of Trade Unions Myanmar (CTUM) join me. I’m The Irrawaddy’s Burmese editor, Ye Ni.

There have recently been protests by workers regarding the minimum wage. Daw Phyo Sandar Soe, what are the latest developments in setting a new minimum wage?

Daw Phyo Sandar Soe (PSS) : The Minimum Wage Law was enacted in 2013. Since then, we have learned how to establish tripartite mechanisms involving the government, employers and employees to set a minimum wage. We had intense debates on the minimum wage in 2014. The minimum wage was set for the first time in Myanmar the following year. We have studied structures for the minimum wage; that is, whether to set the universal minimum wage at the national level or to set the wage according to the types of industry or location of the workplace. And we discussed what factors should be considered in setting the minimum wage. I am talking about the definition of the minimum wage because its definition stated in the 2013 Minimum Wage Law is not a definition we agree on. It is defined as the minimum wage set by the Union government. So we worked to have a definition. And the minimum wage was adjusted for the second time in 2018. Speaking of the latest developments in setting the minimum wage, the tripartite discussions have never been able to reach a consensus over the definition of the minimum wage. ILO [International Labor Organization] Convention 131 says the minimum wage is the amount that can meet the basic needs of the employee and their family. But in Myanmar, there are different definitions. The minimum wage definition applied in 2015 and 2018 was that the amount meets the basic living costs of an individual employee. When we, the trade unions confederation, proposed a rate based on our surveys on living costs, at the tripartite meetings, the government and the employers could not deny it. We are conducting surveys on the living costs of employees and there are also ongoing surveys being conducted by the three groups. The government and employers cannot deny that our proposed rate is reasonable. But the problem is affordability for the employers. We always suggest that if we conduct surveys on the consumer price index (CPI), we should also survey affordability for employers.

But this year again, employers oppose the tripartite groups conducting surveys on affordability. They said they would conduct surveys themselves. This shows a lack of transparency. If no one can deny the rates we propose are reasonable, then all of this depends on the affordability for employers. Both lawmakers and the government have failed to push for surveys on affordability for employers. So without any proof, we cannot accept employers saying that they cannot afford to increase wages.

YN: From the news reports, it appears that the Upper House committee chairman stands by the employers. Although the Upper House is not the government, it still represents the government. And employers said they would conduct a survey. How can we expect the tripartite mechanism to progress against this backdrop?

U Thet Hnin Aung (THA): The Parliament is taking steps to amend the Minimum Wage Law. Let’s examine the background of the law. Labor organizations started to form after the 2010 election. Labor movements reached their peak around 2012 and 2013. Most of the demands concerned pay increases. The Union Solidarity and Development Party government designed a minimum wage law, saying it was necessary if labor disputes were to be settled peacefully. So the government designed the law at the time when labor movements were at their peak. We had continuous discussions in the following years. And the rate was fixed at 3,600 kyats [US$3.60 at the time]. So workers did not need to go on strike. But then, as you know, commodity prices have since increased. Since 2013 there have only been a few disputes concerning pay increases. And we could convince the government and employers to increase the minimum wage from 3,600 kyats to 4,800 kyats [in 2018], citing the weakened exchange rate and inflation. Lawmaker U Kyaw Htwe submitted a proposal to the Upper House to amend the Minimum Wage Law on Jan. 30. He said he had seen labor strikes before the new rate was due every two years. This is not true. There are tripartite committees not only at the national level but also at the regional and state level. We have asked the regional- and state-level committees not to raise the issues of high commodity prices only when the new rate is due. The government increased electricity bills all of a sudden. It is a serious blow to employees. And while the workers were preparing to demand pay increases in response to the electricity price hike, we told the [Labor] ministry to discuss the minimum wage. Not so long after the electricity prices were increased, the ministry formed a national-level tripartite committee. The MICS, CTUM and other labor rights organizations could avert the potential labor strikes for a pay increase. Two times previously, there were various surveys conducted by organizations. But this time the trade unions prepared the survey questionnaire collectively. We plan to send that questionnaire to the employers so that they can include their production costs and the affordability [of pay increases]. Then we will hold tripartite discussions together with the Parliament on those surveys. The MICS are working for this to happen. So far we have got the results of our surveys that we trade unions did collectively. And we have also sent them to employers. But then the proposal to the Parliament suggests against adjusting the rate every two years. So we feel like we have lost.

YN: There is a widely held view that to boost the economy, Myanmar must attract foreign direct investment (FDI) and that maintaining cheap labor is an incentive for FDI. Without it, we are told, the investment will go to factories in Bangladesh and Cambodia. What is your view?

PSS: We need to think about why we invite FDI. The reason is for national development and the creation of jobs. The country has a working population of 33 million. There is a need to create jobs for them. This is the reason why we invite FDI. Some investors call themselves ethical for investing in poor and developing countries like ours for their development. In that case, there are common interests. Business and human rights are always related. The government, employers and employees must determine whether to invite ethical investors or those who will exploit us. Under free trade agreements and memoranda of understanding on free investment, tax exemptions are offered as an incentive for potential investors. For example, regarding foreign investment in the labor-intensive garment industry, it is a common practice that investors make investments for around 30 years before moving to invest in other industries. So we need to think about how to reap benefits for our country from the garment industry during those 30 years. If the investors call themselves ethical, they should offer a level of pay that meets the living costs of employees and their families. If not, when the investors leave after 30 years of enjoying tax exemptions and exploiting a country where the minimum wage cannot even be fixed, what can we really get from them? The workers will be left with occupational illnesses and low standards of living. I worked in a garment factory. Each day we had exposure to cotton dust and had to maintain the same position for hours and endure muscle stiffness. Some people think there are few health impacts on workers in the garment industry. But there are occupational hazards. So after 30 years, the workforce will be left with health issues. And they never enjoyed decent pay during that period and the government has exempted their employers from taxes. And there will also be environmental impacts. So we need to think about what benefits the country can receive.

YN: Do you see anything encouraging, Ko Thet Hnin Aung?

THA: [The proposed amendment to the Minimum Wage Law] calls for a five-year term for the national-level minimum wage committee, which is currently formed every two years. So this will contribute to the stable functioning of the committee. Another proposed amendment suggests the national committee explains its activities on the minimum wage to Parliament once a year. These recommendations are good. The law describes the risk of occupational hazard as a factor to consider in determining the minimum wage. But that provision will be scrapped in the proposed amendment to the law. This means the risk of occupational hazards will not be considered in setting the minimum wage. We are upset about that. Various factors must be taken into consideration in setting the minimum wage. Another problem is that employers view the minimum wage as the maximum amount and that they should pay no more. Article 12 of the law says employers can pay higher than the minimum wage. But that part is being scrapped by the amendment bill to the law. So that amounts to saying employers need not pay higher than that amount. Article 7(a) of the current law says the minimum wage should meet the needs of the employee and his family. Again that part is being scrapped. So we assume Parliament thinks the minimum wage means the wage for an individual. This is a real cause for concern because this will lead to an increase in child labor. And if both parents have to work, who will take care of the children? And how will we support our parents? So scrapping that article is against the ILO Convention, which says a minimum wage should meet the needs of the employee and their family. That article is already enshrined in our law, but then they are now working to scrap it. So we are confused about the direction. And again the amendment bill also suggests scrapping jail sentences in Article 27. We have reported that a major company only pays 100,000 kyats ($69) as a basic salary to its employees. That is mentioned in the employment contract and the Department of Labor has approved it, ignoring the fact that the minimum salary should be 148,000 kyats ($102). If there is no imprisonment used as a penalty, employers will pay what they wish. Again the amendment bill suggests scrapping Article 34, which threatens prosecution against anyone who violates the Minimum Wage Law. We are on the national-level minimum wage committee. We are obliged to set a new rate in two years. The law allows anyone to sue us if we cannot finish setting a new rate within two years. But that provision is scrapped in the amendment bill. And finally, [Upper House labor affairs] parliamentary committee chairman U Kyaw Htwe argued against the mandatory adjustment of the minimum wage every two years, saying it was not convenient for employers to recalculate the rate every two years. That’s not what he should be worried about. That’s a management issue for employers to deal with. Even if the law says the minimum wage must be adjusted every year, employers should comply with it. The excuse he gave is weak. The amendment bill does not reflect the wishes of the confederation. [Lawmakers] have met us twice [while preparing the amendment bill]. Whenever we meet, we make recommendations and explain the situation on the ground. But then our recommendations were not included when the bill was drafted. The original purpose of the law is to reduce labor disputes. It appears that the NLD [National League for Democracy] thinks the reverse and the law is the cause of employees taking to the streets every two years. That’s why it calls for adjustments only as appropriate and not every two years. This is unacceptable. The joint bill committee will review the amendment bill and it said it would meet us in reviewing the bill. The NLD government and the NLD-dominated Parliament increased electricity bills. I would like to request them not to ignore the employees, as they know that the employees are in hardship. I want the NLD to have the political will to set a fair minimum wage in consultation with labor organizations and trade unions. And I want the NLD to approach employees with political goodwill. If the amendment bill is to be put to the vote in Parliament even though we have said that it does not reflect the wishes of the trade unions confederation and can cause a lot of trouble for employees, I ask lawmakers not to vote in favor. Finally, it is time the NLD government met us, otherwise, industrial relations will not be stable. Without stable industrial relations, it will be hard to attract foreign investors. The amendments will have serious impacts on employees. So I urge lawmakers to vote against it.