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Myanmar Garment Sector ‘Unlikely to Recover’ if Brands Cut and Run

One-third of Myanmar’s garment factories—200 facilities in total—are likely to shutter due to “economic instability” as a result of the military takeover in February, labor activists in the troubled Southeast Asian nation say.

The industrial district of Yangon has submitted a proposal to Myanmar’s labor ministry suggesting as much, Moe Sandar Myint, leader of the Federation of General Workers in Myanmar, told the Democratic Voice of Burma. The move, she noted, could plunge the country’s 700,000 garment workers into further economic distress after a year of pandemic-induced shutdowns, layoffs, pay cuts and wage theft. Most of their legal protections and benefits had already been stripped following the ousting of Aung San Suu Kyi’s quasi-democratic civilian government. Any delay in the restoration of business as usual could push workers past the edge of starvation and destitution.

A number of brands, including Bestseller, C&A, H&M, Primark and United Colors of Benetton, suspended their production in Myanmar shortly after the coup mired the nation in escalating violence and bloodshed from the junta’s crackdown on pro-democracy protestors. Bestseller, H&M and Primark have since resumed sourcing, citing a desire to protect the livelihoods of the workers who made their clothes. Labor activists, on the other hand, say the companies are prioritizing profits over human rights, particularly since they made their decisions without consulting with unions and worker leaders. There’s also the fact that some of the factories they use are located inside industrial zones linked to the military.

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“Overall, it is deeply concerning that brands are continuing their sourcing from Myanmar without any preconditions,” Bent Gehrt, field director for Southeast Asia at the Worker Rights Consortium, a Washington, D.C.-based think tank, said earlier this month. “With the ruthless junta still in power, and some union leaders under arrest or in hiding, there is no guarantee that workers’ rights will be respected at their suppliers in Myanmar. On the contrary, given that the unions are no longer able to operate effectively, it is easy to imagine that factories will take advantage of this to increase violations of workers’ basic rights with the full support of the brutal military and police apparatus currently suppressing democracy in Myanmar.”

A number of workers have also insisted that Western powers apply financial sanctions that would bleed the junta dry and reinstate the civilian government.

“We all think that if we can stop the economy, that it will really hit the military government, and we think it is the solution to solve the problem we face,” Ko Aung, a member of the Federation of General Workers Myanmar, said at a press conference organized by grassroots group Remake in March.

‘We cannot operate’

Even with some orders coming in, however, factories are not only struggling to stay open but some have already preemptively closed. Heng Mao (Myanmar) Garment Co., a Chinese-owned apparel factory in Yangon’s Hlaingthaya Township, blamed operational challenges such as economic sanctions, raw-material shortages and the Covid-19 crisis for its closure, which it announced on social media over the weekend. While its 800-plus workers would receive some form of compensation, Heng Mao said it could no longer keep them employed.

One businessman told the Democratic Voice of Burma a similar tale of woe. “We cannot operate, purchases have stopped, money can no longer be transferred and raw materials can no longer be purchased through mobile banking,” he said.

The coup has created safety, logistical and banking challenges for all businesses, the European Chamber of Commerce in Myanmar, an industry group whose members include Besteller, C&A, H&M and Lindex, said in a status update last month. One-quarter of workers across all industries have lost their jobs, a preliminary survey found. The situation, the organization said, is “likely to significantly worsen” by the end of June.

“European companies now need to decide whether to continue to source from Myanmar,” EuroCham Myanmar said. “If not, our suppliers’ factories have informed us that they will close, and more workers will be made redundant and skilled teams in factories will disperse. Inevitably, sourcing will relocate to other countries, and the sector is unlikely to recover for years.”

Roughly a third of Myanmar’s total exports are textiles and apparel, which racked up $6 billion in 2019, according to trade data. More than half of the merchandise is destined for the European Union.

The question to stay or leave isn’t an easy one to answer, even if logistical issues are resolved and links to the military are avoided, the organization admitted. Brands that remain must work with their suppliers to ensure workers are protected through ongoing human-rights due diligence and social dialogue. If they choose to exit, they must push suppliers to meet their legal obligations.

On Monday, ACT (Action, Collaboration, Transformation), a multi-stakeholder initiative on living wages whose roster includes Asos, Besteller, H&M, Primark and Zara-owner Inditex, offered its members guidance on how to communicate with suppliers about letting go of workers responsibly.

“Workers who have been absent from work for more than three consecutive days for safety reasons can only be terminated upon payment of adequate compensation (severance pay), or, if possible, be granted unpaid leave for a period agreed between the worker and the employer,” it said.

In the meantime, the situation in Myanmar grows bleaker by the day. Security forces have killed more than 870 civilians to date, according to the Assistance Association for Political Prisoners, a local monitoring group.

In March, soldiers allegedly shot dead at least six workers at Xing Jia shoe factory in Hlaingthaya following a wage dispute. The owner, a Chinese national, summoned the military after conflict erupted, according to local media, although the Global Times, a Chinese Communist Party-run news outlet, has dismissed the incident as “100 percent a rumor.”

But witnesses have insisted otherwise. Troops rounded up 700 workers onto prison transport trucks, they said, and when people demanded their release, the military responded with excessive—and deadly—force.

“The soldiers and police came into the factory and surrounded it,” one local told Myanmar Now. “The police slapped a girl who was the leader of the workers. When she hit back, they shot her.”