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Shuttered Myanmar Garment Factory Forced to Pay Lost Wages

An apparel factory in Myanmar’s Yangon region that shut down in late December has been forced to pay up, awarding its 300 employees lost wages.

The Hong Yun garment factory, located on the Shwe Pyi Thar industrial estate, shuttered on Dec. 28 after just eight months in operation, the Myanmar Times reported. The manufacturing facility’s Chinese owner reportedly told authorities that the decision to close hinged on order cancellations from global buyers.

According to Federation of Garment Workers organizer Ma Hla San Yi, Hong Yun employees believe the factory’s owner was actually seeking to start a fresh new business under a new name, ridding himself of the financial burden of his current unionized workforce. Yi said that after the factory was closed without notice, the workers, the Federation, officials of the Ministry of Labor, Immigration and Population and the country’s General Administration Department held negotiations with the employer to try and recover workers’ lost wages for the month of December.

The factory owner’s passport was seized during these talks, Yi said, so that he could not flee the country. In a meeting on Dec. 29, the factory owner agreed to pay workers for the month of December and the first five days of January, along with an extra month of wages as severance. The sum amounted to 200 million kyat (about $152,000)—far more than the 22,500,000 kyat ($17,000) that the factory manager had originally demanded to pay each of their 300 workers 75,000 kyat (about $57) in wages and severance.

While workers are pleased with the outcome of the intervention, the victory is bittersweet, Yi said. “The Federation is glad the workers got the money they deserved but was sorry the factory was shut down and the workers lost their jobs,” she said.

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According to some of Myanmar’s garment sector union officials, factories have been using the Covid crisis as an excuse to lay off workers. Phyo Sandar Soe, assistant general secretary of the Confederation of Trade Unions in Myanmar (CTUM), told Sourcing Journal in December that while the country’s 600,000 garment workers are aware of the challenges factory owners are facing in light of canceled orders, they believe some are circumventing unions by opening up shop at new locations with fewer, non-union workers.

Another strategy Myanmar’s factory owners have been employing is to shutter facilities temporarily so they don’t have to compensate workers for lost wages, she said. “This keeps the workers waiting in the hope they will be re-hired when the factory opens,” she said. “But the owners simply restart another factory so they can avoid the whole issue.”

According to the World Bank, the second wave of coronavirus infections this fall is having a more severe effect on the country’s economy than the first, exacerbating some of the issues that garment workers are continuing to face.

The pandemic and efforts to contain its spread have weakened both supply and demand for Myanmar’s exports and services, disproportionately affecting manufacturing, retail, travel and leisure-related industries. Consumption and investment have slowed, while business operations have been disrupted due to a lack of available labor and inputs, the organization wrote in its Myanmar Economic Monitor in December.

While Myanmar’s economy grew by almost 7 percent from 2018-2019, growth contracted to just under 2 percent during the 2019-2020 fiscal year. The World Bank believes that growth is expected to hover around 2 percent during 2020-2021, with the possibility for a return to a 7 percent average growth rate in the medium term, “supported by new investments in industrial and urban development projects, roads, and communication and power infrastructure.”

Digital technology could boost productivity across a number of categories, it wrote, and a gradual resurgence of manufacturing is likely to take place in time.

“However, risks to growth remain high,” it wrote, if waves of infections continue to pummel the small, developing country. A “more prolonged global slowdown” could also have devastating impacts on Myanmar’s economic outlook, it added.