After months of back and forth between factory owners and labor unions about a new minimum wage, Myanmar’s government has agreed to go forward with the 3,600 kyat ($2.82) daily pay rate for workers, and the move is expected to fuel foreign investment in the low cost country and grow its fledgling garment sector.
The new minimum wage, which works out to roughly $67 a month based on 8-hour workdays, six days a week, means Myanmar is well ahead in winning the low-cost race as workers in neighboring Vietnam earn between $90 and $128 per month, according to the International Labour Organization, and Thai workers take home up to $237 on average every month.
Myanmar’s garment industry was one of its fastest growing sectors in the ‘90s and early 2000s before the U.S. imposed sanctions on the country and revoked its trade privileges during its military rule. Since then, companies slowly started crawling back to the country and making careful investments to test the waters.
Gap was the first big apparel brand to start sourcing there last year and the retailer uses two factories in the country’s commercial capital, Yangon, to make product for its Old Navy and Banana Republic brands.
Swedish fast fashion retailer H&M is also sourcing in Myanmar and has been voicing its support for the nation’s efforts to implement a minimum wage, noting in a July statement, “In setting a minimum wage level, we advise that the government set a uniform level across all industries. If the garment industry wage levels are lower than other industries, it will not be able to attract and retain a skilled labor force, which it needs to develop and grow into a thriving economic driver.”
Myanmar’s government imposed the new minimum wage in June, but battles between factory owners and worker representatives stalled implementation as some factory owners threatened to close their facilities if the wage was put in place as they claim they won’t be able to pay the rate.
Factory owners and workers were far apart in their wants, with the former seeking a 2,500 kyat daily rate ($1.96), the latter a much higher 5,600 ($4.39).
The announcement of the new minimum wage—which is slated to take effect from Sept. 1—came Saturday and any push back from factory owners remains to be seen.
Myanmar exported $24.5 million worth of textiles and apparel to the U.S. for the year ended June 2015, a 237 percent increase over the $7.3 million the year before.