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Myanmar wage hike may not benefit workers

Garment workers in Myanmar are unlikely to benefit from recent increase in minimum wages. Reason: factories have upped production targets, meaning workers will have to work harder or longer hours. Taking into account inflation rates, increasing costs of living and cut production bonuses, workers may earn absolutely nothing more than before the minimum wage was introduced.

Several garment brands and retailers source products from Myanmar. They have been asked to take into account the revised minimum wage rate in their cost calculations, enabling suppliers to pay workers at least the new legal minimum wage.

Risks to growth emanate mainly from ongoing ethnic tensions. Uncertainties in the global environment related to trade and energy prices could continue to weigh in on investor sentiment. Exchange rate pressure and weather conditions that might lead to supply-side disruptions will continue to be key sources of inflation uncertainty.

Vulnerabilities associated with poor asset quality and thin capital buffer could increase further. With the advantages accruing from preferential trade agreements and low labor costs, Myanmar can utilize the time window to address the key constraints in improving both the environment for domestic manufacturing as well as the efficiency of trade logistics. Myanmar’s economy grew by 6.8 per cent in 2017-18, up 5.9 per cent from the previous year.

 
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