Myanmar has for the first time set a minimum wage for garment factory workers. The eight-hour daily minimum wage will be applied to businesses with more than 15 workers in all regions and states. It’s based on a five-day work at eight hours per day, and Saturday work at four hours per day.

This represents an approximate doubling of the average base pay for new workers. Myanmar pays double for overtime and overtime kicks in at 44 hours per week rather than at 48 hours, as in most neighboring countries. Hence a higher base pay has a larger add-on effect when factories operate on an overtime basis.

Myanmar currently has the second lowest garment sector wages in South and Southeast Asia, with Bangladesh the lowest. The changes mean that while Myanmar will still have more cost-competitive labor rates than Cambodia and Vietnam, it will be higher than Bangladesh.

One of the biggest challenges has been to set a wage that ensures Myanmar remains competitive as a sourcing destination, but reduces the likelihood of strikes by ensuring workers have enough to live on. The country has set a target of earnings $2 billion from garment exports by 2016 from its 275 large, garment exporting factories.