New Minimum Wage Brings Trouble to Garment Industry: Garment Association President

The new minimum wage is causing trouble for the garment industry, U Myin Soe, President of Myanmar Garment Manufacturers Association, said during a press conference held on July 10 at UMFCCI.

“We all know that the new minimum wage is now set at K4,800. It’s a 33 percent hike compared to the previous wage of K3,600. It causes a financial struggle for a business when wages are increased by 33 percent in one major change. Everyone knows that it is really hard for a customer when prices are suddenly raised by 33 percent. Therefore, I want to urge you to consider if K4,800 is reasonable,’’ he said.

There are currently over 600 garment factories providing more than 500,000 job for women, but according to sources in the industry, there are reports of possible shutdowns of garment factories as a way to mitigate the wage increase.

Myanmar’s garment industry has been booming since February 2014, after being awarded Generalised Scheme of Preferences (GSP) benefits to Myanmar by EU members in July 2013. The GSP allows vulnerable developing countries to pay fewer or no duties on exports to the EU, giving them vital access to the EU market and contributing to their growth.

According to those in the industry, much of the work done in the factories is manual labor. This makes it hard to have even a 10 percent increase in production rates, despite the increase in the minimum wage. So some may have the viewpoint that an increase in the minimum wage is like making an investment without a return.

The garment industry is connected globally, which can have both good and bad consequences. In our case, if the increased cost of manufacturing the items — the minimum wage increase — is passed on to the buyers when they go to purchase goods, then the threat is that they items produced from neighboring countries such as Cambodia, Vietnam, Indonesia and Bangladesh, he added.

Source: Myanmar Business Today

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