Labor realities in Myanmar!

Mar15, 2012

The New Labor Organization Law became effective on 9 March 2012 in Myanmar.

This law replaces the old law that banned labor unions (organizations). It allows labor

organizations and strikes staged by them with a three-day advance notice for

private sector workers and 14-day advance notice for public sector employees. This,

the International Labor Organization says, is a step forward. Hopefully it will help

promote employees¡¦ rights.

Myanmar has a tangle of laws related to labor. They include:

ƒÞ Workmen¡¦s Compensation Act (1923)

ƒÞ Trade Disputes Act (1929)

ƒÞ Payment of Wages Act (1936)

ƒÞ Employment Statistics Act (1948)

ƒÞ Minimum Wages Act(1949)

ƒÞ Employment and Training Act (1950)

ƒÞ Leave and Holidays Act (1951)

ƒÞ Factories Act (1951)

ƒÞ Oilfields Labor and Welfare Act (1951)

ƒÞ Shops and Establishments Act (1951)

ƒÞ Social Security Act, (1954)

ƒÞ Employment Restriction Act (1959)

ƒÞ Labor Organization Law(2012)

   Most of these laws, although still effective, are outdated and do not stand the test of the changing economic and working reality even in Myanmar that lags behind many other countries in many aspects. They have been updated not only in terms of minimum wage, working hours and social security payments but also occupational safety.

     The latter is ignored by the majority of Myanmar companies as can be seen on

construction sites in Yangon where construction workers do not wear any protective clothing or equipment because it is their responsibility, not employer¡¦s, to provide it.

                     "Who these laws apply to and what rights do they stipulate?"

    The labor force (here defined as employed population) in Myanmar, is estimated by the CIA at 32.5m as of 2011. Ac-cording to CIA, 70% of labor force is occupied in agriculture and related activities, 23% works in the services sector and 7% is employed in industry. According to Myanmar’s official statistical yearbook for 2009, total employed population in the country was 15.83m people (the estimate is based on a 1990 labor force survey). This source says that the distribu-tion of the employed population is as follows: agriculture – 56.47%, industry including mining, manufacturing, and elec-tricity, gas and water-12.49%; construction – 2.64% and services including logistics, financial institutions, trade, hotels, restaurants and social services – 28.4%. The unemployment rate, according to CIA, stood at 5.5% in 2011.

   The minimum wage in Myanmar is set by a minimum wage council, according to the Minimum Wages Act of 1949. The minimum wage for a public sector employee has been set at 15,000 kyats ($18) plus allowances. This sector’s minimum wage may change as the parliament has passed a bill to increase the minimum wage by 30,000 kyats ($37) in FY 2012-13. The minimum wage for private sector employee is 500 kyats ($0.62) per day which may be supplemented by various subsidies and allowances.

Working hours vary from sector to sector. According to Myanmar’s statistical yearbook for 2009, standard working hours were 44 hours per week. However, while government employees enjoy a 35-hour workweek, the 1951 leave and holidays act stipulates 48 hours of work per week for employees of “companies, trading centres, factories”, 44 hours per week for employees of “oil field and mines” and 40 hours per week for employees involved in “underground mines” (source: to do business in Myanmar, http://www.myanmars.net/myanmar-business/main.htm#Working_Hours).

     The Social Security Act 1954 stipulates that “at least 4% of insured wage should be contributed to social security scheme in the ratio of contribution 2.5 by employer: 1.5 by employee. The workers insured under the Act are entitled to free medical care, cash benefit for sickness, maternity and disability, funeral grants and survivors’ pension. Social Security Act provides for 66.6% of wages to be payable for a period of 12 weeks of maternity leave (the maximum maternity leave without losing employment is 26 weeks); 2/3 of wage to be paid in case of employment accident for the maximum dura-tion of 52 weeks (a longer period is classified as permanent disability and there is a special benefit or pension allocated in this case); and a total of 40,000 kyat ($50) to be paid as funeral grant to families of a “deceased insured worker”. The payment of social security benefits has increased from K381.6m in FY2000-01 to K1,260.37m (about $1.5m in the cur-rent exchange rate) in FY2008-2009 (statistical yearbook 2009).

      These are all statistics and legal promises. The realities of the labor market in Myanmar may uncover quite a significant disparity between demand and supply. While Myanmar has been tagged by many sources as a country abundant in la-bour resources, the majority of workers are unskilled or low-skilled. At the same time, university graduates face the problem that their university majors (like chemistry, geography, physics) are not in high demand among employers and if they find employment according to their field of study, it is low-paid. Alternatively they can work as secretaries, house maids, drivers, etc. So one side of the coin is unskilled labor and the other one is overskilled and mismatched labor. This does not concern the very small educated elite whose skills are in high demand on the market.

   This market trend has been supported by replies from HR specialists and employment agencies. According to an HR spe-cialist at a large company in Myanmar who didn’t want their names to be disclosed, vacancies that were most difficult to fill involve senior managerial-level work. The hunt for HR and marketing specialists is specifically long, the source said. This may be explained by a lack of proper formal training provided in Myanmar in these fields. Marketing and HR are new “horizons” for Myanmar so many employees learn from work experience and companies tend to hold on these em-ployees so there is little turnover in these categories of managers. At the same time, administrative support positions are filled quite quickly. Accountants are quite easy to find, the HR specialist said.

     In terms of salaries, several employment agencies that preferred to remain anonymous for this report, have put foreign companies as the highest paying employers. Managers with an MBA degree could expect a salary in the range of K500,000 to 1m per month ($580 to $1,250) depending on years of experience. Accountants, which is apparently a very popular occupation in Myanmar where tax collection is yet to be improved, can earn anywhere from K300,000 to K500,000 ($240 to $580).

      So while FDI may be the biggest driver of the Myanmar economy, foreign companies may be the biggest driver of sala-ries and general improvements in the labor market in the country. More and more foreign companies with true interna-tional standards working in Myanmar will train managers and skilled employees. Their demand will also hopefully be reflected in the change in higher education patterns.

Ref:thuraswiss