Towards a new normal

What must change in the Myanmar garment industry post-Corona crisis – a research into the labour conditions of two factories

The Corona virus has left a path of destruction through the Asian garment industry. Orders were cancelled, factories closed down, workers sent home and there have been huge financial losses. As a result, destitute workers have been left in incredible misery with severely decreased income or none at all, and hardly any support.

The Myanmar garment industry and its workers have not been spared. Here too, foreign buyers cancelled their orders, factories closed, and workers have been the ones to pay the price.

Publication / February 5, 2017

The Myanmar Dilemma

Can the garment industry deliver decent jobs for workers in Myanmar?

The world is eagerly awaiting the end of the crisis, for things to go back to normal. We should however realise that even before the Corona crisis broke out, the situation for garment workers in supply chains was far from ideal. On the contrary, before the Corona breakdown, workers had already been hard-hit. SOMO, as well as other organisations, have reported on deplorable sub-standard labour conditions in the export-oriented garment industry in Myanmar: depressingly low levels of unionisation, low wages and unlawful deductions, long working hours with excessive overtime, unpaid overtime, child labour, no employment contracts and a lack of grievance mechanisms.

Photo: @Martje Theuws | SOMO

Recent field research done by SOMO in collaboration with a Myanmar-based labour rights group again shows how bad working conditions were pre-Corona Pre-corona garment production in Myanmar
Since the country was opened to the global economy in 2012 after decades of political and economic isolation, the garment industry was one sector that emerged and grew rapidly. In only a few years, hundreds of Cut Make Pack garment factories sprang up, employing around 700,000 workers. In this system, raw materials for garment production such as yarn, fabrics, buttons etc. are not domestically procured, but provided for by the foreign buyers through their own financing. The greater Yangon area is the most important production hub, including the Hlaing Thayar Industrial Zone and the Thilawa Special Economic Zone. Despite assurances made by big brands to do things differently in the budding Myanmar garment industry, promising to contribute to sustainable economic development and fair employment, it very quickly became clear that foreign companies operating in Myanmar had the same predatory attitude as we have seen in other low-wage manufacturing countries in Asia. A considerable percentage of garment factories in Myanmar are partly or wholly in the hands of Asian manufacturers. Garment production is for the most part export-oriented. The EU, the US, Japan and South Korea are important export markets for Myanmar-made garments. .

In this article, data are presented on key labour issues in two garment factories, Leader One and Dong Yi. From intensive interviews with 39 workers, a grim picture of the pre-Corona crisis situation arises. Things cannot go back to the way they were. Let the Corona crisis be a turning point to finally improve the lives of workers in the garment supply chain, starting with these two factories in Myanmar.

Dong Yi and Leader One

Dong Yi and Leader One are foreign-owned garment factories. Both enterprises are member of the Myanmar Garment Manufacturers Association (MGMA). The factories produce for foreign brands, including Bestseller Bestseller sources from both Dong Yi and Leader One, see source 1 and Source 2. , C&A C&A source from both Dong Yi and Leader One, see source. We sent a draft version of the report for review to both factories and all buyers that we came across. Only C&A responded and explained that both factories had been visited and audited twice within the past year and a half. C&A accounts for 10% of Dong Yi’s production and for 5% of the production of Leader One. C&A partially recognises the problems and risks flagged by SOMO. In November 2019, ‘lack of overtime payments was detected at Dong Yi, primarily for temporary workers’. Additionally, the C&A audit found that some temporary workers did not have the correct contracts as per law. At Leader One, during the first audit in 2019, ‘a gap of 8% between what it was supposed to be paid and what was actually paid during overtime was found’. C&A reportedly engaged with the factory and the issue was rectified. When C&A carried out another audit in November 2019, they did not find any issue with regard to overtime and Next Next sources from Leader One. See source . Main source for the information is the Open Apparel Registry (OAR) where supplier lists of garment companies are uploaded. Interviewed workers also mentioned a number of other brands, but this we could not confirm with other sources.

Tiresome paper work

When applying for a job. workers need to present a slew of documents .These include a recommendation letter from the police, a recommendation letter from the Ward Administrator; a labour card; an ID card; a household list; a recommendation letter from a doctor, and photos , which are difficult to obtain for workers. This stands in stark contrast to the documentary support provided by factory management: workers told us about absent, delayed and unclear contracts . Most interviewed workers were working under a formal, signed employment contract, but half of the workers said they do not have a copy of their employment contract. Nearly half of the interviewed workers indicated that they do not understand the contract they signed . In some cases, workers were not allowed time to read the contract before they were made to sign it. It also became clear that contracts do not necessarily offer job security. In some cases, workers only signed a contract after having worked in the factory for three months.

Besides the problems with the contracts, there are problems with payslips Workers are supposed to get a payslip, but this often is not the case. Workers explained they are paid in two instalments: the payslip they receive with the first instalment must be handed in order to get the second instalment. Some Leader One workers explained that since the factory pays their salary via bank transfer, they no longer need a payslip. One third of the interviewed workers told us that they do not understand the information provided on their payslip. The note is in English, and management does not make any effort to explain. as well: vague procedures, nonexistent and incomprehensible payslips. In case of conflict, such as mass dismissal during the Corona crisis, workers need all documentary evidence to protect their employment position, or to negotiate payment of back wages or compensation.

Low wages and high hourly targets

Long read / November 12, 2018

Higher minimum wage in Myanmar: bad news for workers?

Bad news for workers?

At both Dong Yi and Leader One, the basic monthly wage for most workers totalled to 144,000 MMK (€93.26). At first glance, one may think that the legal minimum wage In May 2018, the daily legal minimum wage for garment workers was set at 4,800 MMK (Burmese Kyat), about €3.11, for eight hours of work. A review was supposed to take place in May 2020, but the corona crisis disturbed the process . The Confederation of Trade Unions of Myanmar (CTUM) proposed a minimum wage increase to 7,200 MMK (€4.66), taking into account cost of living and healthcare in the country. is respected at these factories 30 days x the daily minimum wage of 4,800 MMK = 144,000 MMK (€93.26) . This would be so if a regular working day consisted of eight hours, but this is not the case. In order to reach extremely high targets At Leader One, the hourly target was described as 150 pieces for easy-to-make garments, and 80 pieces for difficult garments] , workers start earlier and shorten or skip their lunch and other breaks and regularly work extra hours unpaid overtime. This confirms again SOMO’s earlier analysis, which showed how the increase of the minimum wage in May 2018 led to higher production targets imposed on workers.

Dong Yi worker: ‘If we don’t meet the target, we need to work unpaid overtime‘.

A take-home wage of 144,000 MMK (€93.25) is not enough to live on. All workers rely heavily on bonuses and overtime payments to get by. With these extras, the interviewed workers earned between 190,000 and 315,000 MMK/month ((€123.02 – 203.98). The majority of workers, however, earned 200,000 (€129.49) to 240,000 MMK (€155.39) per month.

Vague and excessive working hours

The concept of regular working hours is vague at the factories. There is no hard distinction between regular hours and overtime hours . Workers start at 7:40 am in the morning, on weekdays as well as on Saturdays, and work until at least 5pm. The rule is that workers must work overtime hours; this can be until 6pm, 7pm, 8pm, 9pm, 10pm, 11pm until midnight, even the whole night through. This happens a number of days per week, and sometimes every day of the week, including Sundays. .

‘We always have to work overtime, but overtime hours vary. Regular overtime is until 7pm or 8pm. However, we have to work longer when there is too much work to do.’

Working conditions are completely dictated by the flow of orders that the factory needs to produce. National or international standards with regard to maximum working hours do not apply. Lunch breaks, time to go to the bathroom, safe times and modes of transport for commuting workers are not relevant. Whether workers have children to look after or families to cook for – that is of no consequence. Free time, time to rest, to relax, to study, to exercise, to visit friends, etc. – this is a concept that is not part of garment workers’ lives.

Bonuses

Bonuses are an important part of the monthly take-home wages of workers. There are a variety of bonuses that workers can get: seniority bonuses Three Leader One workers gave details about the seniority bonuses, but reported very different amounts. One worker spoke of a seniority bonus of 2,000 MMK/month (€1.29). Another worker said that workers who have been with the factory for one year could get a bonus of 10,000 MMK/month (€6.47). A third worker spoke of a 4,500 MMK/month (€2.92) bonus for workers with four or more years of experience. for the number of years worked in the factory; skills bonuses Various workers mentioned skills or grade bonuses. 2,500 MMK (€1.62) was the amount mentioned most. A Dong Yi worker explained that there are different grades – A,B,C – and for each grade the bonus is another 10,000 MMK (€6.47). Another worker spoke of skills bonuses varying from 10,000 – 20,000 MMK (€6.47 – €12.95). ; productivity bonus Many workers from the two factories mentioned productivity bonuses, for individual workers as well as for a production line. Workers on a production line can get a group bonus for completing a collective production target. Workers said this may amount to 50,000 MMK (€32.38) per month. This of course also means that when the target is not met, there is no bonus. for reaching particular targets; attendance bonuses An important bonus is the attendance bonus. Workers can get an attendance bonus of between 8,000 – 10,000 MMK per month (between €5.18 and €6.47) , etc.

Worker: ‘I don’t think this system is fair. We do not know how much we earn per item. We are told only at the end of the month that we did not meet the targets even though we have worked very hard during the whole month. It leads to misunderstanding and creates problems.‘

‘They said we would be given a bonus if we were able to produce more garments. They did not not keep their promise though.‘

Workers also mentioned other types of bonuses, with cryptic descriptions, like ‘the other bonus of 5,000 MMK per month’; “the dozen bonus”; a bonus given by the buyers; bonuses given by supervisors” One worker told us that ‘If I finished eating quickly and got back to work earlier, the boss, a Chinese woman, would sometimes give me 5,000 MMK as pocket money.’ Some workers mentioned a bonus workers for Myanmar New Year.

Although bonuses are vital to earn an acceptable wage, workers do not necessarily have factual and precise information about the bonus system in place in their factory, or about what they are entitled to. In all, the bonus system has a very arbitrary character.

Deductions

The counterpart of the bonus system is a complex gamut of deductions. Workers at the two factories spoke of all kinds of deductions. Deductions are made for social security fees Amounts mentioned range from 2,000 to 2,900 MMK (€1.29 – €1.88), per person per month , hostel accommodation 15,000 MMK (€9.71) , food provided in the factory and for the transport to and from the factory (more on this below).

The biggest issue clearly is that workers easily miss out on attendance bonuses. Dong Yi workers spoke of deductions of 15,000 to 30,000 MMK (€9.71 – €19.43) for a one-day absence for one day, and of 35,000 (€22.66) or even 50,000 MMK (32.38) for being absent two days. Workers who are absent from work also lose their productivity and grade bonuses. When workers are absent from work, harsh deductions are made. If a worker is absent from work for just one day, their full monthly attendance bonus is deducted. This is even the case when workers take leave they are legally entitled to. The system of deductions clearly appears to be arbitrary.

‘Deductions were made from my salary, but I don’t remember for what exactly.‘

Sanctions and degrading treatment

Even worse than the payment inequities is the picture of harsh and punitive management which  arose from the interviews. Workers gave detailed information about the various sanctions (from dismissal to financial sanctions) that are applied by management or supervisors.

Workers have been fired for various reasons: making (small) mistakes or not meeting targets At Leader One. , being active in a union or calling for labour rights, having arguments with other workers or being absent . Workers at both factories reported that workers may be fired if they are absent from work for two days. This even applies to workers who have workplace accidents or who take sick leave. Management may not dismiss such workers right away, but it often happened that workers were sacked within a month or days of taking leave. And even after workers are fired, they may still face unjust treatment Workers who have been fired still need to get their final wages and bonuses. They are supposed to get their salary on the 10th of the next month. But they need their supervisor’s signature to get that salary. If for whatever reason they do not get their supervisor’s signature, they have to wait for months to receive their final salary. .

In addition to the sanctions, workers suffer degrading treatment:

• Being scolded and shouted at by their supervisors;
• Being prohibited from using the toilet when production targets are not met;
• Being moved to another production line or unit if they refuse to work overtime;
• Not getting a social security card, even while contributions are deducted.

Leader One worker: ‘When workers are dismissed, it happens that management takes their employee card Without such card, a worker cannot apply for another job .’

Worker representation

What can workers do when they have questions or concerns or when they face unjust treatment as described in this article? Unfortunately, but not surprisingly, there are no factory-level unions in these factories. This is very much in line with the overall situation in the Myanmar garment industry, which has an extremely low unionisation level.

Notably, workers generally do not know the difference between a union and a Workplace Coordination Committee (WCC) Workplaces in Myanmar with 30 workers or more, are obliged by law to have a WCC, a mechanism involving management and worker representatives in equal numbers to deal with grievances at the workplace. . Clearly, management does not make an effort to properly explain any of this to workers. Many of the interviewed workers were in fact unsure whether there was a union One worker of Dong Yi said: ‘There is an organisation in our factory but I am not sure if it is a trade union or not.‘ A few workers had a bit more information, but none of this was reassuring. One worker said: ‘They put a picture on the notice board labelled “worker leader” when buyers come to the factory.‘ in their factory.

What we often heard is that workers were ‘still trying‘ to set up a union but that getting the union registered was a lengthy process At Leader One, workers said ‘there is a WCC, but no election‘ and ‘there is one in the factory but I don’t know who the leader is. I learnt that he/she was appointed by the employer‘. At Dong Yi, workers said ‘there is a WCC, but formed by management, composed of a manager, an HR manager and a female clerk‘. .

Overtime

This research shows clearly that overtime is part and parcel of workers’ working lives. All workers work overtime. Workers do not clearly distinguish between “normal” working hours and overtime, as overtime is standard practice. Workers have to work overtime all the time, whenever requested, but still irregularly , A typical answer about the frequency and the number of overtime hours is as follows: ‘Last month, we had to work the whole month. We are asked to work overtime almost all the time. Sometimes, we have to work overtime only 2 days a week.‘ so it is impossible for workers to keep track of the exact number of overtime hours worked over a certain period of time. Workers explained that following a month with public holidays, they have to work overtime for 3 weeks, to make up for the “lost” days.

It is not voluntary

There is no such thing as voluntary overtime. When asked for their reasons to work overtime, workers echoed management, speaking of orders and production targets that need to be met. When asked whether they like to work overtime, about half of the workers explicitly said no. Some workers said they do not like to work overtime, but they do it anyway because of the pay, which they desperately need or because they simply are forced to One Leader One worker said: ‘Management said that it is important and mandatory that we work overtime. They said that we could not refuse to‘. . Other workers said they do not want to work overtime even despite overtime payments, because it is so tiring After working overtime, they arrive home late in the evening and then they still have to cook for the next day. .

Management simply imposes overtime on workers. If management, supervisors, or line leaders do not agree with a worker’s request not to work overtime, the worker will just not be allowed to go home.

‘We have to sign a warning. We have been threatened that we will be fired next time we refuse to work overtime (Leader One).’

‘Usually the female clerk takes signatures from all of us to ensure that it is voluntary overtime. We know that we will be shouted at or scolded if we say no. Therefore we just work overtime whenever we are asked to do so (Leader One).’

Transportation problems when working overtime

When workers have to work overtime, getting home is not so easy. Only when factory management orders workers to work overtime, do they arrange for a shuttle bus (“ferry”). When supervisors order overtime, which is often the case, no transport home is arranged. In any case, workers cannot get  home easily Workers explained that if a “ferry” is arranged by the factory, it still only takes workers to certain drop-off points from where they have to find other means of transport and pay for it themselves, or walk home. Sometimes the factory ferry comes too late so that workers still have to make their own arrangements. Sometime workers share a taxi or ask family members to pick them up. . The workers who don’t have to work overtime face another problem: a ferry is only provided if there are enough workers to fill the ferry. So they have to wait until 11pm when the ferry has filled up.

In principle, the factory pays for the ferry, but workers have to advance the fare, which may amount to 500 MMK (€0.32) per person per trip. This creates problems for workers who do not have sufficient cash on them. Management only reimburses workers the following week.

In any case, the ferry only runs until 10pm, or 11pm at the latest. When workers have to work overtime beyond that time, they have to make their own more expensive arrangements Public transport stops after dusk. The later it gets, the fewer taxis are available and the higher the fares. to get home. Sometimes this leads to unsafe situations Some taxis refuse to take people back to particular neighbourhoods. Workers complained that it is not safe for them to be out in the street that late at night. .

If it gets really late, workers have to stay the night in dormitories, which are most inconvenient Workers of both factories complained about the dormitories: 4-6 workers have to stay together in one room (men and women in separate dormitories). The water supply is not good. Blankets, mosquito nets and pillows are insufficient. . Such all-night overtime is announced a day in advance only. It seems to happen very regularly at both factories. Workers from the cutting and finishing units have to work the most overtime.

Hygiene at the factories

Interviewed workers also described issues with hygiene in the factories. The climate in Yangon is hot and humid throughout the year (with temperatures in summer reaching 45°C). Provision of fresh and clean water in the factory is a basic necessity, but several workers pointed out that the water supply is insufficient.

The picture that arises from the interviews is that workers are instrumental in completing orders, achieving targets and honouring shipment schedules. As workers said: ‘We are facing more difficulties when shipment time gets nearer‘. Do factory management have such awful planning skills? Or do they have no bargaining power with buyers who impose tight deadlines? Or is it both? Either way, these factory owners and their customers do not really care about the workers.

And then the Corona crisis hit Myanmar…

Because of the Corona crisis, the garment industry collapsed in Myanmar. Normally speaking, before Corona, there were 500 to 600 garment factories in Myanmar, employing some 700,000 mainly female workers. Many factories exported to international markets. Since Myanmar does not produce fabric or yarn, Cut Make Pack garment factories depended on the import of these essential goods, mainly from China. When international trade flows dried up, at the beginning of the year, the Myanmar garment industry ran dry too.

Starting in January, factories gradually closed. At first, they may have reduced the number of workers at facilities, but then they shut their doors entirely. Even before the cancellation of European orders, 22 factories had closed down, leaving 10,000 workers unemployed. By early April, more than 40 factories had closed, resulting in the lay-off of more than 25,000 workers. The European Union estimated that half of the Myanmar garment labour force, 350,000 people, were at great risk of either being suspended without pay or losing their jobs permanently.

Thingyan, the Burmese New Year, was celebrated from 10 to 20 April. Traditionally, factories close then and workers enjoy a well-deserved holiday. Just before the end of the Water Festival holiday, in the weekend of 18-19 April, the government ordered all garment factories to close (or remain closed) until 30 April. The Ministry of Health and Sport and the Ministry of Labour directed factory owners to use the 10-day period to take measures in their facilities to prevent the spread of the Corona virus. The Myanmar Garment Manufacturers Association (MGMA) advised its member companies to send their workers on unpaid leave from 20 to 30 April.

Now, things are slowly picking up again. Factories reopened after 30 April. But not all factories have opened, and many still only are operating at only half or even less than half capacity, meaning that workers work fewer hours. In combination with the fact that take-home wages have tumbled since March, this means that garment workers in general are suffering a major loss of income.

There is another effect of the Corona crisis – Myanmar’s young and vulnerable trade union movement is under threath The Clean Clothes Campaign describes the situation at garment factories Rui Ning, Huabo Times and Myan Mode, and says: ‘The current spate of union busting cases are part of a wider picture of trade union repression in Myanmar, which includes violent assaults on union leaders, harassment and intimidation of members, and the recent arrests and imprisonment of workers for joining peaceful strike action.‘ . Under the guise of steps necessitated by the Corona crisis, selective dismissals of union leaders and members are taking place. In this way, factory owners seek to undermine the worker rights movement in Myanmar. In the past months, factory-level unions have spoken out about unsafe working conditions in relation to the Corona crisis and unpaid wages. In the same period, a disproportionate number of union members have been laid off.

Workers protesting in Myanmar

What is needed now?

The Corona crisis is having a huge impact on the global garment industry and a disastrous effect on the living and working conditions of workers in particular. Globally, garment workers were getting poverty wages, far from living wages. Now, many of them do not even have that.

Companies, including the brands mentioned in this article, have benefitted from the exploitative system. This comes with a responsibility. Urgent and collaborative action is needed among all actors in the global garment industry to ensure garment workers’ wages are paid. Clean Clothes Campaign has elaborated the The wage assurance complements the ILO programme of action, which aims to secure loans to enable employers to pay wages and/or enable governments to provide facilities that will allow workers to receive their income. Most major brands have committed to this programme. The aim of the wage assurance is that brands commit to covering a potential gap between the results of this programme and the payments that workers are actually due to receive. The more successful the ILO programme is, the smaller the gap left outstanding, and the easier it will be for brands and retailers to fulfil the wage assurance. Swift action is needed however as workers continue to remain unpaid for months, usually without any financial means to fall back on. Funds for the payment of outstanding wages and benefit can come from multiple sources, including international financial institutions and donor governments, direct financial contributions for immediate relief to employers as outlined in the AFWA Supply Chain Relief Contribution (SRC), or brand “top-ups” of the gap between government pay-outs and full wages. The brand wage assurance means that brands shall be ultimately held responsible for securing this funding and supplementing any shortfall. urging apparel companies to publicly assure that all workers in their supply chain will be paid during this crisis. SOMO is co-signatory of this powerful call for action.

Systemic change is needed

In the long run, we cannot go back to the pre-Corona situation in which workers always pull the short straw. Structural, systemic change is needed.

Key elements are:

• There is a power imbalance between buying companies and suppliers. Buyers push costs and burdens onto suppliers while claiming a disproportionate share of the gains made along the value chain. This must be addressed;
• The prices that buying companies pay to supplier factories for their products should reflect the true cost of labour, including decent wages for workers involved in making the products. Wages should allow workers to cover their basic needs, including medical care, insurances, and savings. Prices paid to factories should enable manufacturers to maintain financial reserves that allow them to pay out all benefits that workers who are terminated are entitled to;
• Whereas workers hardly have a voice now, they must be given a central role in monitoring and improving working conditions in supplier factories;
• Brands and retailers can hardly be held accountable for not respecting labour rights on the basis of the voluntary brand labour standards that now apply. Workers and unions cannot enforce labour rights standards. Legally mandatory human rights due diligence should change this. An important feature of such desired HRDD legislation is the right of persons to claim compensation for harm inflicted by companies that breach human rights.

Only this way, decent garment production in Myanmar is possible.