- By Yu Lwin Aung
Foreign businessmen who place orders are taking the following facts into consideration in addition to low labour cost, according to www.emergingtextiles.com.
(a) Productivity: Businessmen used to focus on labour productivity. A factory with high performance employees can attract more orders. China tops the list of output per worker among regional countries. There are two methods in calculating labour productivity.
/ The first method is based on output per worker which is the amount of goods that a worker produces in a given amount of time such as a year or a month. To calculate a factory’s labour productivity, the total output of the factory is to be divided by the total number of labour force.
/ The cost per unit is the second method. The cost per unit calculation is to divide wages to be paid to workers per month plus total variable cost by total units produced per month at a factory.
/ Without trying to improve labour productivity in Myanmar’s garment industries, but just focusing on increasing in wage will corner the employer at last. Therefore, it is very important for all responsible persons to put their minds to the fact that mindset, knowledge, proficiency, behaviour, concept, attitude and obedience of each and every employee will have a great effect on productivity, and thus their cooperation is needed.
(b) Quality: Although there is a high productivity, if the quality is not up to the mark, the product return process may occur. Therefore quality is enormously important in manufacturing finished goods at CMP factories. Quality means precision, correctness, cleanliness, and neat and tidy. All of them are based on mindset, knowledge, proficiency, behaviour, concept, attitude and obedience of each and every employee. Therefore on-the-job trainings have been conducted for employees. Hence, such restrictions as “Applying Thanatkha is prohibited” “Do Not Apply Lipstick” “Wear Cap” “No Cell Phone Use” “Quiet Zone” “No Food or Beverage Allowed” are made. Making demands for removing these restrictions under the guise of human rights will harm the productivity and quality of a factory thereby leading to closure of it.
(c) Cost of Available Textile Materials: In countries like China and Thailand, such materials as cloth, button, linen and thread are available in their countries so that they can contribute to reduction in cost, and moreover they can buy the items needed in a short time and can choose what they like. These are the strong points for them. Those who place orders are unwilling to place their orders in a country where related materials cannot be produced. Therefore, SMEs at home should manufacture such related items and at the same time the State should encourage them to do so.
(d) Energy Prices: It is normal that a person who will place order would only be interested in a country which enjoys full electricity supply. Frequent power outage, voltage drop and unstable power supply are the big issues threatening to the success of CMP industries. By fulfilling the electricity needs of the industries, foreign investments can be invited and it will attract persons who place orders in CMP industries.
(e) Lead Times: Importing and exporting process will take time based on the distance. If the logistics take too much time, it will be a few time left for manufacturing process. This issue is difficult to be tackled as it is relating with geographical condition. So, it is time to put our heads together to reduce the time limit.
(f) Services Offered to Apparel Importers or Brands: Persons who place orders and retailers prefer CMP and Freight-on-Board (FOB) systems in most countries. Under FOB system, factories are basically responsible for producing the garments in their entirety and arranging for shipment after which they have no responsibility. To practice this system, approval of banks in the recipient countries is needed and these banks are to issue back-to-back L/C (Letter of Credit) for the cash transferred through L/C by the retailers. If there is no L/C system, the end buyers or the retailers have to rely on agents to contact with CMP industries and this will cost them more money for agent fees or they will face price degradation.
(g) Import Tariff Rates in Europe or the US: End buyers or retailers prefer much to Generalized System of Preferences (GSP) of EU or the United States who have a big share in market demand. GSP is granted to developing countries and least developed countries. Such countries get more orders with handsome price. Japan, the Republic of Korea, six ASEAN countries, Turkey and Canada grant GSP to Myanmar. Among them the GSP granted by EU is the highest. EU revoked GSP granted to Myanmar in 1997 but again granted in 2013. US revoked GSP to Myanmar in 2003 but granted back in 2016 step by step. But, Ready Made Garment (RMG) industries have not received such a grant. Now, EU is considering to revoke the GSP granted to Myanmar. If it happens, its negative effect on Myanmar’s CMP will bring about contradictory developments leading to strikes and demonstrations due to wage cut. This should be taken into consideration.
(h) Cost of Freight: To export raw materials and import finished goods, retailers prefer the countries with low cost in freight handling.
Some CMP industries struggling with day to day life to be able to stay in the business have been facing the following demonstrations:
(a) New Twinkle Light Fashion Garment Factory: Located in Hlaingtharyar Industrial Zone-5, the factory is owned by a Chinese citizen. Altogether 779 employees have been employed under 100 % FDI. Stirring by five mechanics who want more wages and beneficiaries, about 100 workers started their demonstration on 8-10-2018. They blocked other workers who came to work, and all the functions stopped. On 13-10-2018 they did not allow to carry finished goods. Foreigner technicians also were not allowed to exit or enter the factory. The problem was settled on 15-10-2018.
(b) Trinity Apparel Garment Factory: A Bangladesh citizen owns the factory by 100 % FDI. The factory employs over 500 workers in Hlaingtharyar Industrial Zone-4. Making demand beyond their legal rights for increasing bonus for punctuality about 200 workers staged demonstrations on 4-10-2018. They barred other workers who came to work and threatened them. On 16-10-2018, they blocked the entrance by building a shed. Other workers who wish to work had no chance to work and all functions stopped. On the same day, negotiation between the employer and employee met a success and made and agreement.
(c) Fu Yuen Garment Factory: The factory with over 1000 workers is located in Dagon Seikkan Township. It is owned by a Chinese citizen by 100 % FDI. The cause of staging demonstration was due to firing of 30 workers who were accused of causing low productivity. Starting from 21-8-2018, about 100 workers staged the protest blocking the entrance gate. According to the request made by some workers who wished to work, a temporary gate was built at the back of the factory. Thanks to that effort, about 800 workers could continue their works. On 15-10-2018, the protesters barred the workers who wished to work from entering the factory. A clash broke out between them and 32 left injured and seven were admitted to hospital. Now, the problem solved through negotiation between the employer and the employee.
In expressing desires, workers should choose the peaceful means. It is important not to create unrest through mobocracy. Threatening other workers who hold different views, blocking entrances with the intention of barring other workers and import and export goods to enter into the factory are acts of breaching law. Especially, barring foreigner technicians from entering the factory tarnished the image of the country. If the information spread, the potential investors may be reluctant and the existing investors leave the country.
Nowadays, not only the CMP industries but also the hotels are suffering the same fate. It is due to low salary, damaged relations between employer and employee. Some employer are not abiding by labour law, stirring of some people who want situation getting complicated, instigation of some trade unions, making unreasonable demands, cooperation of trade union members of other factories with the workers of factory at which strike is breaking out and employment cut.
If the situation is not reviewed and is neglected, the employer will be in a dilemma leading to more factory closure. This will cause increase in unemployment resulting in the struggle for livelihood of working class will be hard. Consequently, it will harm national economy and peace and stability. Overseas investors will also be reluctant to do their businesses if they assume there is no protection of law.
Due to the above-mentioned reasons, Myanmar’s CMP industries suffer less orders received and price degradation, and face other barriers. Moreover they need to enjoy GSP more than ever. So, special attention should be paid on this and the State should apply carrot and stick approach.
Ministry concerned should take such measures as making sure that employers are taking care of the welfare of their employee, explaining employer about the current situation and making them amending pay system to increase wages, and taking punitive actions against those who breach the law – whoever employer or employee.
The difficulties encountered by both sides should be overcome in time to protect their basic rights. This will help human rights comes no harm.
(Translated by Wallace)