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Inflation leads to lower wages
As of August 2024, the legal minimum wage is effectively 6,800 kyat per day. This consists of a base wage of 4,800 kyat per day (last updated in 2018), plus two additional 1,000 kyat daily allowances announced in 2023 and 2024. If the minimum wage had kept pace with inflation since it was last adjusted in 2018, it would now be around 12,000 kyat per day.
Actual salary Wages have also fallen sharply. H&M, one of the few brands to provide transparent data, showed that wages (which include guaranteed wages but exclude variable items such as overtime and bonuses) increased by 25% from 199,000 kyat per month in 2020 to 248,000 kyat per month by the end of 2023.
During the same period, the CPI has risen an estimated 88%, while the cost of an average diet has increased 160%, according to the International Food Policy Research Institute.
The result is that wages at H&M that were enough to support an average family in 2020 will no longer be enough by the end of 2023. While some factories have increased wages by 20-30% in 2024 to cope with worker shortages following conscription, this will not offset years of falling real wages.
There are many reasons for the decline in wages. The main reason is that the military junta’s massive money printing and the public’s distrust of the kyat have led to high inflation.
Factories are also facing an increasingly inefficient and challenging business environment. Deteriorating power supply: Yangon’s industrial areas now experience an average of 20 hours of power outages a day. Almost all factories have a generator from which they get about 62% of their electricity – at a significant additional cost.
Logistics are more complicated and costly, and land transportation to China and Thailand has been severely disrupted by the war. Workers have also left more frequently since the war broke out. The conscription law was announced in February 2024.
The growing challenge has been offset to some extent by a weaker kyat, as factories sell in foreign currencies but incur costs largely in kyat. Despite the complex foreign exchange system the junta manipulates, factories still receive more than twice as much kyat per dollar as they did before the coup.
If the factory paid workers the same dollar amount as it did in 2020 (about $140 per month, according to H&M) and paid them in kyat converted today, they would receive more than 400,000 kyat per month. However, in dollar terms, wages would drop from $140 in 2020 to just $94 per month in 2023, according to H&M.
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