Myanmar's New Minimum Wage - What's Next? Policy Considerations for the Way Forward

In 2013, Myanmar’s government passed a new minimum wage law. While enacting the law was an important first step, turning it into an effective policy tool requires further steps to be taken. This CESD working paper targets Myanmar policymakers with the objective of providing them with some considerations for the way forward. More precisely, it suggests that there are three key pillars of an effective minimum wage implementation system that Myanmar policymakers should address from here onwards. First, it will be important to promote compliance with and, if needed, enforce the minimum wage law in order to, on the one hand, ensure that workers earn a minimum income that allows them to meet their own and their families’ basic needs and, on the other hand, to avoid a situation where non-compliant companies derive a competitive advantage from paying wages below the minimum. This will require efforts that incentivize compliance by employers, sanction non-compliance through penalties, and ensure proper monitoring through labor inspectorates. Second, monitoring and measuring the impacts of the minimum wage policy will be crucial to better understand the effects it has on various stakeholders, and to gauge whether the minimum wage is set at an appropriate level where the resulting benefits outweigh the costs of the policy. For such monitoring and evaluation exercises to be possible, the collection of reliable data will be essential, including through labor force and business surveys. The methodological approaches and empirical models for such impact assessments are well established – so Myanmar’s efforts in this area can draw on them. Third, regularly reviewing and adjusting Myanmar’s minimum wage system in the future will be vital to preserve its relevance by taking into account changes in the cost of living and wider economic conditions. This will require adequate institutional setups and governance mechanisms as well as decisions on the criteria to be used for such reviews and adjustments. Throughout, this working paper presents examples of approaches and practices in other countries, thereby offering valuable lessons and inspiration on the range of possible measures and mechanisms. Considering the three pillars delineated in this paper and learning from others will help Myanmar’s policymakers turn the minimum wage into an effective policy tool that contributes to putting the country on a trajectory of inclusive economic growth and shared prosperity.