22 Minutes To Read

Global garment brands unable to safeguard labour rights in post-coup Myanmar

22 Minutes To Read

Corporate Accountability Myanmar (CAM) inquires how global brands respond to labour rights abuses in post-coup Myanmar.

Introduction

“Given lack of legal protection, destruction of the tripartite system since the coup, we have no choice, but just to turn to brands to seek their intervention to resolve labour rights issues at their sourcing factories,” said the Labour Rights Organization (LRO)[1].
Garment Sector Factsheet of the European Chamber of Commerce, EuroCham
mentions that even after Action, Collaboration Transformation on Living
Wage’s (ACT)[2] withdrawal from Myanmar in November 2021, “ACT member brands and members of the EuroCham Garment Advocacy Group (GAG) remain committed
to protecting workers rights and to working collaboratively as well as
individually to follow up and investigate any alleged violations of
rights at suppliers.”

Workers’ rights violations in the garment sector in Myanmar have been widespread throughout successive years to varying degrees. Since 2011, with changes in the political landscape from the military regime to a quasi-civilian government, certain reform measures were adopted, including enacting laws relating to labour protection such as the 2011 Labour Organization Law and 2012 Labour Dispute Settlement Law. Global brands entered the country through some sanction lifts. Alongside International Labour Organization (ILO) other international and national organizations focused on labour rights and labour unions in Myanmar, some global brands, guided by the international standard of responsibility to respect human rights set forth by the United Nations Guiding Principles on Business and Human Rights (UNGPs), initiated social dialogue projects and capacity building programs to improve industrial relations. However, the global Covid-19 pandemic hampered the progress of such efforts due to Covid-19 related restriction measures and cancellations of orders from global brands. This was worsened by the coup in February 2021, when such initiatives were stopped due to severe human rights violations, including the oppression of labour unions that strongly participated in the national strike movement against the coup.

Corporate Accountability Myanmar (CAM) inquires how global brands are responding to mounting labour rights abuses in their supply chains and how they intervene/mediate those disputes to help protect labour rights within this context. CAM talked to relevant stakeholders in the industry, including four industry experts and four personnel from labour rights organizations and labour unions in February and March. In-depth interviews were conducted at two factories in March: one with three workers and two personnel from a local labour rights organization (LRO)[3] that is providing support to those workers, and another with two workers and one person from LRO at another factory. CAM met and talked to them about six times based on their availability and for further follow-up clarifications. In addition, CAM conducted a desk review and consulted various available sources. CAM contacted six brands, but only one responded to CAM’s queries on their interventions at their suppliers’ factories.[4]
CAM research found that a few brands recently resumed traditional audits in their supply chain factories by trying to pilot virtual audits and hire local consultants to check workers’ situations and working conditions. Upon receiving reports about labour rights issues in their supply chain via LRO, a few other brands intervened and mediated those disputes. At one of the factories in the study, the brand was responsive to using its leverage to facilitate discussions between the employer and the employee and many labour rights disputes[5] were settled while some issues remained unsettled. At another factory in the study, the brand was not responsive and ultimately, lost the trust of workers.

Wider stakeholders’ interviews and desk review reveal that even prior to the coup, brands’ intervention in their supply chain to protect against labour rights abuses had limitations. This was the case, especially with small brands that had little or no leverage with their suppliers due to comparatively small orders and low financial impact incurred from their business withdrawal on their supply chain. Some brands were simply reluctant to recognize labour rights issues in their supply chain, having little to no regard for international standards such as the UNGP. Such brands intend to get benefits out of labour abuses in the country like Myanmar with abundant cheap labour and inadequate labour protection mechanisms. On the other hand, given the favourable circumstances during the democratic transition era when labour unions and labour rights groups were able to raise their voices and demand accountability from global brands and suppliers, some larger brands made commitments to protect workers’ rights in their supply chain, forsaking their short-term interests.

Even for larger brands aware of reputational risk and adherence to the UNGP, the process of brands’ intervention and mediation is time-consuming––involving various stakeholders, namely, unions, employers, and labour rights organizations. For these brands, intervention in labour rights issues in their supply chain in the post-coup period is limited due to the severe oppression of unions, freedom of association and expression. Prior to the coup, unions and labour rights organizations (currently in hiding) were able to provide support to workers through negotiating meetings with concerned stakeholders to resolve labour dispute cases. This included employers, employees, respective brands, national level unions, basic level unions and brands’ home countries’ unions. This is no longer possible in the post-coup context.

In addition, the unstable political, social, and economic operating situation in Myanmar comes with various pressures. As a result of the country’s human rights implications, many brands are still indecisive as to whether they should leave or keep their operations in the country.. That uncertainty has had an impact on brands’ leverage and commitment to better workplace conditions in their supplier factories. Regardless, it is obvious that brands need to do heightened human rights due diligence within this context. They need to closely monitor working conditions in supplier factories to identify labour abuses and respond immediately to provide remedies to grievances.

Brief Overview of the Garment Sector

Trends in industrial growth

Prior to 2011, the garment sector in Myanmar had no access to Western markets due to sanctions, only Asian markets. With the political transition in 2011, the EU trade preferences, Everything but Arms (EBA) initiative, was reinstated. Access to preferential duties through the EU Generalised Scheme of Preferences and the US Generalised System of Preferences is one of the factors that drove the growth of the garment sector in Myanmar. The industry has grown from an export value of US$337 million in 2010 to US$5.7 billion in garments, and a further US$1 billion in footwear and handbags in 2019. The EU is the single largest market for Myanmar’s exports, followed by Japan, Korea and North America––accounting for 54% of apparel products exports in 2019. According to the Myanmar Garment Manufacturers Association’s (MGMA) survey of 50 factories, these factories experienced a 26% decline in exports in 2020 due to Covid-19, compared to 2019. The export value further halved in late 2021 compared to 2019 due to the fallout from the coup.

Brands

It is estimated that there are over 150 brands operating in Myanmar. Consisting of both global and regional brands, major global brands/buyers such as H&M, C&A, Deuter, Gaastra, Muji, New Look, Primark, Suitsupply, Bestseller and Takko, have only been involved in Myanmar since 2012. This is unlike regional brands that operated via local Burmese suppliers throughout the sanctions period in the 2000s to supply the Japanese and Korean markets.

According to the EuroCham factsheet, European, North American brands, and a select few from Japan and Australia, are committed to transparency and responsible sourcing. These brands publish their supplier lists at the Open Apparel Registry (OAR) or on their websites. As of January 2022, openapparel.org lists 408 facilities where those brands are currently or previously sourced. Global brands source from suppliers in Hong Kong or Beijing who manage production among a large number of Chinese suppliers throughout the Southeast Asian region. Many other brands of garments, shoes and luggage from Myanmar are less focused on responsible sourcing and transparency and are not identifiable. This is particularly the case for those selling in Asian markets and those in the shoes and luggage sector.

Since Covid-19 and the coup, major global brands are still operating in Myanmar, except for Tesco, which is planning to leave Myanmar. After a temporary suspension of orders between February and May of 2021 in the light of the coup, major global brands including H&M, Primark and Bestseller are resuming sourcing.

Suppliers

There are generally two types of suppliers in Myanmar. Domestic suppliers continue to operate throughout the sanctions period in the 2000s and produce for Korean, Japanese, Taiwanese and Chinese owners and retailers. Other suppliers are established Chinese factories that have been set up since 2012 in Myanmar to service global brands. They are the same suppliers already operating in other countries within global brands’ supply chains.

Garment factories generally operate under the “Cut-Make-Pack” (CMP) system. In Myanmar, CMP garment factories primarily import raw materials for garment production from China. Workers then cut the fabric to make the clothes and pack export products mainly to the EU or other Asian markets. Between February 2021 and January 2022, 64 CMP factories have permanently closed or are in the process of doing so. Around 140 have closed temporarily, and over 80 factories have reduced or are reducing their workforce. A total of approximately 170-200 factory closures in China and EU markets have occurred since January 2020 as a result of  Covid-19 restriction measures. According to MGMA, around 600 garment factories are currently operating, of which nearly 500 are MGMA members.

Brands’ interventions in their supply chains

International Norms

Global brands committed to transparency and responsible sourcing are required to adhere to the Due Diligence Guidance for the Responsible Supply Chains in the Garment and Footwear Sector, developed by OECD in 2018 based on the UNGPs and OCED guidelines on Business and Human Rights. Brands of OECD’s member countries are especially expected to adhere to these guidelines.

Due diligence is the process through which enterprises can identify, prevent, mitigate and account for how they address their actual and potential adverse impacts. Due diligence is conducted against the OECD Guidelines regarding specific adverse impacts (i.e., harm). An enterprise is expected to conduct due diligence on its own activities and on its suppliers across its supply chain and other business relationships. Due diligence is an ongoing exercise, recognizing that risks of harm may change over time as the enterprise’s operations and operating context evolve.

These international standards outlining the brands’ responsibility to respect human rights determine when and how brands should intervene in their supply chains to prevent harm.

Global brands like H&M and Primark incorporated international standards as requirements their suppliers must comply with, including OECD guidelines and ILO labour standards. Their code of conduct for their suppliers incorporates standards such as non-discrimination, workplace diversity, equality, a fair living wage, freedom of association and collective bargaining, no child or forced labour, environmental responsibility, and grievance procedure. Brands intervene to hold their suppliers accountable to the standards set by their code of conduct.

Interventions prior to the coup

In spite of the fact that large European brands have helped to raise some labour standards by improving Occupational Health and Safety (OHS) standards and addressing issues such as underage labour, discrimination and forced labour, supply chains in Myanmar remain rife with labour rights violations. Chinese suppliers in Myanmar have been subject to the global brands’ codes of conduct since they began operating in the global supply chain for many years in other countries. However, these supplier companies have become adept at passing audits despite their union-avoidance tactics. While traditional audit systems and projects aim to improve labour standards, they fail to address labour rights issues, even before the coup in these supply chains.

Given consumer pressure, “global brands are sensitive to maintaining positive publicity and marketing and avoiding reputational damage that would be caused by reports of labour exploitation and rights abuses by suppliers.” This means that global brands in Myanmar can compel their suppliers to participate in social dialogue projects, despite the latter’s reluctance to be engaged.

Social Dialogue projects and suppliers’ capacity building

The Myanmar Guideline on Freedom of Association (FOA), or FOA Guideline developed in November 2019, is a significant initiative of trade unions and global brands in Myanmar.

The FOA Guideline details the conditions and processes at factory level enabling workers to exercise their right to freedom of association, as well as the obligations of both workers and management to cooperate in good faith and engage in social dialogue.

As of 1st April, 2020, compliance with the FOA Guideline was a business requirement for all factories producing for ACT member brands in Myanmar.

The dialogue between the Industrial Workers Federation of Myanmar (IWFM) and the coalition of H&M, Tchibo, and Bestseller involved in the social dialogue projects became the starting point for developing the FOA Guideline in Myanmar. This brand intervention, as detailed below, shifted away from the traditional audits and top-down systems, and these three projects on social dialogue paved the way for establishing relationships and dialogue channels between unions and brands/buyers.

THREE PROJECTS ON SOCIAL DIALOGUE IN MYANMAR
The overall purpose of the three social dialogue projects was to build capacity for industrial relations, by training of garment workers, trade unions and factory managers, in social dialogue practices in order to improve working conditions, technical skills and productivity in the garment factories. ILO-GIP: Involved ILO, the Swedish International Development Cooperation Agency (SIDA) and the Swedish brand H&M.[6] The WE Program/Tchibo: Involved the German development agency GIZ and the German brand Tchibo.  MYPOD: Involved the Danish union confederation 3F, the Danish brand Bestseller and local Myanmar trade unions IWFM and MICS[7]. Funded by the Danish government under the Danida Market Development Partnerships (DMDP) fund.[8] The three brands involved in the social dialogue projects became the starting point for the FOA Guideline of Myanmar. While these programs have paved the way for improved industrial relations, challenges in social dialogue programs stem from the immaturity of the industrial relations system in Myanmar; this includes a lack of laws and regulations that do not meet international standards, and a lack of cooperation from supplier factories at the factory level and sector level. Critics point out that the employer associations like MGMA do not have a positive view of unions, claiming instead that “the sector is not mature enough for social dialogue, and have been known to discourage some factories from partaking in social dialogue programs.” The employers’ argument of the sector’s immaturity is based on the premise that workers––mostly coming from rural areas in the country with a low level of education––lack the skills to engage constructively with the employer. Such employers’ attitudes in Myanmar are based on a top-down culture that reinforces the factory’s reluctance to engage in constructive dialogue with workers. The FOA Guideline was meant to address this issue by setting and providing clear directions to factory managers at the sectoral level so that social dialogues could continue. However, the coup in February 2021 has led to ACT’s operations’ official withdrawal from Myanmar in December 2021, including applications of the FOA guidelines.

Capacity building programs for supplier factories

In addition to social dialogue programs, brands have been involved in capacity-building programs as another form of brand intervention. A good example is the programs provided by SMART Myanmar for their suppliers in areas such as human resources management, chemical management, supervisor training on grievance mechanisms, social compliance, energy efficiency, etc. Similarly, since 2019, Fair Wear Member brands[9] require their supplier factories in Myanmar to engage in Workplace Education Programme Basic (WEP Basic) and Workplace Education Programme Communication (WEP Communication). WEP Basic raises awareness of the Fair Wear Code of Labour Practices (COLP) and maintains complaint helplines for management, supervisors, and workers. WEP Communication helps build up communication skills for workers, supervisors, and management and skills to solve labour dispute issues at the factory level. However, the fallout from Covid-19 and the coup resulting in security and safety issues have deterred physical access to factories and the implementation of regular audits and training programs at Fair Wear’s member brands’ supplier factories.

Gaps in Dispute Resolution Mechanism and Filling Gaps

“Serious disputes and strikes occurred when there was no trust that the dialogue process could bring both parties to mutually-beneficial solutions.”

In Myanmar, due to a lack of meaningful social dialogue and a lack of legal  process to protect workers’ rights, brands’ intervention has been sought to mediate in many dispute cases at the respective brands’ supplier factories.

Under the 2012 Labour Dispute Settlement Law and its 2019 amendment, rights-based disputes specified in labour law and interest-based disputes relating to a collective agreement can be resolved through a Workplace Coordination Committee (WCC) as the first step of mediation.

“A dispute of rights is defined as a dispute that relates to the rights of employers and workers specified in a labour law. A dispute of interests is defined as a dispute that relates to a collective agreement; or a dispute that is not covered by a labour law but related to the interests of workers; or is a dispute that relates to workplace relations.”

WCC consists of an equal number of worker and employer representatives. However, in many cases, WCC does not function properly due to a lack of management support, decision-making power for members, and trust in the committee because of inconsistencies in democratic elections for workers’ representatives. Unresolved rights-based cases can be brought to the Township Conciliation Body and, if still unresolved, can be brought to the concerned departments or the competent court.[10] If an interest-based dispute is unresolved, the conciliation body shall refer the case to the relevant arbitration body. Relating to the decision of the arbitration body for disputes in non-essential services, an employer can lock out workers or workers can strike, or either party can send the appeal to the Arbitration Council. For decisions relating to essential services or a public utility, a third choice can be applied. After receiving the dispute, the Arbitration Council must establish the Arbitration Tribunal, whose ruling must be complied with by all parties involved in the dispute.

Despite the detailed procedure to resolve disputes, challenges in the legal process for dispute settlement have been widely reported. These include a lack of WCC at many factories, a lack of law enforcement, low unionization, and a lack of a specialized labour court. Government officials in the Township Conciliation Body or Arbitration Body tend to sway their decisions in favour of employers. Even when the Arbitration Council ruled in favour of workers, rather than adhering to the decision to ensure workers’ rights, employers often chose to pay fines and maintain non-compliance with the ruling.

 

“The employers’ economic power has also always been a major issue both in the arbitration and legal process. For example, employers often do not come to the meeting place in time and/or do not send the decision makers for the discussion, and they hire a lawyer for their representation at the court whereas the workers have to wait for the final decision after several meetings, and appear at the court at their own cost.”

Employers’ economic means to pay fines means legal rulings are not effective at creating change. When the legal process fails to protect the rights and interests of workers, labour rights organizations and unions seek brand intervention. Two significant initiatives with such brand intervention are one led by Fair Wear Foundation, and one led by ACT members and IWFM invoking FOA guidelines.

Fair Wear Foundation sought their member brands’ intervention to mediate labour dispute cases by establishing an alternative grievance mechanism. Fair Wear set up a complaint helpline where workers and their representatives, including trade unions and civil society organizations, can present complaints about working conditions and violations of the Fair Wear Code at factories supplying Fair Wear member brands. Local staff members of FWF receive complaints via the helpline. Fair Wear brands are then notified of the complaints. Together with factory management and worker representatives, they find solutions for the immediate problem and search for root causes of the problem. The helpline is still active since the coup despite myriad challenges: no functioning unions, the inability to visit the factory due to security concerns, and the inability to carry out regular audits.

Another significant initiative in dispute resolution mechanism is the Framework Dispute Resolution Mechanism (DRM) which is central to making the FOA Guideline binding and enforceable. DRM was developed and piloted in late August 2020. A Guideline Monitoring Committee (GMC) which consists of 10 people––five representing IWFM and five representing the Employer Working Group[11]––is key to the DRM because they ensure that the supplier factories adhere to the DRM. The DRM only applies to labour rights disputes related to freedom of association. The outcome of the DRM is binding for dispute parties. If an employer does not comply with the outcome, the ACT member brands will ultimately terminate the business relationship with their respective supplier. This would give brands leverage over their supplier factories, and allow them to compel suppliers to adhere to FOA Guideline and prevent violations of the right to FOA and union busting.

Brand’s intervention during Covid-19

In spite of global brands’ initiatives in social dialogue projects and dispute resolution processes, global brands faced condemnation by workers’ rights advocates for cancelling orders worldwide, including in Myanmar, without regard for its impact on their suppliers and garment workers. In many cases, employers used the impact from Covid-19 and cancelled orders as an excuse to undertake union-busting, laying off union members indiscriminately at factories supplying global brands. Given the lack of functional legal arbitration channels, unions asked brands to intervene. In some cases, unions were able to induce brands to pressure factory managers by invoking the FOA guidelines to negotiate with workers and reinstate laid-off workers, or provide unpaid wages and compensation. However, in some cases, brands failed to intervene, leaving disputes unsettled.

Brands’ intervention since the coup

Since the coup, labour rights organizations and national unions have been struggling to protect labour rights amidst various newfound challenges and limitations. They urge brands to intervene to deter labour rights abuses at their suppler factories, especially ACT member brands. After the coup, ACT established a Fast-Track Dispute Resolution Mechanism in March 2021 to receive labour disputes not limited to FOA. According to an industry expert, ACT received about 40 complaint cases from May 2021 to October 2021. Nearly 50 per cent of the cases were remediated, and it continued engagement with the member brands and their suppliers for the remaining cases until December 2021 when ACT withdrew from Myanmar.

Without any leverage like the ACT mechanism, seeking brands’ intervention and support seems ever more difficult. According to CAM’s findings at two factories, legal dispute resolution mechanisms have stopped functioning and LRO has had to seek help from respective global brands at those factories. Challenges in brands’ mediation include a lack of brands’ responsiveness, inadequate human resources, and a lack of sustainable dialogue process with ongoing union-busting at both factory and national levels.

A look inside two factories

Legal dispute resolution process a threat to workers

The legal dispute resolution mechanism did not function properly before the coup, and continues to fail. As the following two case studies show, this mechanism nearly collapsed resulting in the neglect of workers’ complaints in one case, and and workers being threatened for lodging complaints in another case. Normally, a national-level union or a labour rights organization assist workers with lodging complaints at the labour offices––a process that includes preparing complaint letters and other paperwork on a legal basis related to the dispute. However, currently 16 unions and labour rights organizations have been deemed illegal, and they can no longer support workers in person but only behind the scene. They can only provide suggestions on how to lodge complaints via phone or online. At both factories, when workers went to labour departments to lodge complaints, officials asked workers who were the people helping them through the process. Officials threatened that if workers were being supported by now criminal organizations, workers and personnel from such organizations could be arrested. At both factories, workers strongly felt that employers were bribing labour officials. According to eyewitness accounts of workers’ representatives at the labour office, the employer’s representatives arrived earlier than the appointment time to meet with the labour official. Workers noticed that the employer’s representative brought a big black bag to the labour office and entered the office. Workers waited suspiciously, and after a few minutes, the employer came out with empty hands. Workers suspect that the employer gave a bribe to the labour official, although they do not know what was inside the bag. In another case, labour officials clearly favored the employer by intentionally providing relevant information on legal proceedings only to the employer. This left workers in the dark, lacking the right information on how to proceed with their cases. In both cases, the frequent failures of the employers’ representatives to appear at relevant labour offices on appointed times and dates were not met with any legal consequences.[12]

How do global brands respond to the two factories?

Given the failure of legal mechanisms under dispute settlement law, LRO contacted relevant global brands to report labour rights abuse cases and asked for their interventions in resolving these cases. At one factory, the brand’s leverage worked. The respective brand was responsive and was able to facilitate the mediation process between LRO representatives, the factory manager and workers’ representatives. Many issues relating to wage cuts, overtime payment, and workplace harassment were resolved and monitored to adhere to an agreement. However, the factory still applied various tactics to persuade or threaten workers not to join the basic labour organization (BLO), a basic union at the factory level.

At the other factory, the strategy did not work since the brand took too long, in this case, for a month, to respond to LRO’s email. When the brand finally responded, it asked the LRO why the dispute occurred and which laws were being violated, rather than encouraging factory management to start a dialogue with workers to solve the issue. Hence, disputes were not solved in time and lost workers’ trust.

Challenges in Brands’ intervention

Responsiveness of brands is critical

CAM’s study of two factories and wider research indicates the importance of brands’ responsiveness. With a brand’s slow response in one factory, the mediation process was completely stalled and not able to start at all. Fair Wear highlights that

“the support of the brands is essential to encourage factory management to commit to the mediation process, monitor implementation of the agreed upon actions, and support longer-term sustainable solutions (e.g. provide financial support for training where necessary). Fair Wear communicates with the responsible brands and introduces the process to both management and workers to get consent for further interventions.” “Therefore, continuous follow-up and regular check-up meetings are necessary to keep the momentum of good dialogue. In all cases, without follow-up and a push from the brands, the management tended to return to the same practice and ignore dialogue with workers.”

LRO remarks that some brands are superficial in their approach. According to LRO, they are currently liaising with eight brands at 15 factories. LRO said at three factories, the approach failed given low interest and participation of the brands, while there was some success to varying degrees at other factories. Brands do not want to take responsibility and are hesitant to push the factory management. These particular cases also reflect the challenges of social dialogue, as pointed out by critics: “a lack of due diligence, monitoring and compliance leadership from international brands.” On the other hand, a global brand pointed out the high risk of sourcing from Myanmar as there is no guarantee of whether products will be delivered on time, impacting their leverage over their supplier factories. As a result, brands’ orders are not stable, as they remain indecisive on whether to continue their business in the country.[13] The situation has rendered global brands ineffective in using their leverage.

Lack of all relevant stakeholders’ participation

Even prior to the coup, a successful mediation process required participation and support from all relevant stakeholders. Ongoing union-busting at both the factory and national level has hindered the participation of factory and national level unions in dialogue meetings to get dispute issues resolved.

 “The conditions for effective mediation are strongly determined by the involvement and support from the stakeholders concerned, including buyers, civil organizations, union federations, factory management and labour non-governmental organizations.”

Ongoing union busting at factory level and national level

Workers’ representatives and workers’ rights organizations that CAM talked to unanimously point out that strengthening unions at the factory level is critical so that unions are equipped with the skill and expertise to negotiate with employers and defend workers’ rights. In other words, the external pressure of brands’ leverage on their suppliers to engage in the mediation process cannot be sustained without establishing social dialogue mechanisms internally at the factory level and sector level. Ideally, a social dialogue mechanism would have been established at the factory level, and dispute cases would have been internally settled at the level of the Workplace Coordination Committee, which consists of workers’ representatives, including the basic union and the employer’s representatives. In such a situation, brands do not even need to intervene to resolve disputes. Therefore, when stakeholders talked to CAM, they emphasized the importance of strengthening unions. Before the coup and Covid-19, national-level unions and labour rights organizations tried to provide negotiation skills and communication skill trainings to both workers and management with support and cooperation from concerned stakeholders concerned, including global brands, international labour organizations and global unions . Social dialogue projects mentioned earlier intend to improve industrial relations by building the capacity of workers, unions and factory managers. However, since the Covid-19 pandemic, such an attempt has been hampered by union bursting cases, in which initiatives to form unions are hampered by employer intimidation at a significant number of factories. After the attempted coup in Feb 2021, ongoing union bursting has only increased. At both factories in the study, forming unions is discouraged in various ways. At both factories, workers were told not to join unions, and if they did, they would be fired. At one factory, workers were offered MMK 20,000 if they did not join the union. At both factories, whenever workers tried to organize to raise their grievances over labour exploitation and collectively demand their rights, they were threatened with soldiers’ being asked to come to the factories. At a shoe factory in Hlaing Thar Yar, six workers were killed by soldiers in March 2021. The employer called soldiers when a dispute erupted after workers found out they were not given their full salaries. At the national level, since February 2021, the Confederation of Trade Unions of Myanmar (CTUM) and the Myanmar Industries Craft and Services Unions Federation (MICS) declared their withdrawal from the National Tripartite Dialogue Forum (NTDF). The NTDF meets regularly every four months with government, employer and worker representatives to deal with industrial relations at the national level. Notably, key trade unions leaders and representatives of NTDF were arrested without a trial, and many of them are in hiding. The citizenship of some leaders of the outlawed 16 labour unions, has been cancelled.[14]

Human Resource Constraints

Brands’ intervention/mediation process, as explained above, takes time and requires participation from multiple stakeholders. It requires human resources with negotiation skill and capacity from relevant organizations. According to one labour rights defender’s account of their pre-coup work with brands in resolving labour rights issues at some factories, human capital is essential. For instance, in one case, in resolving the issue of union-busting at a supplier factory of a global brand, there were rounds of negotiations among various stakeholders, including the brand’s representative, owner of the supplier factory, factory manager, BLO leader, a national level union representative, a union from the brand’s home country, a local NGO, and a translator. It took about three to four months to resolve the issue and reinstate laid-off workers. According to LRO, of the eight brands they work with, only three brands have local offices employing about two to three local staff at each office. LRO noted that a stronger presence of local offices and staff are needed to facilitate better communication and negotiation among relevant stakeholders. Local staff should also have skills and experience in stakeholder engagement, negotiation, and dispute resolution. In addition to needing greater effort from brands to enhance human resource capacity, LRO’s biggest challenge is also human resource capacity. LRO said they are currently working within their own capacity, and they need more human resources––especially personnel who have experience in labour rights issues and are good at communicating in English. Although LRO intends to work at around 20 to 30 factories over the year, it obviously remains a huge challenge. Even if LRO can meet their targets, they will not be able to reach out to many additional brands and factories due to a lack of human resource capacity, especially given that around 150 global brands are sourcing from around 300 to 400 factories.[15] This figure does not include the approximately 200 remaining factories whose retailers/brands cannot be identified. According to the study, many other labour rights organizations and unions apart from LRO, are in hiding and currently not working with the brands.

Labour rights abuses rage on

Findings from the two factories and broader research reflect what has already been widely reported at various news outlets: mounting labour exploitation, including wage cuts, excessive working hours, reduced attendance bonuses, workplace harassment, and failure to make severance payments. Workers’ security has been threatened at the factory, and on the way to and back from work due to imminent military presence at various checkpoints. At both factories, experienced workers are intentionally hired on a daily wage by the employers to cut overall wages, attendance bonuses, overtime pay, earned leave, and other benefits entitled to permanent and contracted workers. At one factory, although daily wage earners are by law entitled to get paid public holiday leave, the employer cut those payments. In addition, the quota for production has increased beyond the capacity of workers’ ability, pushing workers to work overtime for at least two to three hours per day without overtime pay in order to meet production quotas. Due to an imminent threat to job security and oppression, most workers dare not raise their voices and are forced to work in exploitative working conditions. Around 60,000 jobs were lost prior to 1st February due to Covid and a further 250,000 after. Workers who cannot bear abusive labour conditions quit their jobs and try to migrate to neighboring countries like Thailand illegally; they face a new set of other difficulties.[16] Some workers simply leave industrial zones and return to their hometowns to work in agriculture, livestock, and on fishing boats. Some work at home-based small sewing businesses, and other open small groceries in their villages. Some join other small businesses, like bicycle shops.

Conclusion

The study indicates that the intervention of a few brands to help protect labour rights at their supplier factories––by using their leverage on the latter to mediate labour dispute cases––cannot be sustained without favorable conditions for inclusive participation of relevant stakeholders, including unions and labour organizations. Amidst the many challenges and difficulties, LRO has struggled to work with a few brands that are responsive and willing to cooperate with local labour organizations to improve labour situations. Regardless, elements of an effective mediation process that involve support and cooperation from various concerned stakeholders, are lacking. In addition, brands are not able to support long term solutions and resolve labour dispute, including building the capacity of unions and factory management to foster sustainable social dialogues at the factory level, let alone foster similar types of dialogue at the sector level. LRO would like to see more brands’ responsiveness and support, especially in strengthening unions. However, it remains questionable whether it is even possible within a post-coup context with surging union busting at the factory level and national level. Even prior to the coup, building capacity for industrial relations was in its nascent stages and an on-going process. In the post-coup period, such programs have been stalled and resumption is impossible. In addition, as stated earlier, many employers who are reluctant to be engaged in social dialogue process with workers ’representatives even before the coup, continue to take advantage of rampant human rights violations at the country level and suppress freedom of association and workers’ right to raise their voices. Within such unfavourable circumstances, the ability of global brands to induce employers to adhere to their code of conduct, is severely limited. It renders even global brands that care about their reputation ineffective in preventing labour rights abuses at their supplier factories, let alone brands that simply have no regard for international labour standards, and labour rights situations at their sourcing factories.

Corporate Accountability Myanmar (CAM) is a group of researchers formed in 2020 to conduct research on corporate accountability issues in Myanmar.

Notes

[1] Conversation with LRO, pseudonym name of a labour rights organization currently seeking support from some brands to resolve labour rights issues at some of these brands’ sourcing factories.
[2] Action, Collaboration Transformation on Living Wages, ACT is an initiative between 20 global brands & retailers and the global union federation Industrial Global Union to address the issue of living wages in textile and garment supply chains. For more on ACT, please see the webpage: actonlivingwages.com
[3] See above.
[4] See more about brands and suppliers in Myanmar under the section “Brief Overview of the Garment Sector”.
[5] More details about the disputes are mentioned in the section under “A look inside two factories”.
[6] The ILO-GIP project aided by the Swedish International Development Agency, and H&M started in June 2016 and ended in May 2020.
[7] Myanmar Industries Craft & Services Trade Unions Federation, MICS
[8] Detailed evaluation of social dialogue projects seen at https://cornell.app.box.com/s/etfxtavw1xutyqw7x2k1og04u5ewiowx
[9] 31 Fair Wear brands sourcing from 27 factories in Myanmar: AEVOR, Affenzahn, Deuter, Dynafit, engelbert strauss, ergobag, FOND OF, Funktion Schnitt, GotYaSatch, Hilly, Jack Wolfskin, LaMunt, Lowe Alpine, Mammut, Montane, Mountain Equipment, pinqponq, Rab, Ronhil, Salewa, SALZEN, satch, Schoffel PRO, Schoffel Sportbekleidung GmbH, SOL’s, Sprayway, Suitsupply, Takko, TH Clothes, Vaude, Wild Country
[10] 12 b, 2019 Second Amendment of the Labour Dispute Settlement Law
[11] “Around 40 out of 200 ACT brand supplier factories joined the Employer Working Group. The endorsement of the FOA Guideline process by all ACT brands thus broadened the participation of factories in the Employer Working Group and enabled the establishment of the FOA Guideline as a binding standard for all ACT brand suppliers.”
[12] 2012 Labour Dispute Settlement Law and its 2019 Amendment says “Any employer or worker found to have violated a prohibition contained in section 38 shall be sentenced to a fine from ks.300,000 to ks.1,000,000. Art.46, a); “No employer or worker shall fail to be present in person or through a representative without proper reason on the date and time set by the conciliation body for the negotiation of a dispute.” Art.38
[13] An interview with an industrial expert.
a id=”_ftnref14″ href=”#_ftn14″>[14] Pg.2 of the Global New Light of Myanmar on 8th March, 2022
[15] As of January 2022, openapparel.org lists 408 facilities in Myanmar. This is an indication of facilities from which the brands committed to transparency currently, or have previously, sourced.
[16] Conversation with a labour rights defender in hiding.