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ATTENTION! The collective wage increase in textile wages in Myanmar, Cambodia, Malaysia and other countries!

DATE: Apr 12th, 2018
According to “Fortune,” this year, workers in the Southeast Asia region who had the minimum wage successfully obtained higher basic wages, causing factories and manufacturers to either increase investment in the region or seek lower-cost solutions. Malaysian, Thai and Burmese workers have been able to get a 50% salary increase this year.

When it comes to the well-known representatives of China’s manufacturing industry, basically everyone first thinks of Foxconn, which is famous for the OEM of Apple. Foxconn is one of the largest manufacturing companies in China and has a million employees in mainland China. It is only 2016. Its total import and export accounted for 3.6% of China’s total import and export volume. It is not an exaggeration to say that he is one of the representatives of Chinese manufacturing.

Recall that two years ago, there were once famous manufacturing companies fleeing China and setting up factories in Southeast Asia. According to news reports at the time, world-renowned companies like Uniqlo, Nike, and Foxconn opened new factories in Southeast Asia and India. Accelerated the pace of evacuation in China. The reason at that time was that as China’s labor costs continued to rise, the cost of land became increasingly high. Choosing to set up factories in these underdeveloped countries in Southeast Asia could result in lower costs and more profits. Profits, so these profit-making companies have chosen to move some of China’s factories abroad, laughing to make more profits.

However, just over two years have passed since the time. Those enterprises that feel that they have escaped from China’s economy may not be able to laugh because Southeast Asia has also started to increase wages.

Increasing Southeast Asian wage costs

However, all this has changed since the first decade of the 21st century. At that time, the first time there was a labor shortage in the Guangdong region of China, the migrant workers who had arrived cheaply everywhere could not even be recruited, and companies were at train stations and bus stations. A recruitment contract was set up and all methods were used to recruit workers. However, many companies still did not recruit enough employees. At this time, people realized that China’s labor bonus was subsiding and that relying on the demographic dividend to eat this kind of low-end manufacturing food had changed. It was difficult to sustain. After 10 years of support, a large number of enterprises in 2015 began to flee the country just as they did in the past from Europe, America and Japan to China. They have developed economies in Southeast Asia and are even less developed, resulting in lower labor costs. The country set up factories, thinking that it can take advantage of the demographic dividend of Southeast Asia to eat a decade or two of economic high profits.

However, it is not a long time. According to “Fortune,” this year, workers in the Southeast Asia who have the minimum wage have successfully obtained higher basic wages, causing factories and manufacturers to either increase investment in the region or seek more. Low-cost solution. Malaysian, Thai and Burmese workers have been able to get a 50% salary increase this year.

The Malaysian government has not announced the minimum wage for 2018. However, the Thai government is considering raising the minimum wage in 2018 by 3%.

In order to obtain the support of the garment workers’ voters in next year’s general election, Cambodian Prime Minister Hun Sen announced that the minimum wage for workers of shoe-making and garment factories will increase from US$153/month to US$165/month in the next year, plus Hun Sen’s request for an additional US$5 for next year’s minimum wage. Determined at $170/month, the pay rise is 11%.

On March 5, the cost of labor in Myanmar is expected to rise 33% this year, and purchase costs may also rise. The National Minimum Wage Commission has agreed to increase the daily wages of workers from the current 3,600 kyat ($2.66) to 4,800 kyat ($3.55), a rise of 33%. This is based on 8 hours a weekday and 6 days a week. Burmese garment workers earn a minimum wage of 85 US dollars a month.

Although this increase may appear to be a large percentage, it is lower than the 55% increase required by workers and unions, and the demand for workers and unions has risen to 5,600 yuan ($4.14 per day, $99 per month). U Ye Naing Win, a secretary of the Union of Trade Unions (CCTU) and a former worker representative of the Central Labor Dispute Arbitration Committee, said that they are not satisfied with the K4800 kyat daily salary set by the committee. We (workers) demand a raise because of hunger. They should not ask for discounts.

However, the trade union federation of the country opposed the increase of the wage rate to 4,800 kyats despite the fact that Myanmar’s 2013 Minimum Wage Law requires a review of the wage rate every two years.

At present, the trade unions in Myanmar require the government to consider the actual cost of living when assessing an appropriate salary increase, especially if the upcoming rent increases. Although the payroll group has already determined its gains, the committee will make recommendations and objections within the next few weeks and determine the final figure within 60 days. In other low-cost purchasing countries, such as Mauritius, Mexico, and Cambodia, the recent wages are also rising, and the corresponding labor costs will also increase this year.

Although this increase in wages is indeed a certain gap from the wages of Chinese workers, rising wages will inevitably increase the manufacturing costs of enterprises. Those enterprises that had escaped from China suddenly found themselves as if they had no place to go except for East Asia. Outside of these countries in Southeast Asia, it is almost impossible to find workers with a large population, such as Asian countries, who abide by labor discipline and who are still hard working. (The dilemmas of Indian workers and African workers are still very large in East Asia and Southeast Asia.)

Rely on the low cost of labor production is not sustainable

Even if you moved your company to a low-cost region like Southeast Asia, you must endure the pressure of rapid rising labor costs in a few years. Because of the low cost of labor, high-volume Chinese companies have chosen to substitute low-cost labor. Advanced technology, however, only the core technology is the first productive force. Now Chinese companies must realize that only if they have done a good job of technology, only by raising the level of automation of their own enterprise is the real foundation because it comes from the scope of the whole world. Look, with the more developed human economy, the cost of the labor force must show a rapid rise. However, from the point of view of advanced technologies such as computers, the cost of using automation technology and robotics technology will surely become lower and lower. Therefore, Chinese companies must abandon the inherent low-cost thinking of the labor force to truly realize their own technological advancements.

In addition, it is very necessary to investigate and explain the reasons for the divestment. However, it should be noted that “It’s the weather to rain”, the normal industrial gradient transfer, the inevitable, unstoppable thing, it goes with it. China has a vast territory and a large gap in cost structure. Since the reform and opening up, the internationally transferred industries have remained in China long enough. Some industries, we do not want to stay! Shanghai is not through the illegal removal of construction, governance group rent and other means to control the population, industrial adjustment it!

It should also be noted that the “sounding words” spoken from the side of a company or business organization are not necessarily true and “excuses” are not necessarily credible. Not that there are paragraphs to say: Why do beautiful women in the costume drama always say to the benefactor: “The little woman does not have to report, only the physical aspect of the promise”, is this phenomenon really existed in ancient times? Nonsense, it is because she likes him . If she doesn’t like it, she would say: “The little woman can’t be considered for the report. Only she can make a cow and come back to her in the next life.”

With Southeast Asia’s rising wages, Foxconn could not laugh. Actually, this is not a bad thing. Chinese textile companies are also just awake.