Economic
H&M Factory in Myanmar Damaged in Violent Labor Dispute
Workers demanding better conditions and benefits have
destroyed the production line of a Chinese-owned factory making clothes for
Swedish fashion retailer Hennes & Mauritz, in Myanmar.
YANGON, MYANMAR
—
Workers demanding better conditions and
benefits have destroyed the production line of a Chinese-owned factory making
clothes for Swedish fashion retailer Hennes & Mauritz, in one of the most
violent labor disputes in Myanmar in years.
The month-old dispute, which also saw
managers attacked, highlights the need for Aung San Suu Kyi's government to
enact social and labor reforms, analysts say, while at the same time reassuring
investors looking to tap the opening of one of the world's fastest growing
economies after decades of isolation.
Production at Hangzhou Hundred-Tex
Garment (Myanmar) Company, which was one of H&M's 40 suppliers in Myanmar,
has been halted since Feb. 9, workers and managers in the Chinese company said.
"H&M group is deeply concerned
about the recent conflict and our business relationship with this factory is on
hold at the moment," the Swedish-based company said in a statement. It
declined to elaborate on the impact on its global supply chain.
"We are monitoring the situation
closely and are in close dialogue with concerned parties. We strongly distance
ourselves from all kind of violence."
Labor activists say the protest in the
commercial hub Yangon - in which equipment, buildings and vehicles were damaged
- shows the lack of protection for workers in the labor-intensive textile
industry.
The dispute started with a strike in
late January following the sacking of a local labor union leader, according to
workers and managers. Workers demanded a better performance review system and
health care coverage.
It turned violent on Feb. 9, prompting
the factory's closure. Video footage seen by Reuters shows dozens of female
workers surrounding and beating a Chinese manager who was struggling to escape.
One company manager and a local labor department official confirmed the
authenticity of the footage.
In late February hundreds of workers
stormed the factory and damaged facilities including textile machinery,
computers and surveillance cameras.
"The tension between workers and
management was getting bigger day-by-day," said the company's former union
leader That Paing Oo, who was fired in January for taking leave without
approval.
He had led a labor protest late last
year that successfully pushed Hangzhou Hundred-Tex Garment to compensate
employees who did not receive overtime pay, several workers said. The company
confirmed that it had paid a delayed overtime payment of 70 million kyat
($51,736) to almost all of its 570 workers based on a settlement reached with
the workers in December.
The Chinese embassy in Myanmar described
the incident as an "attack" and has filed a "serious
request" to Myanmar government to hold those involved accountable.
No one was arrested in the late February
violence, police said. Workers' representatives are still negotiating with
management over conditions once the factory is able to re-open.
The Chinese company makes garments such
as skirts and shirts exclusively for H&M, its assistant manager San Htwe
told Reuters. He said the damage would cost around $75,000, and the company was
planning to demand compensation from Myanmar's Labour Department.
The conflict is troublesome for H&M,
which is widely seen as being at the forefront among large apparel companies in
promoting workers' rights and fair wages.
H&M has called on governments in
sourcing countries such as Cambodia and Bangladesh to ensure fair pay for
workers. It has said it cannot unilaterally require individual suppliers raise
wages as it generally shares them with other brands, although according to the
owner that is not the case with the factory in this dispute.
H&M, which sources the bulk of its
clothes in Asian low-cost countries such as Bangladesh, Cambodia and Myanmar,
generally ranks high in sustainability indexes such as the Corporate Knights
magazine's Global 100 index, where in 2016 it ranked 20th, lagging only Adidas
in its sector.
Catching
up
Myanmar's fast-growing textile industry,
which employs more than 300,000 workers, has become attractive to global
apparel brands such as H&M and U.S. retailer Gap Inc following the easing
of economic sanctions by the United States and the European Union.
A minimum monthly wage of around $63,
based on a six-day work week, gives Myanmar a competitive advantage over
neighboring garment producing hubs such as Vietnam and Cambodia, where the
monthly minimum wage ranges from $90 to $145, according to the International
Labor Organization.
But labor activists and industry
analysts say Suu Kyi's government, in office for almost a year, has to do more
to ensure safety for workers as well as investment stability for employers in a
country where strikes and protests are not uncommon.
"Industrial relations are still
only a few years old in the Myanmar garment industry, and effective cooperative
structures are still being developed," said Jacob Clere, who works on a
European Union-funded project to improve Myanmar's garment industry.
The Ministry of Labour, Immigration and
Population, which was involved in mediation between workers and employers of
Hangzhou Hundred-Tex Garment, said it was looking to amend laws to improve the
legal framework for disputes.
Maung Maung Lay, vice president of
Myanmar's Chamber of Commerce, said investors needed to be patient.
"Being a latecomer, there's a leap
forward for Myanmar to catch up in terms of international labor laws," he
said. "Rome wasn't built in a day."
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