The Impact of minimum wage policy on employment in Myanmar

Abstract

The government of Myanmar introduced a minimum wage policy in 2015. The issue of Myanmar's minimum wage policy has been at the forefront among the general public, scholars, economists and the government because a recent economic transformation has taken place in Myanmar. There has been a growing interest in the potential for employment due to the minimum wage policy in Myanmar. Also, the impact of the national minimum wage policy implementation on female employment receives attentiveness to investigate as the women are traditionally discriminated against in terms of education and job opportunities in Myanmar. The purpose of this paper is to analyze the impacts of minimum wage policy in Myanmar and how the introduction of minimum wage setting has affected the employment of Myanmar's labor force. Additionally, this paper extends to explore the firm’s action in response to the government’s minimum wage policy whether installing supplementary machines to substitute labor resources. This paper applies a fixed effect estimation method by using the World Bank's enterprise panel data set surveyed from 2014 to 2016 in Myanmar. Findings suggest that the minimum wage reduces not only full-time but also part-time employment. In contrast, the first minimum wage policy increases overall female employment. However, the adverse impacts pronounce more in female employees of Joint Venture enterprises and the enterprises located in the small populated regions. Manufacturing enterprises destroy full-time employment more than service enterprises do. Investment in capital such as equipment and machinery increase to substitute labor after the minimum wage policy implementation, as a result, the full-time employment slightly decreases. Basically, Myanmar's first and foremost minimum wage policy implementation does not affect employment substantially. Thus, appropriate measures concerning the minimum wage policy must be undertaken regularly by the government and institutions related to the labor union to be a sound instrument for the government and the well-being of employees as well as employers. Whenever the government of Myanmar fix the minimum wage in a reasonable period based on the fiscal year, it should be a manageable wage for both the employer and the employee to prevent possible issues and losses that could result from the minimum wage being set.