The economic fallout of the COVID-19 pandemic and the 2021 coup in Myanmar has unraveled the promising gains the country achieved since its opening in 2011. The World Bank’s update from January projects 1 percent growth for Myanmar in 2022, noting that the country’s economy is 30 percent smaller than it would have been in the absence of the coup and COVID-19 shocks. While impacts vary across sectors, experiences in Myanmar’s garment industry provide insight into how the COVID-19 pandemic and military coup have reversed improvements in workers’ livelihoods and security. This trend demands attention from U.S. and European stakeholders as they seek to advance political and business interests while championing responsible labor practices.
The garment sector functioned as a driving force for export-oriented growth during Myanmar’s post-2011 political and economic transition. The value of garment exports expanded fivefold from 2012 to 2019, accounting for 28 percent of Myanmar’s total export value by the onset of the COVID-19 pandemic. Myanmar gained preferential access to European markets under the European Union’s Everything But Arms (EBA) scheme, which facilitated its garment exports’ success. In addition to its significance for overall economic growth, the garment industry also served as Myanmar’s fastest growing source of decent employment. Its ascent highlights the critical livelihood and economic mobilization opportunities afforded by Myanmar’s period of opening, particularly for the young women constituting approximately 90 percent of Myanmar’s garment workers, most of them rural-to-urban migrants.
The outbreak of COVID-19 first began to unthread the seams of Myanmar’s garment industry as lockdowns, supply chain disruptions, and order cancellations contributed to widespread layoffs and factory closures. A factory survey from the EU’s Center for Economic and Social Development suggests that Myanmar’s garment and footwear industry witnessed a 26 percent reduction in its workforce in 2020. Those who remained employed faced income loss driven by cuts to overtime hours. This in turn reduced remittances from internal migrants working in the industry, which serve as a lifeline for many rural poor households. The EU’s Myun Ku program and the pre-coup Myanmar government’s COVID-19 Economic Relief Plan provided a baseline level of economic relief but fell short of reaching all impacted workers.
Additional supply and demand shocks hit the garment industry as a result of the coup on February 1, 2021. From February through May of 2021, major global brands including H&M and Primark suspended operations in Myanmar in light of the coup. Reductions in global demand along with cash flow shortages and transportation disruptions exacerbated factory closures and layoffs. Consequently, the Federation of General Workers in Myanmar estimated that one in three garment factories were set to shutter their doors in 2021. Additionally, the value of the kyat dropped precipitously following the coup, reaching a historic low in September 2021. This further reduced the purchasing power of garment workers, whose wages had already eroded from the impact of COVID-19.
The coup also introduced political pressures that place garment workers in a difficult position as they weigh political activism with economic and physical security considerations. For many, the commute by motorbike or on foot to factories located in industrial zones requires navigating conflict zones or military checkpoints in areas under martial law. Moreover, labor unions have emerged at the forefront of the Civil Disobedience Movement (CDM), which encourages workers to forgo income-earning opportunities to participate in general strikes. These unions’ outspoken criticism of the junta has rendered garment workers targets of factory raids and arrests by security forces attempting to quash anti-coup resistance.
Garment workers bear the brunt of the fallout from the junta’s response to anti-coup labor activism. Following the emergence of the CDM, the junta outlawed 16 labor organizations and arrested prominent union leaders. These actions have undercut unions’ abilities to monitor and advocate for improving working conditions. The hollowing out of collective labor power compromises the highly fragile gains for workers’ rights that labor unions achieved prior to the coup.
Two years after the onset of COVID-19 and one year after the coup, Myanmar’s garment workers now face an evolving dilemma. The World Bank highlights the garment industry as a sector on the mend from the impact of COVID-19. Notably, garment exports largely accounted for the gradual recovery of manufacturing exports during the final three months of 2021. However, as the World Bank also underscores, post-coup political uncertainty continues to plague the industry. Balancing bolstering the industry’s COVID-19 recovery with ongoing efforts to take a stance against the junta complicates the choices facing garment workers and those seeking to support them.
As the source of many of the world’s major fashion brands and Myanmar’s largest garment export markets, the EU, the United States, and Japan play a critical role in shaping the direction of the complex road to recovery for Myanmar’s garment industry. In December 2021, the Action, Collaboration, Transformation (ACT) initiative – the primary international labor rights watchdog in Myanmar – halted its operations in Myanmar after its local trade union affiliate determined it was “no longer able to operate freely under current circumstances.”
Following ACT’s withdrawal, a coalition of over 130 trade organizations, including the American Federation of Labor and Congress of Industrial Organizations, marked the first-year anniversary of the coup by calling for international fashion brands to divest from Myanmar in solidarity with the All Burma Federation of Trade Unions and the Federation of General Workers Myanmar. In addition to placing pressure on individual companies, activists have also lobbied the European Union, the United States, and other governments to broaden sanctions and for the European Union to withdraw the EBA preferential arrangements that uphold Myanmar’s garment sector’s privileged access to European markets.
While these demands align with calls from most labor unions in Myanmar, a survey from December 2021 from the Workers’ Solidarity League of Burma – with over half of the respondents working in garment and shoe factories – found virtually no support for labor unions’ campaigns for broader sanctions. These conflicting views between individual workers and unions provide insight into the complexity underlying garment workers’ approaches to their work and its political implications as they respond to multiple crises evolving at different rates. The European Chamber of Commerce in Myanmar acknowledges this complexity, noting that it will support fashion brands that continue to source from Myanmar while ensuring to the extent possible decent work opportunities and compliance with human rights standards.
Understanding the challenges squeezing workers from all sides in industries such as the garment sector is essential to crafting sensitive responses to Myanmar’s crises. Prioritizing responsible labor practices in policy responses will reduce harm to the workers on the frontlines of these crises as European and U.S. stakeholders seek to support Myanmar’s economic rebound from COVID-19 while taking a stand against the junta.
This article was originally published on New Perspectives on Asia from the Center for Strategic and International Studies and is reprinted with permission.