German Supply Chain Law: Monitoring employment practices and environmental issues in Myanmar

last updated on 5 May 2022 | reading time approx. 3 minutes

• Which risks occur along supply chains in Myanmar? »

• Which industries appear particularly vulnerable to adverse impacts of human/labor rights or environmental issues in Myanmar? »

• Is there any legislation in Myanmar which addresses these risks? To what extent is it enforced in practice? »

• Can you provide a case example (e.g. taken from local media coverage) in which a foreign or local company had to deal with such adverse impacts? »

Which risks occur along supply chains in Myanmar?

The situation in Myanmar has fundamentally deteriorated since the military's coup in February 2021, including the control of supply chains. Targeted sanctions by Europe and the United States against military personnel and units, as well as companies with military involvement, require a detailed investigation of supply chains. In addition, family names are almost nonexistent in Myanmar, making it generally difficult to identify family affiliations. This circumstance considerably hampers, for example the identification of holdings in local businesses and family conglomerates with ties to the military.

In Myanmar, there is widespread state and societal discrimination against minority groups, including in the fields of education, housing, employment and access to health care. However, ethnic minority groups make up 30 to 40 percent of the population. International observers criticize that significant wage gaps based on religious and ethnic background are commonplace.

Risks lie particularly in the area of employee protection, especially with regard to the prohibition of unequal treatment in employment relationships and the prohibition of withholding a fair wage.

Which industries appear particularly vulnerable to adverse impacts of human/labor rights or environmental issues in Myanmar?

In many extractive industries, such as oil & gas and mining, poor working conditions, human rights violations and inadequate environmental standards are more common due to corruption, licensing and involvement of the military or ethnic groups in these sectors.

In general, sectors and companies close to the military are more vulnerable to human rights violations and inadequate working conditions, because local and international labor rights organizations have very limited access to these sectors, hence standards can be enforced less decisively.

In the opening and democratization process of the past ten years, attempts have been made to counteract the unequal treatment of workers, and to successively strengthen workers' rights, such as through the formation of trade unions. In recent years, for example, the Burmese government has introduced partially applicable labor laws and enacted laws to protect the environment. However, the military coup in February 2021 and the social situation since then have brought this development process to a fundamental standstill.

Trade unions also report that criminal proceedings are being brought against employees, sometimes culminating in arrests, if they have exercised their right to strike. The current unstable situation in Myanmar, with large sections of the population being engaged in civil disobedience, generally makes it difficult to look at working conditions and compliance with environmental standards.

Here, too, risks lie in the protection of workers, especially the prohibition of disregard for freedom of association.

Is there any legislation in Myanmar which addresses these risks? To what extent is it enforced in practice?

The basic legal framework for foreign and local employees is prescribed in the Myanmar Companies Law 2017, including equal rights and remuneration for employees as well as dispute settlement procedures.

The Environmental Conservation Law from 2012 is guiding companies to ensure compliance with environmental standards and aiming to reduce the impact on communities, though the execution is often still questionable.

Also in 2012, The Settlement of Labour Dispute Law was enacted in order to strengthen workers' rights, providing peaceful workplaces and settling disputes of employers and workers justly.

Can you provide a case example (e.g. taken from local media coverage) in which a foreign or local company had to deal with such adverse impacts?

In the former capital of Yangon, a developer was stopped with a construction project near the iconic main pagoda due to environmental concerns with regard to the impact on the landmark building. As a result, the city of Yangon provided a different prime space for the project as substitute.