INTERNATIONAL LABOUR ORGANIZATION THE OFFICE OF THE ILO LIAISON OFFICER. Bureau for Employers Activities
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1 INTERNATIONAL LABOUR ORGANIZATION THE OFFICE OF THE ILO LIAISON OFFICER Bureau for Employers Activities Call for Expression of Interest ILO/YGN/19 /15 23 January 2019 Researches on: Position Title: Impact of labour turnover and absenteeism on labour Productivity in the Garment sector in Myanmar Effects of automation and digitalization on market strategies, investment and skills policies for Myanmar garment sector Organization: Technical Cooperation Programme: International Labour Organization (ILO) Institutional Capacity of Employers Organizations Location: Yangon (Myanmar) Type of contract External Collaborator or PO services contract No of Position One Source of Funding Duration: Closing Date: Applications Details: RBSA 15 February May February 2019 Application to Nyein Chan Institutional Capacity of Employers Organizations Project International Labour Organization , ILO Yangon No. 1(A), Kanbae Road, Yankin Township Yangon Myanmar. or via to chan@ilo.org Only short listed individuals/firm will be contacted for further consultation process.
2 BACKGROUND The garment sector currently plays a pivotal role in Myanmar s economic growth. As per MGMA official report, there are currently in Myanmar around 500 factories giving jobs to half a millions employees. The garment sector is the fastest growing sector with highest job creations in the country. MGMA forecasts that the sector can provide 1.5 million of people employment by 2020 with the export value of 8-10 billion USD. In order to ensure a sustained growth of the garment sector, there is a need to foster labour productivity. When describing the labour conditions and productivity in the garments export sector, the World Bank (2012) explained how higher worker turnover rates drive low capacity utilization resulting in lack of investment in workforce skills upgrading and training thus affecting the overall productivity. A study conducted by the ILO (2016) on wages and productivity in the garment sector in Asia and the Pacific and Arab States, revealed how across the region there are significant productivity gaps that reflect the generally low-value nature of the industry. Within the region, Myanmar s labour productivity is still significantly lower than its neighbours like Thailand, Vietnam and Cambodia (CEIC Data, 2016). The competitiveness of Myanmar s garment industry on the global market is currently primarily based on low wages. Amongst other factors, two elements seem to have an important negative impact on labour productivity in the sector: extreme high turn-over and absenteeism rate. On average, labour turnover rate in garment sector of Myanmar is at 7% per month (reaching the peak of 12% in Chinese owned companies), which is higher than Bangladesh 5 % per month. Exploring the deep roots of the high turn over rate, including working conditions, salaries, decision making process of a young workforce, payment system and incentives and HR practices could definitely contribute to put in place sustainable solutions for the retention of skilled labour and have a more mature labour force. In fact high turn-over rate is attributable to different reasons, but it has as an important consequence on the very low investment in training and skills development and the need to constantly re-orient and offer at least basic skills training to new recruited personnel. Additionally, due to the lack of formal skills recognition in the country, workers that go from one factory to another find themselves always starting at the bottom of the salary structure. No data and empirical evidences exist so far in the scientific literature on the impact of absenteeism on companies productivity in Myanmar, but this is one of the most common problem indicated by HR managers in the garment sector in Myanmar as explanation of lower production results compared to regional competitors. The difficulties in re arranging the structure of the line due to unforeseen absenteeism and the need to constantly require over time to the labour force to reach production targets (also because the line is understaffed), is posing also serious consequences on the competitive capacity and putting the workers under big strain. On the other hand the easier access to automation and digitalization technologies will play an important factor in increasing labour productivity (thanks to capital investment). But the sector development strategy and employment strategy in Myanmar garment sector associated to automation and digitalization could also pose serious challenges and concerns. Technological advancements could potentially change sourcing decisions of big buyers and threaten jobs and livelihoods of people. Myanmar s Ministry of Labour, Immigration and Population (MoLIP) highlighted the challenges ahead in advancing labour market for sustainable development in Myanmar where many economies are
3 planning/switching toward advanced technology and the importance of evidence based research to facilitate the policy direction of future labour market dynamic in Myanmar. Thus, brings up the issues of impact of the automation and digitalization on the Myanmar garment sector is important to understand what type of skills and investment policies need to be undertaken to foster growth and sustainable labour market development within garment sector in Myanmar. DESCRIPTION OF WORK This research will have two main areas: The impact of turnover rate and absenteeism on labour productivity in garment industry in Myanmar; the impact on employment and future market strategy of automation and digitalization on garment industry in Myanmar. The final paper(s) should at least respond to the following key questions and set of sub questions PART 1 Main research question Which are the impacts of turnover rate and absenteeism on labour productivity in garment industry in Myanmar? Do improvement in working conditions (as per ILO definition working conditions include working time - hours of work, rest periods, and work schedules- remuneration, the physical conditions and mental demands that exist in the workplace) and well-designed HR policies and practices (including but not limited to employment security, selective hiring, promotion of diversity, contingent compensation, extensive training, information sharing, employee development and career growth, etc.) have an impact on reduction of labour turnover and absenteeism rate? Set of sub questions What is the turnover rate in garment sector factories in Myanmar? So ownership (national or foreign ownership), presence of trade unions and collective bargaining agreements, companies size, years of experience, main sourcing partners, composition of the workforce by gender, family responsibilities and age, position of the employee, effective composition and role of Working Coordinating Committees, characteristics of supervisory staff at the factory level (ratio of supervisors to workers, nationality of supervisors) having effects on turnover rate? What are the main reasons for workers to leave the company? How much are companies spending on recruitment practices, orientation and basic skills training for newly recruited personnel? What are the payment/wage system in place in the factory? Presence of other rewards? What HR practices and policies are currently in place to diminish labour turnover? Which of these policies are effective? What are the impacts of labour turnover rate on labour productivity in garment industry?
4 What is the level of absenteeism (justified and unjustified)? What are the main reasons for being absent? Are ownership (national or foreign ownership), presence of trade unions and collective bargaining agreements, companies size, years of experience, main sourcing partners, composition of the workforce by gender, family responsibilities and age, position of the employee, effective composition and role and regularity of Working Coordinating Committees, characteristic of supervisory staff at the factory level (ratio of supervisors to workers, nationality of supervisors) having effects on absenteeism level? How do production managers deal with unforeseen absenteeism? What are the HR policies and practices currently in place to deal with absenteeism? Which ones are effective? What are the impacts of absenteeism on the labour productivity (in selected lines)? Does the absenteeism level have an impact on request for overtime to employees at work? PART II Main research question What are the foreseen impacts on employment and future market strategy of automation and digitalization on garment industry in Myanmar? 1 Set of sub questions What percentage of garment factories do currently have machines and robots that have substituted labour force? What are the reasons that motivated the factory to adopt automation technologies? What have been the impacts so far on employment? How long does it take to recover the investment in automation technology? Which automation technologies (sew boots, automatic cutters, robots etc) will be most probably purchased by garment manufacturers in Myanmar with significant impact on labour destruction (how many workers can the automation technology substitute) in the next 3 years? Which new skills which will be required by the employees to manage the automation technologies and processes? Are those skills available in the Myanmar labour market? Which process is most likely to be affected by the introduction of artificial intelligence? Robotisation? How do Myanmar firm are compared to other Asian garment producing countries, with regard to using new technologies? Which are the most recent forecasts on relocation of production processes closer to final customers (in Europe and USA) owned to automation and digitalization opportunities? Which could be the consequences, if any, for Myanmar garment industry? How does MGMA 10-year strategy, particular the 1 or 1.5 millions of workers employed in the sector, fit with this changing landscape of production processes? How can Myanmar be competitive in this environment? 1 In investigating the impacts of automation and digitalization of the consultant will liaise with the ILO-Garment Industry Project also looking into the impact of these new trends with a specific gender aspect.
5 What are the best strategy to continue creating sustainable employment, improving working conditions and increasing salaries in a competitive environment What investment and skills policies should be promoted by the government to make sure the international investors and buyers will maintain their production and sourcing from Myanmar? The research methodology should be developed by the research team and should be approved by the ILO and include at least the following: - Desk research and literature review - Structured interview survey with managers and workers and workers representatives in at least 40 garment companies (sampling methods based on companies size and ownership) with at least 10% of the companies located outside Yangon (preferably Bago or Pathein) - Interviews or FGDs with key stakeholders including Department of Labour under the Ministry of Labour, Immigration, and Population (MoLIP), the Department of Technical and Vocational Education and Training (DTVET) of the Ministry of Education (MoE), the Ministry of Industry, the Ministry of Commerce, Myanmar Garment Manufacturers Association (MGMA) selected industrial zones management committees, selected big brands sourcing from Myanmar, Confederation of Trade Unions of Myanmar, Industrial Workers Federation of Myanmar (IWFM), and with the Myanmar Industries Craft and Services (MICS). - Relevant garment support projects, including Aung Myhn Hmu, Business Innovation Facilities, DaNa The research shall also include a set of final recommendations for garment factories owners, workers representatives and policy makers to face the challenges the research is investigating on. DELIVERABLES AND TIMELINE This assignment has five deliverables, which must be completed in sequence. The external collaborator will complete the following: 15 Feb March 2019: Desk research and literature review presentation of bibliography of reference by 10March March April 2019: Stakeholders engagement. Proposed list of stakeholders to be engaged, including factories to be surveyed, and proposed survey questionnaire and methodology by 10 April April-20 May 2019: Data collection and Data analysis. Presentation of preliminary findings by 20 May May July 2019 Redaction of the final reports on Impact of Turn-over rate and Absenteeism and Productivity and Impact of Automation and Digitalization on the sector. The report should be include a list of recommendations to address the root causes of labour turnover and absenteeism and an analysis on the policies options to face the possible adverse effects of automation and digitalization on Myanmar garment sector. First draft should be submitted by 20 June June. ILO team is committed to provide comments in 10 days. Final versions of the reports should be delivered by 10 July 2019 All outputs should be provided to the ILO, and payment will be released only after approval and acceptance by the ILO. Note that products may be returned for further work if they are incomplete (e.g. do not address
6 all areas noted in the ToR) or not of sufficient quality (including but not poor grammar, weak report writing/structure, etc.). QUALIFICATIONS The group of researchers who should include a lead researcher and associates researchers must have University degrees in management, economics, social science, engineering, public policy or a related discipline. Composite team expertise will be considered an asset. Strong knowledge of the garment industry in Myanmar Strong research experiences including primary data collection in the area of working conditions and labour productivity in manufacturing sectors A detailed knowledge of the country context and ability to communicate with all stakeholders (both local and international) has an asset Relevant experience related to impact of automation and digitalization on labour force Previous experience in producing research papers for international public and private sector clients. The total expected working days for the assignments are around Research Team can also apply for only PART I or PART II of the assignments, but for economy of scale principles, it might be preferable for the research team to send proposals for both components. All interested parties should submit an application with the following: 1 page Cover Letter CVs of the Research Team (all members) Technical proposal including proposed research methodology and structure (approx.. 4 pages) Proposed total fee for the service The deadline to submit expressions of interest is by close of business on 04 February 2019 sent by with the subject header Researches on: - Impact of labour turnover and absenteeism on labour Productivity in the Garment sector in Myanmar; - Effects of automation and digitalization on market strategies, investment and skills policies for Myanmar garment sector Nyein Chan at chan@ilo.org
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