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Lao Government Increases Minimum Wage for Third Time Since 2018

Source: Radio Free Asia

The Lao government has again lifted the monthly minimum wage – the latest increase since mid-2022 as high inflation and a weak currency continue to erode the buying power of workers.

The wage hike to 1.6 million kip (US$82) per month from 1.3 million kip (US$66) took effect on Oct. 1, according to the Ministry of Labor and Social Welfare. It is the government’s third such increase since June 2022 in response to the depreciation of the Lao kip against foreign currencies and the rising price of goods for daily consumption. 

The office of Lao Prime Minister Prime Minister Sonexay Siphandone issued an official notice on Aug. 6, announcing the approval of a 300,000 kip (US$15) increase to 1.6 million kip a month beginning in October, Radio Free Asia reported earlier. But the new minimum level doesn’t apply to state workers’ salaries.

Although the amount of increase isn’t adequate, it can still help workers to a certain degree, said a labor official who declined to be identified so he could speak freely.  

“When the government notice was issued, the main point referred to the cost of living and inflation rates based on the current situation,” he said “1.6 million kip might not be enough, but at least it can help the workers.”  

The move comes as the government addresses the cost-of-living crisis in Laos and its effect on the country’s workers whose wages are among the lowest in Southeast Asia.

The measure applies to new employees — unskilled, untrained, inexperienced and those with no professional qualifications — who work eight hours a day for 26 days per month, but does not include overtime, food, housing or other benefits, according to the Labor Ministry notice issued in September.

All businesses in Laos must implement the new wage increase or pay a fine. 

Workers who have professional qualifications, training and experience, and who have worked up to nine months also must be paid 1.6 million kip per month.

Employers must pay factory workers who perform jobs that pose a danger to their health more — at least 15% of the 1.6 million-kip wage.

Lao workers told RFA that they were pleased with the increase, even though it’s not a huge improvement.

“I am happy like others because it’s better than nothing … but 100,000 kip a day is not enough for meals for a whole day,” he said.

Another worker agreed, saying the extra 300,000 kip would not suffice because the price of daily necessities keeps rising, and people cannot save money.

“The price of goods has increased from 2,000 kip to 8,000 kip to 10,000 kip,” he said. “We have to save as much as we can and reduce our consumption.”

A garment factory worker said his employer had been paying new workers 1.3 million kip per month, but now will have to bump up their salaries to 1.6 million in line with the new regulation.

The first of the three most recent increases took effect in August 2022, raising the monthly minimum wage to 1.2 million kip from 1.1 million kip. The second increase that took effect this May increased it to 1.3 million kip. 

Civil servants, especially government officials, who are not affected by the new increase, currently earn monthly salaries of about 2 million kip.