Laos Faces Labour Shortage as Living Costs Skyrocket

Source: The Star

Depreciation of the Lao currency kip and skyrocketing inflation are the prime motives for Lao people to seek jobs in neighboring countries, resulting in labor shortages in Laos.

The rising cost of living and comparatively low wages are forcing thousands of Lao nationals to seek employment in other countries, with most seeking jobs in Thailand and South Korea.

Members of the National Assembly (NA) have called on the government to take stronger action to handle spiraling inflation and currency exchange rates to minimize the hardships faced by the general public.

NA members expressed their concern over the continuing dire state of the economy, with more and more people leaving Laos for better-paid jobs in other countries.

NA member for Savannakhet province, Xayadeth Ouyavong, told the ongoing debate session that the government must tackle the resulting labor shortage.

“Workers have left factories in Laos for jobs in other countries because the wages paid by factories here are not keeping pace with the rising cost of living,” he said.

“Continuing depreciation of the kip and rising apartment rents are worsening the situation. As a result, factories in Laos are facing a labor shortage,” said Xayadeth.

He emphasized that the local workforce is the country’s backbone, and the acute labor shortage will negatively impact any efforts to stabilize the economy.

Inflation in Laos has increased significantly since the beginning of 2022, with the rate surging from 6.25 percent in January 2022 to 41.26 percent in February 2023.

The year-on-year inflation rate in Laos dipped slightly to 40.97 percent in March, 39.89 percent in April, 38.86 percent in May, and eased to 28.64 percent in June after Laos passed the peak of headline inflation recorded in February, according to the Lao Statistics Bureau.

President of the Lao National Chamber of Commerce and Industry (LNCCI) Oudet Souvannavong, said at the 14th annual Lao Business Forum held on March 27 that the spiraling cost of living has posed a huge challenge for businesses in their search for employees and efforts to boost exports, and that many skilled workers have left Laos for higher paid jobs elsewhere.

The LNCCI president added that many farmers have also abandoned their fields or are growing fewer crops due to rising production costs and the lack of manual workers.

A recent survey conducted by the Macroeconomic Research Institute in March found that more people are crossing the border into Thailand, where they can earn more than in Laos.

“In 2022, the monthly minimum wage in Laos was almost four times lower than in Thailand. This is mainly due to the significant depreciation of the Lao currency,” the survey stated.

With almost two-thirds of the Lao population being of working age, the country has huge potential to boost economic growth. However, there is a concern that high inflation, combined with comparatively low wages, means that many workers opt to work in neighboring countries where they can earn more.

So far this year, some 31,394 skilled workers have left Laos to work abroad, with more than 30,200 people going to Thailand, according to a report released by the Ministry of Labor and Social Welfare in April 2023.

In 2022, as many as 500,712 Lao nationals were working overseas, according to the report.