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Minimum Wage Hike Still Problematic

Source: Vientiane Times

Attempts to increase the minimum wage are meeting with resistance because of the impacts on businesses caused by the Covid-19 pandemic.

Business owners say they may not be able to roll out a wage increase in the near future, as proposed by the Lao Federation of Trade Unions (LFTU).

The LFTU has suggested that businesses should raise the minimum wage from the present 1,100 000 kip to 1.5 million kip a month, to improve workers’ standard of living.

It is possible such a decree could be issued on May 1, when workers celebrate International Labour Day.

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A meeting took place on Friday as a follow-up to several tripartite meetings between the government and representatives of employees and employers to discuss the issue.

LFTU President Mrs Aly Vongnorbountham said the Federation had carried out a nationwide survey to determine whether the existing minimum wage was appropriate given the cost of living and found that it did not meet people’s basic requirements.

A representative of the Lao National Chamber of Commerce and Industry suggested that the wage hike be delayed until May 1 next year.

He justified this by saying that if a wage increase had a negative impact on businesses, the workforce would be in trouble if employers cut worker numbers.

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“In my view, it is necessary to have a strategic plan, so that employers can prepare for a wage increase. It should not be the case that an announcement is made today and the practice begins tomorrow,” he said.

The use of more logical methods in fixing the minimum wage would lead to benefits for all stakeholders, he added.

“At the same time, an increase in wages is needed in view of the current situation regarding the country’s economic growth,” he said.

Minister of Labour and Social Welfare Mrs Baykham Khattiya said the ministry had commissioned a study to assess the lowest possible wage to be offered, which was originally expected to come into effect on May 1 this year.

The ministry would make another proposal on the wage increase and submit it to the government. If approved, the prime minister will issue a decree to implement the new minimum wage.

In recent years, the government has approved increases in the minimum wage but has been unable to rein in increases in the price of food and consumer goods, so that wage increases have not kept pace with the basic cost of living.

The government first increased the minimum wage in 1991.