Minimum Wage Increase Remains Unpaid, Despite New Ruling

Many businesses, notably garment factories, are failing to comply with an increase in the minimum wage paid to workers, which came into effect on January 1.

The government announced that the monthly minimum wage would increase from 348,000 kip to 626,000 kip.

The announcement stated that an unskilled worker must be paid a monthly minimum wage of 626,000 kip together with any supporting allowances previously received, such as for lunch, good performance and social welfare benefits.

The refusal by employers to increase the wage as mandated has been repeatedly reported on. Officials have announced on several occasions that they will conduct checks to ensure that businesses are complying with the new policy. In the meantime many are failing to do so, the Federation of Trade Union has said.

“Employees in many workplaces have not had their monthly wage increased,” Director General of the union’s Worker Protection Department, Mr Ounkham Bounyaseng, told the Vientiane Times last week.

“Some workers have been paid less than the legal rate of 626,000 kip.”

A worker at a garment factory in Xaythany district who asked not to be named said she earns an overall monthly income of less than 626,000 kip.

Mr Ounkham said that while many businesses had increased the minimum wage they paid, they had stopped paying supporting allowances, which was a misinterpretation of the government’s instructions.

Officials said that if the minimum wage is raised to an acceptable level but other allowances are cut so that the amount paid to a worker remains the same, this completely contravenes the new wage policy. Some officials said that such misinterpretation is deliberate on the part of employers in an attempt to cut costs.

Workers have submitted petitions to the union from time to time requesting that, in its capacity as the workers’ representative, the agency step in and force businesses to abide by the new regulation, Mr Ounkham said.

He said the union has reported the situation to the relevant government bodies and asked them to strictly enforce the policy, but admitted that such issue remains occur. The union will raise the issue again at a tripartite meeting scheduled to take place in March between the union, the Ministry of Labour and Social Welfare and the Lao National Chamber of Commerce and Industry.

Officials said the government increased the minimum wage for unskilled workers because of the rising cost of living. It recognised that workers were struggling to cope with rising prices, especially as the minimum wage in Laos is very low.

Even pulling in a monthly wage of 626,000 kip, without any supporting allowances, an unskilled worker in Laos earns only about 24,000 kip per day. This is one third of the 76,000 kip earned by an unskilled worker in Thailand, where the cost of living is lower than in Laos .

published with the permission of Vientiane Times