Laos Increases Minium Wage, Excludes Overtime

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An increased minimum wage is officially in effect across Laos today, however, overtime and other benefits have not been included.

The increased minimum wage, now LAK 1,200,000, is only applicable to the private sector, and will not include overtime compensation, according to the Lao Federation of Trade Unions.

State media reports that Deputy Director General of the Labour Protection Department of the Lao Federation of Trade Unions, Mr. Athilate Oudomdeth, said during a meeting that the conditions for the increase in the minimum wage apply to low-skilled workers.

Experienced workers, workers with professional or specialized skills, and who have worked for at least nine months will be entitled to receive a salary above the minimum wage from their employer.

Under the new regulations, employers must also pay an additional 15% of the minimum wage to employees assigned to work that is hazardous to their health as defined by labor laws and regulations.

The new minimum wage adjustment starts at LAK 1,200,000 and is effective from 1 August to 30 April 2023. On 1 May 2023, the second minimum wage adjustment will commence at LAK 1,300,000.

Workers Trapped in Low-Paid, Low-Quality Jobs

Meanwhile, according to an updated World Bank report, the majority of workers in Laos remain trapped in low-paid, low-quality jobs, either as self-employed or unpaid family workers, especially in agriculture.

Jobless growth disproportionately affects poor and vulnerable groups, according to the report, leading to higher inequality which can fuel social instability.

“Laos needs economic growth based on job creation, rather than on borrowing and the sale of natural resources”, says Alex Kremer, World Bank Group Country Manager for Laos.

“The immediate priority is to increase state revenues. Otherwise, with debt payments growing each year, there will be less money available to invest in education, skills, local infrastructure, and health – the sources of healthy economic growth,” he said.

Goods and commodity prices have reached their highest yet this year, forcing low-income workers in Laos living on minimum wage to struggle.

The rising prices of petrol, cooking gas, and other imported items, together with the depreciation of the Lao kip, and rampant inflation, are making it extremely difficult for minimum wage workers to get by.