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Wednesday, June 19, 2024

Staff Shortage, High Production Costs Remain Key Obstacles To Lao Businesses

This Week

The Macroeconomics Research Institute (MRI) recently conducted a survey to identify the main obstacles businesses are facing in Laos.

According to the survey results, the main obstacles identified were the high cost of production, the depreciation of the Lao KIP, and difficulties with recruitment.

While the survey did show some improvement in hiring efforts, it still remained a significant hurdle for businesses in Laos in the first quarter of this year.

The depreciation of the Lao KIP has had a huge impact as well, with the monthly minimum wage in Laos being four times lower than Thailand’s, resulting in many Lao nationals migrating to Thailand for better-paying jobs.

This has caused a labor shortage for some businesses, with 24.6 percent of survey respondents reporting that they were unable to hire staff and maintain their operations.

Additionally, the steep decline in the value of the Lao KIP has also affected the daily production costs for businesses that do not earn revenue in a foreign currency, forcing them to raise prices and sell fewer products.

The survey also revealed that there are growing concerns regarding economic uncertainty and the high cost of production and operations, compared to the fourth quarter of 2022.

Inflationary factors, such as skyrocketing meat prices, have caused many restaurants in Laos to have no choice but to increase their rates as well. The cost of doing business in the country has also been adversely affected by factors like the high cost of imported petrol, animal feed, fertilizer, and machinery.

It’s worth noting that major economic powerhouses, such as the United States, are also facing labor shortages. The construction industry in the US, for example, has been hit hard with a labor shortage of approximately 430,000 workers, with only 67 percent of its workforce recovered after a sharp decline in March and April 2020, according to reports from the National Center for Construction and Research.

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