Lao Companies Slow to Adapt to Wage Increases

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Garment factory workers in Laos. (Photo: ILO in Asia and the Pacific, taken on 19 July 2016.)

Several companies across Laos have shown reluctance to comply with government initiatives to raise the minimum wage.

Despite the government’s approval of a minimum wage increase in 2023, it has proven insufficient to counteract the escalating prices of food and consumer goods.

In collaboration with the Lao Federation of Trade Unions, senior officials from the Ministry of Labor and Social Welfare recently conducted visits to companies in Vientiane to gather direct information. Shockingly, only 10 percent of all companies had adjusted their minimum wage in line with decisions made at the trilateral meeting, as reported by Lao state media.

Officials emphasized that wage hikes negatively impacted businesses, potentially leading to workforce reductions. Despite numerous job vacancies, few individuals are willing to accept positions at low pay rates.

The high cost of living in Laos has widened the significant gap between the minimum wage and workers’ basic needs. Consequently, in the quest for higher wages, Lao workers are seeking job opportunities abroad, particularly in countries such as South Korea and Thailand.

In Thailand, unlike in Laos, employers actively seek skilled workers and offer competitive wages, exacerbating the worker shortage dilemma faced by companies in Laos.

Additionally, the lack of accurate data in Laos has contributed to issues such as informal recruitment processes and insufficient employment protection, with the absence of job market indicators complicating efforts to gauge employment opportunities and unemployment rates.

To address the issue, the Lao Employment Business Association is working to empower local workers by educating them about their rights and providing platforms for negotiation with employers and authorities. 

Through representing recognized employment agencies in Laos, the association aims to protect workers from exploitation, particularly in the context of both Laos and overseas employment opportunities.

Despite efforts, Laos still faces challenges such as the lack of data on labor issues and limited negotiation capacity with relevant sectors. Further effort is also needed to promote better industry practices and facilitate access to legal services for workers.