To address the growing cost of living, the Lao government is considering a proposal to raise allowances for employees in enterprises. This topic is on the agenda at the cabinet’s August meeting, which commenced on 26 August.
In Laos, where labor costs are generally low, employees are struggling with high inflation rates that have diminished their purchasing power. In July, inflation was reported at 26.10 percent, a slight decrease from June’s 26.15 percent, according to the Bank of Laos. Since May 2022, inflation has remained in the double digits and hit a peak of 41.26 percent in February 2023.
Prime Minister Sonexay Siphandone emphasized the urgency of tackling critical issues, including economic and financial challenges, education, labor shortages, and the impact of natural disasters. The government is targeting a reduction in inflation to single digits by year-end, though recent statements suggest this goal might be unattainable.
Economic strain has contributed to an increase in school dropouts and a shortage of domestic workers, with many seeking employment abroad. Additionally, high inflation and currency depreciation have eroded real wages.
The cabinet will also review the electricity pricing structure for 2024-2028 and consider several draft laws, including those related to residential buildings, the Bank of Laos, and independent auditing. The meeting will assess the cabinet’s August performance and outline plans for September.
