UPDATED on 4 September at 2:01 PM
Starting 1 October, all organizations and companies in Laos that define salaries in foreign currencies and pay their employees in Lao kip are advised to adopt a fair exchange rate, according to a new directive from the Ministry of Labor and Social Welfare.
This move is in accordance with a Prime Minister’s Order on foreign currency management issued on 24 January and aligns with the Labor Law regarding salary payments.
The directive requires that wages, defined in foreign currencies, be converted to kip based on the exchange rate issued by a commercial bank within three business days prior to payment.
The National Labor Committee, along with provincial and district Labor Committees, Labor and Social Welfare Offices, and the Labor Inspection Office, will oversee compliance with these regulations. Companies must amend employment contracts and operational guidelines to meet the new requirements. Employers who pay wages at a rate lower than the bank rate will receive a written warning and must correct the issue.
The Lao Federation of Trade Unions has expressed concerns that fluctuations in exchange rates could pose financial challenges for some companies. Additionally, the Ministry of Labor and Social Welfare has noted that high inflation and rising living costs are driving many Lao workers to seek employment abroad for foreign currency earnings.
This directive is part of a broader effort to bolster the nation’s currency amid ongoing economic challenges.
