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Friday, April 11, 2025
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Low Wages, High Costs: Lao Workers Struggle as Economic Pressures Mount

This Week

State government worker Noy, who also works as a part-time taxi driver, struggles to make ends meet on Laos’ minimum wage. 

With a monthly salary of LAK 2,500,000 (approximately USD 117), he finds himself facing constant financial pressure. 

A trip to the grocery store often costs him around LAK 1,500,000 (approximately USD 69) or more, leaving little room for other expenses. His electricity bill is typically LAK 800,000 (approximately USD 36) per month, and his water bill adds another LAK 100,000. After paying for these basic necessities, he is usually left with approximately LAK 100,000 (approximately USD 4). 

However, this small amount must cover additional costs, including fuel for his vehicle, phone bills, and other daily expenses. The wage barely covers his essential costs, forcing him to make tough choices each month.

“I decided to be a driver because it can be one of my money reserves over my salary from my full-time job,” he said.

On a typical day, after finishing his work as a state government employee, Noy begins his shift as a taxi driver from 6 PM to 3 AM. During this time, he earns approximately LAK 2,000,000 (approximately USD 92) per night.

The current LAK-2,500,000 minimum wage, up from the previous LAK 1.6 million (about USD 75), is generally deemed inadequate to address labor shortages and increases school dropout rates nationwide.

According to data from last year, dropout rates in Vientiane Capital rose by approximately 13.3 percent during the 2023-2024 school year.

Noy has seen many students, from secondary school to university level, dropping out of school to start working. They believe that graduating only to end up with a minimum wage job won’t allow them to survive, so they choose to gain work experience instead of continuing their studies with little hope of earning a higher salary, according to Noy’s experience. 

Some even opt to work abroad, heading to countries like South Korea or Thailand, where they think they can find more job opportunities. 

Laos has long been grappling with increasing economic and social challenges as workers find the current minimum wage insufficient to meet their basic needs. Despite a drop in inflation, the cost of living continues to rise, widening the gap between wages and essential expenses.

An employee at a private marketing company, who requested anonymity for security reasons, voiced concerns that low wages may discourage students from pursuing higher education, ultimately weakening the nation’s future workforce.

“This could have a major impact on children, who represent the country’s future. Many study for years to graduate, only to receive a wage that barely covers basic survival. Some feel it’s not worth the effort and choose to drop out,” she said.

Lao Workers, Businesses Face Challenges Amid Economic Crisis

In response to the ongoing economic crisis and the depreciation of the Lao kip, the government has been making adjustments to the minimum wage. However, despite recent increases, wages have not kept pace with inflation.

The Lao kip continues to weaken against major foreign currencies, including the US dollar, Thai baht, and Chinese yuan. According to a recent update from a local commercial bank, the exchange rate has surpassed LAK 21,000 per USD 1 and over LAK 640 per THB 1, with unofficial rates often even higher.

A woman employed at a private insurance company who also requested to remain anonymous said, “The minimum wage in Laos remains low compared to the rising cost of living, particularly in cities like Vientiane. While I earn LAK 5 million per month, many others in lower-paying jobs struggle to afford rent, food, and transportation. Saving money or supporting a family on these wages is extremely difficult.”

The owner of a café in Nong Nieng village, Vientiane capital, with over 20 employees further highlighted the difficulties businesses face in raising salaries.

“The current minimum wage does not reflect the economic challenges we are experiencing. At our restaurant, entry-level employees with no prior experience start at LAK 4 million,” the cafe owner explained. “While wages should be adjusted in response to inflation, doubling salaries across the board is unrealistic, as businesses must also focus on sustainability and profitability to remain operational.”

He further pointed out that wage concerns are influenced by multiple factors, including economic instability and the depreciation of the Lao kip. Additionally, the limited skill set among the Lao workforce worsens the issue.

“My salary depends on how much I spend a day. Sometimes it is enough, but sometimes I can’t pay bills like electricity since it keeps increasing, especially this month. In Laos, the minimum wage should be at least LAK 5 million for laborers to survive,” said one of the cafe employees.

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