The Lao government has announced plans to increase the minimum salary of civil servants to between LAK 2 million and 2.2 million (USD 91.45 – 100.60) by 2025 in response to the rising cost of living and economic challenges,
The Minister of Finance, Santiphap Phomvihane, addressed the National Assembly on 13 June regarding the government’s policy on salary and allowance increases for civil servants and police. Despite recent increases, the minister acknowledged that current salaries and allowances remain insufficient to mitigate the effects of inflation and currency depreciation on the cost of living.
In 2023, the government raised the minimum salary to LAK 1.7 million (USD 77.74) and provided an additional LAK 150,000 (USD 6.86) to cover the higher cost of living. This year, another increase took place, bringing the minimum salary to LAK 1.85 million (USD 84.59).
Santiphap emphasized that the government considers the timely payment of salaries and allowances for civil servants, military, police, and retired employees a priority. However, he noted that the challenging economic situation, marked by inflation and exchange rate fluctuations, continues to affect the living standards of government employees.
To address these issues, the Ministry of Finance is exploring the possibility of further increasing salaries. Preliminary research suggests that the minimum salary could be raised to LAK 2 million to 2.2 million (USD 91.45 – 100.60), representing an 8-18 percent increase from the current minimum. This raise is expected to be implemented in stages starting in 2025.
The proposed salary increase is part of a broader effort by the Lao government to mitigate the impact of inflation and currency depreciation on its workforce.
As of June 13, BCEL Bank and Phongsavanh Bank are selling US dollars at LAK 21,825 and Thai baht at LAK 694.45. Unofficial rates are much higher, with the US dollar exceeding LAK 25,000 and the Thai baht over LAK 710 at local money exchange shops.
Last month, Bounleua Sinxayvoravong, Governor of the Bank of the Lao PDR, announced that inflation is expected to remain high through the end of the year, making it unlikely to achieve the government’s 2023 goal of reducing the inflation rate to 9 percent. The Lao kip continues to weaken, hitting record lows against major currencies.
