Lao: Minimum wage to rise by 80 percent

The government expects to approve an 80 percent rise in the minimum wage this month amid rising costs of living in Laos.

Garment factory workers like these can expect a wage increase in the near future

After several months of intense debate, the 80 percent minimum wage increase is also supported by both the Lao Trade Union, which represent Lao labourers, and the Lao National Chamber of Commerce and Industry, which represents employers and businesses.

Lao Trade Union President Mr Khamla Lorlonesy confirmed yesterday that a tripartite meeting of government, worker and employer representatives reached an agreement on the new minimum wage in the middle of last month.

“The Ministry of Labour and Social Welfare has proposed the new minimum wage to the government to consider and approve. We hoped the government would approve and enforce the new rate on October 1 but that day has passed without approval being given,” said Mr Khamla, who is also a Party Central Committee member.

He said the increased minimum wage would help struggling labourers to make ends meet as the costs of essential goods and services continue to rise. However, he admitted the increased wage increase does not meet workers' demands for a larger increase.

According to a report from the National Statistics Bureau, inflation levels exceeded 7 percent over the first half of this year, placing additional financial burdens on all Lao people, but particularly those earning the minimum wage or working as subsistence farmers.

Laos saw 8 percent GDP growth over the same period, but with inflation levels exceeding 7 percent this means that growth hasn't really flowed on to ordinary people.

Lao National Chamber of Industry and Commerce advisor Mr Onesy Boutsivongsakd, who attended the tripartite meeting, said the chamber agreed with the new minimum wage, saying the increase was at an acceptable level.

Mr Onesy, who is also the Lao Garment Industry Association President, said the minimum wage excluded the daily living allowance paid by some companies to their workers to help meet their day to day costs. “The daily allowance is not included in the minimum wage,” he said. “It is up to individual companies and factories whether they pay a daily allowance or not. Some companies pay less while others pay more.”

The government recently approved an increase to civil servant salaries of about 500 kip per one index point, or about 15 percent in real terms. Government employees will begin receiving the higher salaries this month.

The last increase to the minimum wage was approved by the government in 2009, raising monthly wages from 290,000 kip to 348,000 kip. Prompted by the global financial crisis, the government raised the minimum wage by 20 percent - the first time in a decade that any change was made.

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