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Wage hike fails to impress inflation-hit Lao workers

Lower labor wage forces many Laotians to move to foreign countries for employment, legally and illegally, says expert
A worker carries materials for the China-Laos Railway in this file photo. Private sector employees say 25 percent increase in minimum monthly wage is insufficient amid rising cost of living and high inflation

A worker carries materials for the China-Laos Railway in this file photo. Private sector employees say 25 percent increase in minimum monthly wage is insufficient amid rising cost of living and high inflation. (Photo: AFP)

Published: August 23, 2023 10:51 AM GMT

Workers employed in the private sector have termed the 25 percent monthly minimum wage hike “insufficient” in tackling their hardships amid the rising cost of living due to high inflation, says a report.

The office of Lao Prime Minister Sonexay Siphandone announced on Aug. 6 that the government has approved increasing the monthly wage to 1.6 million kip (US$82) starting in October. The wage hike does not apply to state employees.

Workers welcomed the wage hike, but called for more increases as they can’t eke out a living given the rising costs of gasoline, food and daily necessities, Radio Free Asia (RFA) reported on Aug. 21.

The inflation rate was 28 percent in July, dropping from a peak of more than 41 percent in February.

One worker from Xayabury province said the salaries that he and others receive are only enough to pay for gasoline, forcing them to take on side jobs such as raising chickens and growing vegetables, or to go abroad for jobs where salaries are higher than they are in Laos.

“South Korea pays workers over 1 million kip per day, while Thailand pays about 100-200 Thai baht (US$3-6) per day,” he said.

A small business owner in Bokeo province said the new increase will not be enough to persuade Laotians to work for domestic companies.

Laotians may seek employment with foreign companies investing in Laos because they pay higher wages, though many are still interested in landing jobs abroad because of higher pay, he said on condition of anonymity.

“They might work with foreign companies such as companies from the United States, Australia, China, or Thailand that invest in Laos and pay higher wages,” said the business owner.

But many Laotians are fearful that “the economy will collapse in the near future,” he said.

An economic expert told RFA that the Lao government has failed to solve the problem of lower labor costs and did not set a committee to address the issue despite making a promise.

Instead, the government has allowed inflation, the devaluation of the kip, and the cost of living to get out of hand, creating hardship for low-income workers, he said.

These problems forced Lao workers to seek employment in foreign countries legally or illegally, resulting in some falling prey to human traffickers or ending up in the sex trade, the expert said.

Others have become indebted to banks from which they borrowed money to pay for the legal documents and plane tickets to go abroad, or they have disappeared after falling into the wrong hands in the fishing industry in countries like Thailand, he added.

In 2022, the International Labor Organization reported that as many as 1.3 million Lao nationals were living abroad, and about 56 percent were women.

The Golden Triangle Special Economic Zone set up in Bokeo province along the Mekong River bordered by Myanmar and Thailand is a well-known gambling and tourism hub and a haven for criminal activities.

Since 2007, Lao authorities have rescued and repatriated about 1,680 human traffickings and forced labor victims from the Chinese-run economic zone.

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