October 3, 2024
VIENTIANE – The government has instructed businesses and service providers to pay a higher supporting allowance to low-wage workers to ensure their monthly income rises to 2.5 million kip, starting from October 1.
The Ministry of Labour and Social Welfare issued a notice to this effect on September 27, which if carried out will see workers without qualifications or prior training receive a monthly allowance of 900,000 kip.
In total, including their salary, workers must receive no less than 2.5 million kip per month.
The minimum wage currently stands at 1.6 million kip, following the last increase in 2023.
But the Minister of Labour and Social Welfare, Mrs Baykham Khattiya, has said that 1.6 million kip is insufficient to meet the spiralling cost of living. Speaking at a National Labour Committee meeting in July, she highlighted the need for further wage adjustments to reflect the current economic situation.
The government is actively seeking solutions to improve living standards amid high inflation. According to the Minister of Finance, the ministry is working on a proposal to revise the salary structure, with plans to increase the minimum wage to between 2 million and 2.2 million kip in early 2025.
The new wage and allowance increases are part of broader government efforts to help workers cope with the economic pressures caused by the high cost of living and inflation.
Inflation in Laos remains a pressing concern, although it slightly eased to 21.7 percent in September 2024, down from 24.3 percent in August, according to the latest update from the Lao Statistics Bureau.
The inflation rate soared to two digits in May 2022, peaking at 41.26 percent in February 2023.
The government has set an ambitious target to lower inflation to a single-digit figure by the end of the year. However, the Cabinet recently told the National Assembly (NA) that it is unlikely to fulfil that target.
Reports presented at the last ordinary session of the NA suggest that economic hardships have impacted education. School dropout rates have reached alarming levels, sparking concerns over the quality of workers in future years.
Meanwhile, high inflation and depreciation of the kip means that workers are being paid less in real terms, undermining their spending capacity and widely believed to have forced many to seek employment in other countries, leading to worsening domestic labour shortages.