Minimum Wage Compliance Slow Among Lao Companies

Numerous businesses in Laos are showing reluctance to comply with government efforts to raise the minimum wage, despite the approved wage increase in 2023, as reported by The Star.

Only 10% of businesses that had undergone inspections conducted by the Lao Federation of Trade Unions and senior officials from the Ministry of Labor and Social Welfare, in Vientiane, the largest city in Laos, had adjusted their minimum wage.

The elevated cost of living in Laos has widened the significant gap between the minimum wage and the basic needs of workers. 

The increase that was made following a deicision at the trilateral meeting has proven inadequate to counter the escalating prices of food and consumer goods and had negative repercussions on businesses as highlighted by officials, potentially resulting in workforce reductions.

Consequently, in the pursuit of higher wages, Lao workers are actively seeking job opportunities abroad, particularly in countries such as South Korea and Thailand.

Additional Information:

• In Thailand, unlike in Laos, employers actively seek skilled workers and offer competitive wages, aggravating the worker shortage dilemma faced by companies in Laos.
• The Lao Employment Business Association is striving to empower local workers to tackle the problem by educating them about their rights and providing platforms for negotiation with employers and authorities.
• The association aims to shield workers from exploitation by representing recognized employment agencies in Laos, particularly in the context of both Laos and overseas employment opportunities.
• Despite efforts, the absence of precise data on labor issues in Laos has led to problems such as informal hiring practices, inadequate safeguards for employment, and limited negotiation capacity with relevant sectors, making it challenging to evaluate job prospects and unemployment rates due to the lack of indicators in the job market.
• Additional efforts are also required for the promotion of better industry practices and facilitating access to legal services for workers.