February 03, 2018

Minimum wage hike still problematic

By:  Phetphoxay Sengpaseuth, Vientiane Times, January 29, 2018

Image of Lao money

Businesses and factories may soon be required to increase the minimum wage from the present 900,000 kip to 1.1 million kip a month in a bid to improve workers’ standard of living.

This message was reiterated at a meeting last week attended by Minister of Labour and Social Welfare, Dr. Khampheng Saysompheng, and representatives of the Lao Federation of Trade Unions (LFTU), Ministry of Labour and Social Welfare, and the Lao National Chamber of Commerce and Industry.

LFTU Vice President Mr. Symoune Ounlasy addressed the issue at a tripartite meeting to discuss the possible increase in the minimum wage.

He said the minimum wage was the lowest remuneration that employers can legally pay unskilled workers. The minimum wage in Laos is lower than that paid to workers in Myanmar, Cambodia, and Thailand.

“We carried out a nationwide survey to determine whether the existing minimum wage was adequate for the cost of living and found that it did not match the current circumstances,” Mr. Symoune said.

Many factories and companies have vacancies but few people are interested in working for such low pay.

The low salaries offered by employers in Laos drive many people across the border to seek work in Thailand where the wages are higher.

Also speaking at the meeting, Dr. Khampheng said the ministry would make another proposal about the wage increase and submit it to the government. If it is approved, the prime minister will issue a decree to implement the new minimum wage.

It is possible such a decree could be issued on May 1, when workers celebrate International Labour Day. Dr. Khampheng said a pay rise was vital to improve workers’ living conditions and ease their hardships amid rising costs, with prices rising every month or year.

“900,000 kip a month is not enough to live on, and many items are increasingly expensive,” Dr. Khampheng said. Employers should sympathise with workers and help them to improve their circumstances, especially as they are the ones who enable their employers to make a profit, he added.

A representative from the Lao National Chamber of Commerce and Industry said the increase was welcomed. But business operators may be reluctant to pay 1 million kip a month because most of their workers were unskilled.

In recent years, the government has approved increases in the minimum wage but is unable to prevent increases in the price of food and consumer goods.

According to the Ministry of Labour and Social Welfare, the government first increased the minimum wage in 1991.

In 2012 the government raised the minimum wage from 348,000 kip to 626,000 kip a month, and in 2015 ordered a further hike to 900,000 kip a month.

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