Laos Increases Minimum Monthly Wage for the Third Time in Eight Years

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ASEAN Regulatory Brief

By Dezan Shira & Associates

The Lao government has increased the country’s monthly minimum wage from Kip 900,000 (US$108) to Kip 1,100,000 (US$132) with effect from May 1, 2018. An increase of 11 percent, the wage increase will apply to all businesses and factories established in the country. This is the third such raise in the last eight years. In early 2012, the minimum monthly wage doubled from Kip 348,000 (US$41.5) to Kip 626,000 (US$74.7). In 2015, it rose to Kip 900,000 (US$107.4).

Professional Service_CB icons_2015 RELATED: Payroll and Human Resources Services from Dezan Shira & Associates

According to the Lao government and the Lao Federation of Trade Unions (LFTU), that had petitioned for the minimum wage to be increased, the hike will help improve the labor standards in Laos and address the rising cost of living in the country. Besides, the government hopes the wage increase will motivate a large number of Laotians working in neighboring countries such as Thailand and Vietnam, to return and contribute to its manufacturing sector.

The revised wages, however, are still significantly below those in neighboring countries;  the current minimum daily wage in Thailand ranges from Baht 308 (US$9.6) to Baht 330 (US$10.28), depending on the province, which is approximately Baht 9240 (US$288) to Baht  9900 (US$308.5) a month.

Related-Reading-Icon-Asean Link RELATED: Laos’ Investment Outlook for 2018

For Laos’ low-cost manufacturing sector which remains at a nascent stage of development, the increase in the minimum wages means narrower profit margins, increased competition from cheaper producers elsewhere in Southeast Asia, and perhaps, prospective laying off of low-skilled workers. The raise also significantly impacts the operating cost of business units. Businesses in Laos are now also liable to pay an additional wage of Kip 200,000 (US$23.8) per month or Kip 2,400,000 million (US$286.4) per annum per employee, lowering Laos’ appeal for foreign investors.

About Us

ASEAN Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Asia, including ChinaIndiaIndonesiaRussiathe Silk Road & Vietnam. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.

Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the ASEAN and Asia. We maintain offices in Singapore, as well as Hanoi & Ho Chi Minh City, and maintain Alliance offices in Bangkok, Jakarta, Kuala Lumpur and Manila as well as throughout China, South-East Asia, India and Russia. For assistance with ASEAN investments into any of the featured countries, please contact us at asean@dezshira.com or visit us at www.dezshira.com



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