Minimum Wage

Minimum wage and its relevance to socio-economic progress in the Lao People's Democratic Republic : A workers' perspective

This paper examines empirical aspects of the regulatory and institutional frameworks and the process of minimum wage adjustment in the Lao People’s Democratic Republic, as well as its actual implementation in different sectors – private, public and informal. Included is a review of collective bargaining coverage to measure how such agreements affect wage increases. It also analyses the relationship between the minimum wage and certain socio-economic developments, such as gross domestic product growth rates, consumer price indices, inflation rates, employment trends, the national and international poverty lines, labour productivity and social security coverage.

The Lao People’s Democratic Republic is undergoing rapid demographic growth and urbanization, which is creating challenges in employment, especially for youth, women and rural migrants. This trend will trigger an increase in salaried workers in non-agriculture sectors and urban areas. With a potential for faster and bigger economic expansion, the minimum wage system becomes a central stage for policy development related to employment, living standards, poverty reduction and social security. A visionary minimum wage policy would serve as a basis for an inclusive economic growth model for the country, with better jobs and shared prosperity. The country needs to establish a solid minimum wage fixing mechanism that is supported by all essential services and statistics from a standing institution. This case study provides insights to tripartite partners in the Lao People’s Democratic Republic and abroad on minimum wage fixing and aims to generate a debate on the minimum wage system. With no other apparent research on the minimum wage in the country, this paper’s analysis should be useful for further studies on wages and relevant policies.