Lao PDR is a landlocked country with a topography that is predominantly mountains and narrow river valleys in the north, and rugged hilly, densely forested areas with a flat croplands in the south, with a population of 5 million growing at 2.6 percent per annum. It is a country of complexity and richness. This diversity, both human and biological under increasing threat from many directions. There are many ethnic minorities living in poor conditions in isolated mountainous areas. Social indicators are among the worst in the region. Agriculture remains the major sector of the economy, contributing 52 percent of GDP and employing over 80 percent of the labour force. Under the New Economic Mechanism (NEM) a centrally planned economy has been transformed into a market-oriented system. However, Lao PDR’s modern history once again, reached a new turning point when the country joined ASEAN in mid-1997. As a full member of ASEAN, the Lao PDR is committed to implementing the ASEAN Free Trade Area (AFTA), Common Effective Protection Tariff Scheme (CEPT), which involves the reduction of tariffs and the removal of non-tariff barriers on designated products by 2005. The 13^th ASEAN-European Union Ministerial Meeting under the co-chairmanship of the Lao PDR and France took place in Vientiane in December 2000. The Lao PDR remains actively involved in the international arena. Despite such progress, many difficulties persistently prevail. Actual economic growth averaged almost 7 percent per year from 1990 to 1997. The Asian economic crisis continues to have a significant impact on the economy of Lao PDR. Although the agricultural sector provided some resiliency, the crisis had severe impact on macroeconomic management. Major revenue shortfalls in the public sector, combined with the large increases in off-budget public investment expenditures on rural infrastructure, led to serious and largely unintended monetary and inflationary consequences. The country has experienced the highest inflation rate, which has reached its peak of 167 percent in March 1999. In July 1999 the Kip reached its lowest point representing only 14.8 percent of its pre-crisis value.

In the government’s attempt to continue market-based reform to strengthen macro-economic management, it has to ensure a sustainable platform for economic growth, and provide an enabling environment for the development of private sector.

The Ministry of Labour and Social Welfare (MOLSW) was created in 1993. The Labour Law was promulgated in 1990 and amended 1994. The Department of Labour (DOL) is the focal point of the labour administration system and liaises with the ILO and other international organizations on labour-related issues. At present, the effectiveness of DOL remains, yet to promote the technical capacity, management capacity and information collection. With more knowledge of industrial relations and process of collective bargaining, the DOL will improve significantly in conducting dialogues between workers and management. The labour law does make provision for the creation of a Tripartite Labour Arbitration Committee. This has yet to be undertaken by the Government. The MOLSW gives priorities to skill development, labour administration and labour policy, and employment promotion and labour statistics.

The Lao National Chamber of Commerce and Industry (LNCCI) represents employers’ interest. It still does not have a significant role in social policy. LNCCI and Lao employers have stressed the need to strengthen the capacity of the Chamber and develop it into a properly functioning employer’s organization. It has been expected that a new separate organization will be set up to take over responsibility for promoting employers’ organizations.

The Lao Federation of Trade Union (LFTU), established in 1966, is the only national workers’ organization. It maintains the status of a ministry with subsidy support (both staff and activities) from the Government. The President has a ministerial status. In the year 2000 LFTU has given priority to workers education to prepare all levels of the organization to respond effectively to the process of change to a fully-fledge market economy. It has advocated in more than three thousand cases against employers between 1994-1996, resulting in Kip 52 million in compensation.

However, aside from the above-mentioned roles of the organization, the LFTU has also played an active and crucial role in disseminating the HIV/AIDS prevention education at workplace as part of the project initiated by WHO.

Country Objectives were endorsed by the constituents in 1997 and serve as a basis for programme development in six areas: employment promotion and poverty alleviation; HRD; labour administration, industrial relations and tripartism; workers organizations, employers organizations and social security.

Current work programme includes capacity building for labour law implementation, occupational safety and health under DANIDA-funded project, social security providing protection to workers in both the public and private sectors, integrated rural access planning and employment creation, collective bargaining and grievance handling, policy advice to the Government in rural development and ethnic minority issues, and child labour.

Lao PDR has ratified four ILO Conventions in 1964, including Convention No. 29 on Forced Labour. Another seven core Conventions (Nos. 87, 98, 100, 105, 111, and 169) are under consideration by the National Assembly. The MOLSW has recently indicated that they may ratify these core Conventions. The Government making progress in acting in conformity with the Convention. The principles of the various international standards have already been partly incorporated in the Labour Law. ILO has organized a Tripartite Workshop on Convention No. 182, the Worst Form of Child Labour, to raise awareness of the risk of child labour, and the minimum age for employment of children under Convention No. 138. The workshop on Convention 169 is much welcome by the LFNC (Lao Front National Construction) as part of the government plan in promoting the rights of ethnic minorities (more than 50 percent of population are ethnic minorities from various tribes). The ratification of the ILO Convention 169 is foreseen in the not too distant future.

Both the LFTU and the LNCCI are still part of the Government. The constituents have identified tripartism as a priority area of assistance from the ILO.