Social protection

Reports highlight steps to expand social security to Lao workers

Addressing gaps in outreach, healthcare benefits and enrolment processes would help boost coverage, especially for informal sector workers.

11 December 2024

A man is working on his farm. — A cabbage farmer on his farm in Vang Vieng.

VIENTIANE, Lao People's Democratic Republic (ILO news) - The Lao government is well-positioned to increase social security coverage for Lao workers outside formal enterprises and for the self-employed through the National Social Security Fund (NSSF) by undertaking a number of coordinated measures, according to recently launched studies.

An International Labour Organization (ILO) report entitled “Understanding informality and expanding social security coverage in the Lao People’s Democratic Republic ”, and a Policy Brief ”Improving Home-Based Workers’ Access to Social Security in Vientiane Capital, Lao PDR” by ILO in partnership with Women in Informal Employment: Globalizing and Organizing (WIEGO) highlight the comprehensive nature of Lao systems to enhance enterprise formalization and workers’ access to social security through the NSSF.

The studies find that workers in informal employment are deterred from signing up to the scheme due to limited knowledge of NSSF benefits and negative perceptions of the healthcare benefits. Steps to enhance the quality and provision of healthcare could help lift persistent low worker enrolment. Currently, only 7.6 per cent of the total membership is enrolled voluntarily.

Loveleen De, the Social Protection Program Manager at ILO, said: “The NSSF offers a competitive product providing high value for workers and enterprises. The Lao People's Democratic Republic’s legislative framework and systems for enterprise registration, taxation, labour conditions, and social security provision are sound, but there is room for improvement. Better outreach and coordination are key to improving worker enrolment.”

A man is speaking in the meeting with community level — Highlighting challenges faced by informal workers from the grassroots level

The Lao government introduced the voluntary NSSF coverage to workers outside formal enterprises and the self-employed in 2013. This is in line with the National Social Protection Strategy, which envisions that by 2030 all Lao people will have equitable, adequate, effective, and sustainable access to basic social protection services. However, low participation rates in the NSSF indicate limited outreach to workers in informal employment, despite their significant presence in the labour market – 86.4 per cent of the working population, or 2.14 million people.

“One of the key recommendations we put forward is to enhance coordination and cooperation across government sectors involved in social security provision and formalization. We also recommend actions such as conditionally linking operating licenses and business incentives with social security registration, and to make sure businesses can be inspected to ensure compliance with social security legislation. Ultimately, enforcement of the law and its regulations is key,” De added.

Aura Sevilla of WIEGO, who contributed to the Policy Brief said workers could be better informed about the NSSF. “There is a lack of information about the NSSF for home-based workers. Our focus group discussions revealed that many workers were unaware of its comparative advantages over private insurance. The NSSF offers a range of benefits at a reduced cost,” she said.

Sevilla also noted other barriers for home-based workers in accessing the benefits, including financial challenges due to low and irregular incomes and difficulties navigating the application process and payment methods.

The studies were launched in Vang Vieng on 11–12 November 2024, to engage discussion with key stakeholders on how the recommendations could be used in formulating policies.