Private sector workers will have to wait a while longer to receive the revised minimum wage as the government wants the Ministry of Labour and Social Welfare to decide on a round figure for practical purposes.
An official involved in the process said last week that government leaders have agreed in principle to the proposed increase of the minimum wage from 348,000 kip to 626,400 kip a month, but want the Ministry of Labour and Social Welfare to adjust it to a round figure for easier calculation.
“According to a notice from the Government Office, the government agrees in principle with the proposal but they want the new amount to be a round figure. However, the notice does not specify whether this should involve an increase or decrease to the proposed figure,” said the official.
The official said the ministry would host another meeting of government, employer and employee representatives to discuss the change to the minimum wage in line with the advice from the Government Office.
He said the enforcement of the minimum wage will be delayed as it will take some time for the concerned sectors to discuss and agree on a round figure, specifically determining whether a minor increase or decrease of the wage would pose a negative impact on either employers or employees.
“It took nearly a year for the tripartite meeting to agree on the new minimum wage so I expect that the further change will take some time,” the official said.
Another official from the Lao National Chamber of Commerce and Industry explained that the proposed new minimum wage was estimated based on a labour cost of 3,000 kip per hour, and therefore was not a round figure.
He also said the chamber agreed to an 80 percent increase to the minimum wage, with employers happy to pay workers the extra amount of money.
A tripartite meeting of the Ministry of Labour and Social Welfare, Lao National Chamber of Commerce and Industry, and Lao Trade Union agreed in September to the wage increase, hoping to gain government approval and put it into practice in October.
The decision of the tripartite meeting to increase the minimum wage came in the wake of sustained economic growth and higher inflation. Lao GDP growth in 2010/2011 was 8.3 percent, while inflation exceeded growth in the middle of this year due to the higher prices of food and fuel.
The delay is expected to have a negative impact on workers, particularly garment workers, as they have to pay increasingly higher living costs while receiving the same wages.
Management at a number of garment companies have said they cannot increase wages without government approval of the revised minimum wage, which they need as a reference point.
Most garment companies in Laos are foreign-owned and have to abide by strict auditing rules, so it is impossible for management alone to decide on a wage increase.
