Laotians Feel The Pain of Rising Prices, Stagnant Wages

The cost of living in Laos—one of the most impoverished countries in Southeast Asia—has been rising this year despite a stagnant minimum wage of about U.S. $120 a month, making it difficult for many ordinary people to afford staple foods and other daily necessities.

In the capital Vientiane, food prices have increased by an average of 30 percent since last October, said a senior official in the Lao Ministry of Industry and Commerce, who declined to be named.

A kilogram of sticky rice, a daily dietary staple, has shot up to $1.50 from $1.05—almost twice the price in neighboring Thailand, he told RFA's Lao Service.

The price of a kilogram of beef in Laos has risen to $10.80 from $9.55, about 40 percent higher than the price in wealthier Thailand, while the cost of a kilogram of pork has increased to $5 from $4.40, he said.

Many Laotians are not surprised about the rising prices because they say the government has not been able to control them.

“The prices of beef, fish, pork, chicken, and vegetables keep going up little by little all the time in the capital,” said a resident of the capital Vientiane who requested anonymity.

Laos doesn’t produce most of its own food and must import it along with other goods from neighboring Thailand.

“As we see on Saturday and Sunday, all Laotians go shopping at Mecco and Lotus supermarkets in Nong Khai, Thailand, where food is cheaper,” said another Vientiane resident. “They buy lots of food to keep in their refrigerators at home.”

Nong Khai lies along the Mekong River in northeastern Thailand near the site of the First Thai-Lao Friendship Bridge that spans the river into Laos, connecting to Vientiane prefecture. The capital Vientiane is about 20 kilometers (12.4 miles) from the bridge.

The rising prices have especially affected those with low incomes, who see the cost of staple foods going continuing to go up while their salaries remain stagnant.

“We would like to ask the government to reconsider increasing wages and salaries because the cost of living in Laos is rising; if they do not, then authorities have to control the prices,” said a low-income government worker at the Ministry of Labor and Social Welfare.

Those with low incomes are feeling the pinch much more than people earning high salaries who are able to afford food despite the price increases, said another Vientiane resident.

“To keep up with the rising costs, low-income employees have to work many jobs,” he said. “For example, as soon as a government worker leaves the office, he has to work a sales job.”

‘Government is concerned’

An official at the country’s Department of Domestic Trade, who declined to be named, told RFA’s Lao Service that his department is working with other government offices to address the issue.

“The government is concerned about rising costs of living in the country,” he said.

“We are in difficult situation [because] some say government should be laissez-faire and laissez-aller,” he said. “We are a free market economy, so why should the government have to control prices? But others say government should control prices at least for the poor.”

Given the rising inflation, many people are no longer confident in the buying power of the Lao currency, the kip, and they are increasingly using foreign currencies, especially U.S. dollars and Thai baht, sources said.

Though the country’s central bank reported that the inflation rate was 1.97 percent in July compared with 1.63 percent in June, Laotians wonder why the supposedly strong kip has not resulted in lower prices.

A March report issued by the Asian Development Bank predicted that inflation in Laos would remain subdued this year as a result of low forecasts for global oil prices and food prices.

The report also said the country’s economy would pick up because of the strong construction and service sectors and greater electricity exports as more of the country’s hydropower plants went live.

Reported by RFA’s Laos Service. Translated by Max Avary. Written in English by Roseanne Gerin.