Amid surging inflation, Lao lawmaker calls for hike in civil servants’ wages

Struggling state workers welcome the move, but the government has not responded.
By RFA Lao
2022.12.12
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Amid surging inflation, Lao lawmaker calls for hike in civil servants’ wages People shop at the Talat Sao morning market, one of the biggest markets in Vientiane, Laos, in a file photo.
Associated Press

A member of the Lao National Assembly has called on the government to raise salaries for low-paid state workers amid a surge in inflation in the country, one of many economic problems facing one of Southeast Asia’s poorest countries.

Inflation accelerated to 38.5 percent in November, the highest level in 23 years, with the prices for water, electricity and health care all climbing rapidly. The cost of transportation, cell phone service and entertainment are all rising too. 

Prices of food and nonalcoholic drinks are up nearly 43%, while clothing and footwear have increased about 26%, according to the statistics bureau.

On Aug. 1, the Lao government raised the monthly minimum wage for workers by 100,000 kip to 1.2 million kip, or about U.S. $69 at the current exchange rate. But at a recent parliamentary meeting lawmaker Ketmany Bandasak said most state workers were struggling to make ends meet, and called for a wage hike.

“The cost of living in our country is rising quickly, [so] the government should come up with some solutions,” Ketmany said. “One of them should be to increase the benefits and salaries of our government workers; if not, they can’t survive in the current living conditions.”

She pointed out that the government’s monthly 50,000-kip gasoline subsidy for civil servants now only lasts two days. “Before, they filled their car tanks with only 500,000 kip; now, they must pay up to one million kip,” said the lawmaker.

One key factor contributing to accelerating inflation is the kip’s devaluation against the U.S. dollar and other regional currencies. Since Laos relies heavily on imports and requires foreign currency to buy goods from abroad, as supplies of Thai baht, Chinese yuan and dollars dwindle, importers pay more for them.

So far, neither Prime Minister Phankham Viphavanh nor other government officials have responded to Ketmany’s call.

Side jobs

Several teachers, police officers and nurses told Radio Free Asia they have to work side gigs such as growing vegetables, raising chickens or selling products online to earn additional income.  

A schoolteacher in the Lao capital Vientiane, who like other sources in this report requested anonymity for safety reasons, said on Nov. 8 that she supported the lawmaker’s proposal to raise salaries because her current monthly pay was only 1.5 million kip.

“That is not enough for monthly living expenses because the cost of living here in the capital is rising,” the teacher said.

The teacher’s monthly pay was enough to cover only half of her monthly expenses, forcing her to do other work to earn money to cover utilities, food and childcare expenses.

A low-ranking police officer also supported the call, saying that the average monthly salary for police and military officers was about 1.8 million kip.

“Compared to the current cost of living, our salary is way too low,” he told RFA, adding that he grew vegetables and raised chickens and ducks to make ends meet.

A nurse at a state hospital in Vientiane said state employees like her made only 2 million or 3 million kip a month, and that she would like to see a 20% increase in her salary to cover the  rising costs of everything. 

“We can’t rely on the salary alone nowadays,” she said. “In the city, we have to pay for rent, rice and other food … and electricity and water as well. Think about it, it’s not enough.”  

Balking

But a government trade official cautioned against raising state workers’ salaries, saying the move might have a negative result if the higher wages lead to further inflation.

“As soon as the salaries increase, the prices of all goods will go up, and our kip will depreciate further,” he said.

The government increased the minimum wage in to 1.2 million kip a month in August to help low-wage workers deal with rising prices. The last increase before that came in May 2021, when wages were raised by nearly 2%. 

Also on Wednesday, several lawmakers urged the central government to tackle the country’s other financial woes, including increasing public debt, poverty and budget shortages, which state leaders have failed to address in the last few years.

“The government has been trying to control the inflation and prices, [but] unfortunately, the price of goods has been on the rise since this June, the kip also has been continuously depreciating, and gasoline prices have been rising nonstop,” Finance Minister Malaythong Kommasith said during a parliamentary session.

He pointed to the government’s latest move to ease living conditions by selling cheaper rice to the people, suggesting that more must be done.

On the same day, Bounleua Xinxayvoravong, governor of Laos' national bank, told lawmakers that the currency depreciation and double-digit inflation would continue until the end of the year. 

“Prices will also continue to rise because one-third of our goods are imported,” he said.

Prime Minister Phankham Viphavanh recently forecast that the country’s economy would grow by 4.2% this year and 4.4% in 2023, without specifying what will drive the growth. 

Other Lao government officials have said the country’s mining industry, the Laos-China high-speed railway, and the reopening of Laos to tourism following the COVID-19 pandemic will boost economic growth.

Translated by Max Avary for RFA Lao. Written in English by Roseanne Gerin. Edited by Malcolm Foster.

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