The Prime Minister’s Office has issued a Notification (№ 560/PMO, 20 April 2018) (“Notification 560”) increasing the monthly minimum wage in Lao PDR from 900,000 LAK (USD 108) to 1.1 million LAK (USD 132). The increase took effect 1 May 2018, thereby coinciding with International Labor Day celebrations. Per local media and understanding of the discussions leading up to the announcement, the increase responds to an increased cost of living and a need to improve the livelihoods of workers.

‘Minimum wage’ is not defined under Notification 560, however, according to the previous legislation, Instruction on the Amendment of the Minimum Wage of Employees Working in Business Areas (№ 808/MLSW, 9 Feb 2015) (“Instruction 808”), ‘minimum wage’ refers to the minimum amount of salary or wages payable to employees, working up to: 26 days per month; 6 days per week; and 8 hours per day, to guarantee a basic standard of living in Lao PDR. The minimum wage excludes any other payments which may be due to employees including: overtime payments; bonuses; welfare payments; incentives; and food, lodging, or transportation allowances (if any). For employees who earn wages based on production, the amount paid to such employees may not be lower than the minimum wage then in force.

With regard to scope of application, Instruction 808 specifically applied to business units across all socio-economic sectors with the notable exception of international organizations, which were regulated separately under the Decree on Management of Local Staff Working for International Organizations in Lao PDR (No. 456/PM, 1 November 2010) (the “International Organization Staff Decree”).  Per this Decree, the monthly minimum wage for local employees of international organizations was higher than that of business sector employees subject to Instruction 808: 1 million LAK (USD 120) for manual labor and 2 million LAK for skilled labor (USD 240)).  Per our verbal inquiry with the Lao PDR labor authorities, Notification 560 applies to all employers.  Indeed Notification 560 states that the increase is generally for “labor in the Lao PDR”.

Contact

Danyel Thomson
Head of Regional Employment Practice Group
[email protected]

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.