Minimum wage increase

The Lao People’s Democratic Republic (PDR) prime minister’s office has issued a notification (No. 560/PMO, 20 April 2018) increasing the monthly minimum wage in the Lao PDR from LAK 900,000 (USD 105: GBP 80: Euro 90) to LAK 1.1 million (USD 130: GBP  100: Euro 112).

The increase took effect May 1, 2018, thereby coinciding with International Workers’ Day celebrations. According to local media, the increase comes in response to the spiraling costs of living and a need to improve the livelihood of workers.

“Minimum wage” is not actually defined under Notification 560. However, according to previous legislation, the Instruction on the Amendment of the Minimum Wage of Employees Working in Business Areas (No. 808/MLSW, 9 Feb 2015), “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 the Lao PDR. The minimum wage excludes any other payments that 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 currently in force.

Whereas Instruction 808 had previously not covered international organizations, which were regulated separately, the new decree appears to cover all employers. Indeed, Notification 560 states that the increase is generally for “labor in the Lao PDR.”

Written by Briana Olson of DFDL and Roger James of Ogletree Deakins