Economic growth fails to create jobs for majority, economist says
Economic growth fails to create jobs for majority, economist says
Despite the strong economic growth that Laos has experienced in recent years, the majority of Lao people are still struggling to reap any benefits from the growth, according to a senior economist.
“Laos has seen strong economic growth over the past years but unfortunately the wealth of the nation does not provide direct benefits to the majority of the people,” the Director General of the Lao National Economic Research Institute Director General, Dr Leeber Leebouapao told Vientiane Times yesterday.
Dr Leeber said that the current GDP growth rate of 8 percent per annum, which Laos has maintained for a number of years, is due largely to Foreign Direct Investment (FDI) in hydropower, mining and manufacturing.
Unfortunately, hydropower and mining are not particularly labour intensive once the construction phase is over, so comparatively few people gain employment in these sectors despite the considerable investment involved.
Another fact is that most foreign investors feel reluctant to hire local people, saying that they do not have the necessary skills. This fact saw the government raise the ceiling quota restricting the import of foreign workers to satisfy labour demand.
According to a report from the Ministry of the Planning and Investment, the Lao government approved about US$3 billion worth of private investment projects in the 2012/2013 fiscal year.
The Bank of the Lao PDR detected a US$1.1 billion inflow of foreign funds into Laos in the same fiscal y ear. Most of the investment funds are flowing into the hydropower, mining and manufacturing sectors.
Dr Leeber said that despite the huge foreign investment in the industry sector including mining and hydropower, it employs only 7 percent of the Lao workforce, making it impossible for the majority of Lao people to gain direct benefits from the strong economic growth.
Some 73 percent of the Lao workforce is still employed in the agriculture sector while 20 percent of workers are employed in the service sector, he said.
The majority of Lao people which are employed in the agriculture sector did not generate large amounts of income as they did not produce sufficient output despite rising demand for agricultural commodities.
“The Lao agriculture sector saw only 3.1 percent growth last fiscal year,” he said, adding that the figure reflects the fact that farmers didn't make substantial amounts of money.
Dr Leeber said that to make Lao people wealthier, there is a need for the government to invest in the modernisation of agriculture to increase the output of the sector and raise the income of the majority of Lao people.
He explained that the modernisation of the agriculture sector will also help to reduce the labour demand and free up supply for the industry and service sectors, which are expected to experience rising demand due to growing foreign investment interest.
Dr Leeber said the government was aware of the situation regarding economic development in Laos. It is now trying to introduce a number of investment incentives to boost investment in agribusiness and manufacturing in order to create employment for larger numbers of people.
He said that one of the measures which the government needs to take is to encourage the importation of modern technology into Laos so as the country becomes one of the production bases in the region.
Dr Leeber also stressed the fact that the country also needs to improve human resources to supply a skilled workforce in order to meet the growing demand from foreign investors.
vientiane times
