Lao garment industry urged to improve labour productivity
Lao garment industry urged to improve labour productivity
Laos needs to improve labour productivity if it wants to attract foreign investment into the garment industry, it was found in a recent survey.
The findings on labour standards and productivity in the garment sector, were distributed to Lao media last month, showing that labour productivity in the Lao garment industry is lower than in Cambodia, Vietnam and Thailand. This fact is one of the major challenges for Laos to attract foreign investment in the garment sector, at a time when a number of firms are looking for new production bases due to rising labour costs in industrial and developing countries.
International garment firms are looking for countries with cheap labour available in order to increase their profit margins.
The survey, which was funded by the World Bank and other foreign development agencies in Laos, highlights that Malaysia is the country with the highest labour productivity, generating large revenue and profits for garment firms.
China is the second best country in terms of labour productivity and Thailand is third. Cambodia and Vietnam are ranked sixth and seventh while Laos comes in ninth.
However, Lao labour productivity is still higher than Mongolia, Uzbekistan, Nepal and Tajikistan.
Officials said that the Lao garment industry needs to adjust themselves to accommodate the new investment opportunities and challenges.
The garment firm needs to import modern technology and train workers to meet international standards so as they can produce more goods for the companies.
President of the Lao Association of Garment Industries, Mr Onesy Boutsivongsakd said that the garment industry was not only facing low labour productivity but also a shortage of workers, which is posing challenges for the industry.
He said that many Lao workers do not want to work in the garment industry in Laos after the government introduced a policy to legalise Lao workers in Thailand and the recent decision by the Thai government to increase the minimum wage.
Mr Onesy explained that it was difficult for the garment industry to increase wages for the Lao labour force since the productivity of workers is still low compared to neighbouring countries and increasing wages would make it uncompetitive.
However the Lao garment industry is one of the top foreign exchange earners for Laos after mining, hydropower and tourism.
The country earns about US$200 million a year from garment exports. There are more than 100 garment firms in Laos, which together employ more than 20,000 workers.
Most Lao garment exports are destined for the European market, which offers low import tariffs due to the country's classification as a least developed nation.
vientiane times
