No labour shortage but lack of attractive jobs
No labour shortage but lack of attractive jobs
Laos is not facing a labour shortage as it has large numbers of farm workers that could potentially move to the non-agriculture sector, according to the World Bank's Lao PDR Development Report 2014.
Launched this week, the report stated that rather than suffering from a labour shortage Laos has a shortage of attractive job opportunities that make it worthwhile for farmers to give up farming.
“Currently, most of the jobs that are available in the Lao PDR are not very attractive: productivity and growth remains very low, and this implies relatively low wages, and relatively slow growth in those wages,” stated the World Bank report.
Deputy Governor of Savannakhet province Mr Khampheuy Phanthachone said recently that despite the fact that more jobs have been created in the province, local people keep on crossing the border to work in Thailand for higher payment.
The World Bank report recommended that to help create more attractive off-farm employment opportunities, barriers to doing business in Laos must be removed to encourage investment and spur productivity growth in diversified sectors.
Large proportions of the workforce are trapped in lower-productivity farming jobs: seven in 10 Lao workers are employed in the agriculture sector.
This implies that a very large number of workers are needed, each producing very little and making only a meager living.
Boosting agricultural productivity is a top priority to raise farm incomes, lower the need for labour in the agricultural sector, and eventually free agricultural workers to move out of farming to higher-productive, higher-paying sectors with more growth prospects.
The Lao economy will need to generate more off-farm jobs to absorb these new workers coming into the economy. The essential first step is creating an environment conducive for farm and non-farm businesses to make investments and grow, according to the report.
A senior economist from the National Economic Research Institute Dr Leeber Leebuapao said the growing industry in Laos did not create as many jobs as anticipated for Lao people.
“High paid jobs require skilled labourers but many of our workers remained unskilled. On the other hand, unskilled workers are not interested in low paid jobs forcing Lao workers to cross the border and work in Thailand for higher payment,” he said. In fact the government planned to increase the minimum wage for Lao workers from the current rate of 626,000 kip to 900,000 kip as a way to help people deal with the rising cost of living in Laos.
The pay rise is expected to be enforced this month pending the signature from the government.
The Lao PDR is a fast-growing economy – 7 percent in GDP on average over the last two decades – with the highest growth rate in Southeast Asia. Its population is projected to increase by 38 percent from 6.4 million in 2010 to 8.8 million in 2030.
An additional 96,000 young people will be looking for jobs every year in the coming decades. Having more potential workers presents an opportunity for growth, but only if productive, income-generating jobs are available.
