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Staff Recruitment in Laos

Laos offers a small, young and low-cost working population, and about four million of its seven million people are in the workforce. Jobs in agriculture dominate Laos’ employment market with around 70% of its workforce employed in the agricultural sector, mostly in small-scale farming. Investment in agricultural technology is needed to enable the release of workers from the agricultural sector, along with investment in education standards and skill sets to aid the workforce transit from agriculture to industry and service. Currently, foreign firms in Laos find it difficult to recruit workers with the right skill levels. In this connection, Hong Kong companies considering investing in Laos need to devise strategies to manage the poor supply of skilled workers, including the provision of specific training courses. Meanwhile, Laos permits the employment of foreign workers.

The entity responsible for labour and employment in Laos is the Ministry of Labour and Social Welfare (website in local language), with the Labour Law (2013) governing the administration of labour and employment matters. Familiarisation of the Labour Law (2013) is necessary before recruiting in Laos, and below are the key points of which Hong Kong companies should be aware:

  • Employers have a duty to give priority to Laotian workers and in the case of employing foreign workers, they must ensure:

    • Approval has been obtained from the Ministry of Labour and Social Welfare.

    • Foreigners undertaking manual labour can make up no more than 20% of the total number of Laotian employees, and no more than 25% of the professionals with specialised skills.

    • Foreign workers must hold a valid business visa and work permit.

    • Foreign workers can enter into employment agreements for a period of 12 months, and each renewal will last for another 12 months. The total working period for a foreigner worker in Laos cannot exceed five years, barring specific permission granted by the Labour Administration Authority.
  • Minimum wages are applicable in Laos. It was announced in November 2017 that the minimum wage in Laos was set to increase from LAK900,000 to LAK1.2 million (about US$140) per month, following a formal endorsement by the Laotian Prime Minister. In Laos, private sector employees are entitled to a meal allowance. Besides, overtime must be paid if the work day exceeds eight hours, with the payment set at between 200% and 350% of the employee’s hourly wage.
  • The workplace must have its own Internal Regulations, which cannot conflict with the Labour Law (2013) and should be approved by the Labour Administration Authority.
  • Every workplace shall make payments to the National Social Security Fund (NSSF) (website not in English) for their employees. Benefits under the NSSF include the provision of funds for health care during child birth, workplace injuries and illnesses, old age pensions, funeral grants, surviving family benefits, and unemployment benefits. The Lao government has adhered to a policy to adjust the maximum ceiling of insurable earnings under the NSSF framework at five times the minimum wage, that is, LAK6 million (about US$750) based on the last agreed minimum wage.

    • Non-government employer’s monthly NSSF contribution for each employee is set at 6% of the employee’s monthly salary subject to a maximum amount of LAK 360,000 (about US$45) per month.

    • Employee monthly contributions at 5.5% of monthly earnings subject to a maximum of LAK330,000 (about US$41) per month.

 

A Practical Guide to Doing Business in Laos

  1. Regulatory Environment
  2. Establishing a Presence
  3. Intellectual Property Protection
  4. Staff Recruitment
  5. Tax Considerations
  6. Import/Export Procedures
  7. Further Information


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