Inflation in the Lao People's Democratic Republic (PDR) is affecting living standards and altering the job market, as revealed by the latest World Bank Household Monitoring Survey. The survey indicates that while more people are entering the workforce to combat rising prices, wages are not keeping pace with inflation. Consequently, many workers are opting for self-employment or migrating to support their families.
The World Bank's tenth round of Rapid Monitoring Phone Surveys, conducted from January to February 2025 across Laos, highlights a steady increase in employment over four years. In January 2025, 97.1% of respondents reported being employed, up from 94.4% in June 2024 and 88.2% in May 2022. More women have joined the workforce, reducing the gender employment gap from 8% in December 2022 to just 1.9% in January 2025. However, high inflation and currency depreciation have prompted shifts from service jobs to agriculture and wage employment to self-employment or migration out of Laos.
"The transformation of the labor market in Laos is astonishingly quick," said Alex Kremer, World Bank Country Manager for the Lao PDR. "Three years of high inflation and currency depreciation have reshaped work choices, eroded household living standards, accelerated migration, and undermined human capital development."
Despite tight monetary policy and foreign exchange controls slowing inflation from 26.2% in mid-2024 to 11.2% in March 2025, households remain financially strained after years of price increases.
Wage growth remains steady at 13% as of December 2024; however, real wage decline slowed from an annual rate of -11.2% in 2023 to -3.9% in 2024. Non-farm family business profits increased by only 7.4%, lagging behind both wage growth and a year-on-year inflation rate of 16.9%. Rural households continue expanding agricultural activities due to higher returns compared to non-farm businesses.
Labor migration persists as workers seek better opportunities abroad; one-third left Laos for this reason by January 2025 compared with figures from the previous year. Remittances contribute significantly: about one-third received remittances averaging nearly three-quarters (76%) relative annually against minimum wages during that period.
To manage high food costs amid depleted resources such as savings or livestock sales alongside borrowing practices among families whose assets weaken future resilience capacities further down economic lines – including health care spending reductions impacting education access particularly among poorer children – it has been noted how these measures affect enrollment rates: low-income household school-age child attendance dropped dramatically doubling those figures observed within wealthier counterparts reaching alarming proportions (11%) come early next calendar cycle alone.