FILE PHOTO: A teacher in Laos in 2023. Public sector workers are now grappling with rising living costs. - Vientiane Times/ANN
VIENTIANE: The Ministry of Finance plans to raise minimum monthly salaries for civil servants to three million kip (US$138) in 2026, a move aimed at easing the financial pressure faced by public sector workers grappling with rising living costs.
Responding to queries from National Assembly (NA) members at the ongoing session on November 13, Finance Minister Santiphab Phomvihane said the planned adjustment will benefit civil servants, military personnel and police officers, whose wages have been severely eroded by inflation and currency depreciation in recent years.
The session, chaired by NA President Xaysomphone Phomvihane, heard the minister describe the economic challenges faced by ordinary public sector workers, with soaring prices for basic goods and daily necessities making it increasingly difficult for families to make ends meet on current salaries of 2.2 million kip a month.
To fund the increase, the ministry has allocated an additional 11 trillion kip to the salary and policy allowance budget. The money will come from expanded domestic revenue collection, including broadening the value-added tax base, adjusting excise tax rates and introducing new taxes such as environmental and land taxes.
“These revenue sources are stable and have the capacity to increase collection each year,” Santiphab said, adding that efforts to close revenue leaks through modernisation will also help fund the wage rise.
Santiphab noted that the Lao economy has faced significant macroeconomic vulnerabilities, particularly high inflation and exchange rate fluctuations, which have severely impacted civil servants and their families.
“The government recognises these difficulties and has made considerable efforts to address them,” he said.
Santiphab emphasised that the salary restructuring is designed to help workers maintain their purchasing power rather than fuel additional spending that can push prices even higher.
“This aims to support those who have been hit hardest by rising costs, not to stimulate excessive consumption that could drive inflation even higher,” he explained.
Responding to the proposed move, a number of NA members praised the government’s decision and called for close and regular inspections of local markets to ensure that prices are not unlawfully increased, as had evidently occurred in recent changes.
However, Santiphab acknowledged concerns that the salary increase can prompt traders and businesses to raise prices, potentially negating the benefits for workers.
He called on the Ministry of Industry and Commerce to take the lead in monitoring and controlling prices of essential goods and food items.
The government will launch public information campaigns to explain the necessity and rationale behind the salary increase, with the aim of discouraging opportunistic price hikes.
“We must promote domestic production capacity to better meet internal market demand, while addressing business obstacles, particularly cost-related issues,” he said.
For many civil servants who have watched their wages buy less and less each month, the announcement brings hope that their financial struggles may begin to ease.
The salary increase represents not just a policy adjustment, but the government’s recognition of the real hardships faced by those who serve the public while trying to support their families in increasingly difficult economic times. - Vientiane Times/ANN
