VIENTIANE: The latest World Bank Household Monitoring Survey highlights the significant impact of inflation on living standards and the labor market in Laos. As rising prices put pressure on household budgets, there has been a notable shift in employment trends, with many individuals entering the workforce. However, stagnant wages relative to inflation have led many to pursue self-employment opportunities or seek work abroad to provide for their families.
Conducted in early 2025, the World Bank’s Rapid Monitoring Phone Surveys show a rising employment rate, with 97.1 percent of respondents reporting employment in January 2025, up from 94.4 percent in June 2024 and 88.2 percent in May 2022. This increase is accompanied by a narrowing of the gender employment gap; the number of women in the workforce has grown, reducing the gap from 8 percent in December 2022 to just 1.9 percent in January 2025.
Despite this positive trend, the labor market transformation poses challenges as many workers transition from service roles to agriculture or self-employment during a difficult economic period. Alex Kremer, the World Bank country manager, noted the rapid changes to the labor landscape, driven by high inflation and currency depreciation. He warned that families are depleting their assets and may run out of coping resources.
Inflation has recently moderated from a peak of 26.2 percent in mid-2024 to 11.2 percent in March 2025 due to tightened monetary policies and foreign exchange controls. Nonetheless, inflation remains a significant concern as many households struggle financially after years of price increases. Wage growth was steady at 13 percent in December 2024, but real wages have been impacted, with the decline slowing from 11.2 percent in 2023 to 3.9 percent in 2024.
In rural communities, families are expanding agricultural activities as farming yields outpace non-agricultural ventures. Labor migration is also becoming a crucial strategy; in January 2025, one-third of migrants had left Laos during 2024, with remittances playing a vital role in household support. In 2024, 8.6 percent of surveyed households received remittances, averaging 22.9 million kip, which substantially contributes to their overall income.
To counteract high food prices, many families have resorted to depleting savings, selling livestock, or taking loans, ultimately risking their future financial stability. Additionally, one-third of households reported cutting health and education spending due to financial constraints, leading to a concerning increase in school-age children from low-income families not being enrolled—11.4 percent compared to 4.5 percent among more affluent households.
A hopeful takeaway from this situation lies in the increasing workforce participation and diversification of employment. The resilience of families looking for alternative income sources, along with potential improvements in inflation and economic policies, could provide a brighter outlook for Laos’ future. The government and institutions may need to prioritize support for vulnerable households to bolster their financial stability and enhance educational opportunities for children, crucial for long-term development.