By Somsack Pongkhao
April 30, 2012
The government is planning to increase salaries for state employees next year in line with rising living costs.
A three-day government meeting held in Vientiane last week agreed in principle with the findings of research pointing to the need for increases in salaries and allowances for civil servants, in line with economic growth and inflation.
Government spokesperson Ms Bounpheng Mounphosay told Vientiane Times at a press conference after the meeting that the government proposed to increase salaries by about 30 percent, or 1,000 kip per index point, which is the system by which officials’ salaries are set based on different levels of qualification, experience and position.
The government has asked the Ministry of Finance to verify if the national budget can respond to the proposed increases.
“Our government has tried to raise the salary for officials for a long time, but financial difficulties delayed the process,” she said.
She added that the salary increases aimed to reflect the present economic reality of Laos and respond to the basic needs of government officials in the face of inflation.
“The government’s intention is to reasonably respond to the needs of officials, despite limited income and revenues. The salary increase also aims to encourage government officials to concentrate more on their duties.”
The increase was proposed by the Ministry of Home Affairs, which has been looking at how to restructure salary increases from 2013 to 2015.
Ms Bounpheng was unable to unveil further details of the salary and allowance increases because the level of the increase in each year would depend on the government’s financial capacity.
Currently, the salary of state officials ranges from 500,000 kip to 1.5 million kip per month depending on their index total.
However, those who hold a bachelor degree now earn about 700,000 kip per month, and holders of advanced degrees receive a higher sum than this.
In 2007, the year before the global financial crisis hit, the government decided to increase salaries for state employers by 20 percent.
Last year, the government increased salaries once more from 3,000 kip to 3,500 kip per index, or about 16 percent.
The salary increase not only aims to improve the living standards of state officials, but also to maintain public purchasing power.
An important side issue to the move is the effective management of product prices so that market vendors don’t use the higher salaries as an excuse to hike their prices.
The Lao economy continues to grow at 8 percent annually. The country’s revenue collection is on the rise, and the government considers it important to raise state salaries to counter inflation.
According to the Bank of the Lao PDR, the average inflation rate in Laos in 2011 was 7.58 percent. Higher monthly averages were recorded however, and inflation stood at 9.24 percent in April, 9.76 percent in May, and 9.52 percent in June.
This year, the inflation rate has fallen but remained relatively high at 6.69 percent in January, 6.11 percent in February, and 5.33 percent in March.