(KPL) Inflation in the Lao PDR is eroding living standards and reshaping the job market, according to the latest World Bank Household Monitoring Survey. To cope with rising prices, more people are working, but with wages not keeping up with inflation, workers are turning to self-employment and migration to help support their families.

The tenth round of the World Bank’s Rapid Monitoring Phone Surveys. conducted across Laos from January to February  2025, shows that employment  has steadily increased over the past four years , with the proportion of respondents reporting working in January 2025 at 97.1%, up from 94.4% in June 2024 and from 88.2% in May 2022. An increasing number of women have entered the workforce, with the gender employment gap narrowing significantly from 8% in December 2022 to just 1.9% in January 2025. At the same, high inflation, currency depreciation, and declining real wages have persuaded many workers to shift from service jobs to agriculture, from wage employment to self-employment, or to leave Laos.

Thanks to tight monetary policy and foreign exchange controls, inflation has slowed, falling from 26.2% in mid-2024 to 11.2% in March 2025. The rate remains high though, and many households are in a weakened financial situation after several years of continued price increases.

“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. The findings of this survey suggest that families have depleted their assets and may eventually run out of coping mechanisms.”

Wage growth is steady, standing at 13% in December 2024, while the decline in real wages slowed from 11.2% in 2023 to 3.9% in 2024. Profit growth among non-farm family businesses has also slowed, falling behind wage growth. Average profits increased by 7.4% in the year to December 2024, below both the annual wage growth rate of 13% and the year-on-year inflation rate of 16.9%. In rural areas, households continue to expand agricultural activities and are selling more produce as returns from farming remain higher than those from non-farm businesses.

Labor migration continues, with workers seeking better opportunities and higher wages abroad. A third of the number of migrants reported in January 2025 left Laos in 2024. The money Lao workers earn abroad supports household incomes at home: 8.6% of surveyed households received remittances in 2024, at an average of 22.9 million kip annually, equivalent to about 76% of the annual minimum wage.

To deal with high food prices, many households have resorted to using their savings, selling livestock or other assets, or borrowing. These strategies are depleting family assets, weakening future resilience and income-generating capacity. A third of households report reducing their spending on health and education. As a result, children from poorer families are more likely to be out of school: 11.4% of school-age children from low-income households were not enrolled in January 2025, more than double the 4.5% rate among children from better-off families.

KPL