Fair Wear verification coordinators Juliette and Annabel in Laos

Last week, verification coordinators Juliette Li and Annabel Meurs visited a number of stakeholders in Laos, one of the countries where FWF is active.

There are a lot of similarities between Thailand (where we were later in the week) and Laos; one of them being the language. Vientiane and Nong Kai (Thailand) are only separated by the Mekong River. Juliette speaks Thai well, thus we had no problem getting around in Vientiane.

There are not many garment factories in Laos supplying members of FWF. We spent three days and visited FWF’s key stakeholders, including Oxfam local office and Homenet Laos.

The garment sector in Laos is an important sector contributing to the Lao economy. Despite the financial crisis, the number of garment workers has not decreased much. Garments factories are spread throughout the city, mostly around the two big cities Vientiane and Luang Prabang. Many of the garment workers come from the rural areas. Many skilled workers aim to move to Thailand for better pay. Most garment workers are women and factories often hire casual workers (also known as day workers in Laos).

The biggest concerns of stakeholders are wages and workers’ social security. Due to the low wage level, workers are not able to buy nutritious food. When there is a health threat, they are reluctant to visit a doctor since out-of-pocket medical fees are high. Workers in the private sector are not usually covered by medical insurance. Many have to borrow money from private operators to pay off the medical fee for themselves or family members. As a result overtime work is a common practice in Laos. Although Laotian workers’ hours are not as long as those of their counterparts in China or Bangladesh, they usually work 10 hours per day and 6 days a week. The OT negatively impacts on workers’ health, efficiency and productivity.

However, stakeholders have also seen good development in improving working conditions. The government in 2012 changed the legal minimum wage to 626,400 kip: with an increase of 80% this is a real improvement. FWF is hoping for continued social diaglogue leading to living wage as the legal minimum wage.

It is still unclear if manufacturers are willing and able to comply with the new minimum wage. For FWF member companies, the challenge will be to address small factories’ problems to find the resources to pay the higher wage, while for bigger factories the brands will need to invest in explaining the change and calculation of the new wage – as a first step towards achieving a living wage.

Collective bargaining is just starting in Laos. Oxfam works together with Lao Federation of Trade Unions (LFTU) – the solo trade union in Laos – on a project to negotiate Collective Bargaining Agreements (CBA). At this stage CBA is seen as a tool to implement and enforce labour law. The experience in Vietnam is taken as an example.  There is CBA at the garment sector level which is now expanding to other industries. Labour law states that when there is no trade union, workers representatives should be presented. Usually workers representatives are not fully functioning. It has been a challenge for LFTU when promoting CBA. Despite the difficulties, 50 CBAs were established in 7 provinces since 2010.

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