Insights and Analysis

In Laos: Skilled Labor Shortage and No Remedy in Sight

December 12, 2007

By Gretchen A. Kunze

A quick look through the Vientiane Times or other local newspapers in Laos reveals help-wanted ads for all sorts of professional positions, from engineers to managers to financial officers. With few exceptions, the ads clearly state they are looking for “Lao nationals only.” Work permit restrictions, the need for Lao language capability, and tremendous bureaucratic hurdles regarding hiring foreigners all come into play, as does the fact that it is substantially cheaper and less time-consuming to hire a Lao citizen than a foreigner with an expatriate salary and benefits.

One interpretation is that this is another sign of Laos’ remarkable economic growth. The economy has been booming at over 7% growth for the past two years, due largely to massive foreign investment in hydro-power and mining. But, in reality, demand for the level of professional employees needed to maintain this economic growth — and to build institutions to support and sustain it — well surpasses the supply. Laos is facing a skilled labor shortage with no remedy in sight.

Laos has one of the lowest literacy rates in all of Asia, but most people agree that education levels are slowly improving. The government’s plan to eradicate poverty and dramatically reduce illiteracy by 2020, coupled with massive amounts of foreign aid for education projects, appears to be having a positive impact. Most of this effort, however, is focused on primary education. While this approach is appropriate for a nation at Laos’ stage of development, the need for an educated workforce is here now.

The National University of Laos, the country’s only university, is just 11 years old, but has increased its student population more than three-fold in that time. In 1996-97, there were just over 8,000 students, today there are nearly 27, 000. The school is continuously upgrading its services, and is even developing graduate degree programs, but the shortage of human and economic resources pose constant challenges. Most faculty members have no degree beyond a bachelor’s level. The university’s central library recently received a private donation of computers and Internet service for use by students. This brings the online computer stations in that library up to ten.

Before the decline of the Soviet Union, Lao students could readily access scholarships to attend universities in other communist countries around the world. Today, if one asks that generation of senior government officials about their educational background, one will hear about degrees from Bulgaria, Poland, and the Ukraine, and other seemingly unlikely places for a Southeast Asian student. An even older generation of professionals ” those who went to school well before the Vietnam War and before the communist government came to power in Laos in 1975 ” will tell of their schooling in France, a hold-over of the once colonial power.

Yet, those who were of university age between the fall of the Soviet empire and today have been left without either the support network of communist states or a functioning education system at home. The result is that middle managers in their 30s and 40s with a university degree who should be poised to take up senior positions are few and far between. There are few if any individuals in that age group with a master’s degree or higher.

One senior level official shared that the problem is compounded by what he calls “temptation.” There was a time when educated, capable graduates sought government jobs for their prestige, security, and access. Today, when government salaries are in the range of US $35 a month, what is the motivation to remain in these posts? Low civil service salaries are blamed the world over for encouraging corruption, mismanagement, and absenteeism. But now, with the number of mega-projects coming to Laos, like huge hydro-electric dams, it is even easier to increase one’s income through completely legal means. Skilled individuals are simply taking jobs with international organizations and businesses running these projects, leaving government agencies and ministries with an acute shortage of high-caliber staff. Not coincidentally, the ministries in most need of experts in today’s Laos ” those concerned with natural resources, protecting the environment, financial management, and investment regulation, to name a few ” are those in direct competition with the fastest growing private interests in the country.

In Laos, university professors are also government employees, with corresponding civil servant salaries. It is hard to imagine how departments like engineering, natural sciences and business, will be able to keep their best and brightest teachers, all but eliminating the mechanism for building a future generation of capable Lao professionals.

In response, some staff members are being asked to remain in their current positions longer, because there are no suitable replacements. The director general of one ministry said a number of his contemporaries who should be retiring have been encouraged to stay on the job past the official retirement age of 60. The dedication of these individuals to their jobs, and the recognition that there is no alternative if they want to maintain the progress they have already forged, is often what keeps them. But this is only a stop-gap measure that will delay the problem for a few more years, as there is certainly no up-and-coming group to fill the ranks.

For Laos, this means as foreign investment booms, more professionals will be lured away from government work to higher-paying jobs with international organizations or private entities. Working steadily at improving education over the long term starting at the primary level will render all of the positive results that come with a better-educated population, but this will be over the long term. There is no quick fix to the predicament Laos now finds itself in, but a significant investment in those who could become these managers and professionals in the medium term, perhaps within two to five years, could have a considerably positive effect long before those currently studying reading, writing and arithmetic are in the job market.

Gretchen Kunze is The Asia Foundation’s Deputy Country Representative in Thailand and Laos.

Related locations: Laos
Related programs: Inclusive Economic Growth


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