Labour practices and productivity in the Lao garment sector - perspectives from management and workers

(GSS 2011) coordinated by the World Bank. 5 This a newly commissioned set of data constitutes a useful baseline against which to examine the effects of strategies being developed for improving working conditions and adherence to international labour standards in Lao PDR. To date there has been only limited documentation of these issues in Lao PDR and this research seeks to begin filling this gap. The Laos industry, while modest by international standards, is the largest source of employment in the manufacturing sector, and a significant contributor to annual exports. Though the industry has managed to survive the international liberalization of the garment trade, firms are constrained by high landlocked transport costs and increasingly trapped in a cycle of low labour productivity and high staff turnover rates. While reported instances of extreme violations of international labour standards appear to be few, employees, many of whom are young female migrants, suffer from often difficult working and living conditions, long hours and compulsory overtime, and, for the most part, have a very limited understanding of their contractual rights and obligations. They tend to see work in the garment sector as a temporary phase in their life undertaken to gain much-needed income to help parents and siblings make ends meet, and to improve their own future prospects. Thus, firms struggle to raise productivity when faced with a perpetual need to replace experienced workers with new unskilled recruits, and the sector remains stuck in a sub-optimal equilibrium of low-productivity and high turnover rates. Our main objective in this paper is to compare differing perspectives on working conditions between managers and workers, and to explore ways in which the Lao garment sector could break out of this unsustainable situation to achieve improvements in both labour standards and productivity. Section 2 provides a general overview of the garment sector in Lao PDR and its characteristics, situating it in the context of other developments both within the Lao economy and in international trade. Section 3 offers a brief description of the institutional setting, in terms of the business environment, industrial relations, labour laws and mechanisms for workers‘ representation. Section 4 reviews the key literature on the gender division of labour in the global economy, focusing in particular on the contradictory effects of working in the manufacturing sector for women, and then situates Lao garment workers in the country‘s economic transition and shifting labour markets. Section 5 describes data and methodology of