20,698 garment workers from 47 garment factories in Lao PDR each benefited from one-time cash transfers of LAK900,000 ($85) from March to October 2021 to help mitigate workers’ lost income and support business continuity while reducing employers’ staff turnover costs.
The German Federal Ministry for Economic Cooperation and Development (BMZ) funded the initiative, which was developed with technical support from the International Labour Organization (ILO).
It supported the government’s social protection response to the pandemic and provided cash assistance to workers in the garment sector, including those ineligible for government support due to not being registered with the Lao Social Security Organization (LSSO) or having paid contributions for less than 12 months.
“Thanks to the German government and ILO, we were able to provide much-needed income support to garment workers during this difficult time. The initiative has also helped strengthen our social security system payment mechanism, allowing us to transfer funds to beneficiaries who do not have bank accounts,” says Padeumphone Sonthany, vice minister of labour and social welfare.
The scheme was developed in line with international social security standards including national ownership, joint oversight by government, employers and workers as well as transparent and accountable administration. The Association of Lao Garment Industry (ALGI) and the Lao Federation of Trade Unions (LFT) were involved in its development and supported the scheme’s operation.
“We are pleased to see how this income support helped workers and businesses survive a difficult period. It is especially important that those not normally eligible for unemployment benefits were included and that every effort was made to ensure no one was left behind,” notes Graeme Buckley, director of ILO Country Office for Thailand, Cambodia and Lao PDR.
The initiative was implemented by ‘piggybacking’ on LSSO’s existing delivery systems, helping reduce administration costs and speed up delivery, whilst easing the financial strain on the national unemployment insurance scheme. New payment systems were piloted by LSSO, with electronic payments made via local mobile network operators, increasing financial inclusion for garment sector workers, especially those without bank accounts.
Support was also provided to the Association of the Lao Garment Industry to strengthen occupational safety and health performance in garment factories and dormitories in relation to Covid-19 infection prevention through on improving health and hygiene in factories, and dormitories, including capacity building for dormitory managers and OSH Committees.
The Lao PDR garment sector employs some 26,000 workers and was hit hard by the Covid-19 pandemic with many factories scaling back production, releasing staff and in some cases closing their doors.
News of the emergency income support initiative was first announced in February.