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As countries become increasingly integrated into the global economy, increased trade links with other countries translate into increased access to better or cheaper imports and increased demand for exports. Both can have an impact on consumers, producers and workers through household consumption, household production, and labor incentives. The channels through which increased trade integration can affect labor include: (i) the consumption channel, typically leading to an increase in purchasing power and therefore higher real wages, and (ii) the employment effect due to increased labor demand. The extent of these gains to trade will depend on the incidence of trade policies or trade shocks; in other words, the impact will depend on which products become less expensive, which sectors increase demand for skilled or unskilled labor, and which workers can access these new jobs. This report utilizes a range of methodologies and datasets that implicitly link trade and jobs; by using these complementary analytical approaches, we generate multiple perspectives on Lao PDR’s recent labor market outcomes, and their implications for Lao PDR’s current and future trade competitiveness.

Growth moderated throughout 2015, affected by a slowdown in private consumption and weak export growth. The authorities have generally managed the downturn in commodity prices and the financial market volatility with a reasonable mix of macro policies. Heightened external volatility calls for prudent macro policies and acceleration of structural reforms. The eleventh Malaysia plan stresses the importance of effective migration management to achieve high-income country status by 2020. Immigration continues to play a crucial role in Malaysia’s development. While job growth has recently been concentrated in high-skilled occupations, three quarters of all jobs in Malaysia are still low- and mid-skilled. Econometric modelling suggests that immigrant workers can raise gross domestic product (GDP) and create employment for Malaysians. The current process for sourcing immigrant workers is complex and costly for the migrant. The immigration system can better meet the country’s development objectives if it is aligned with Malaysia’s human resource development strategy. Global experience shows that successful immigration systems recognize the long-term role of immigrant workers in the hosting country’s economic and social objectives if they are: (a) market-driven, with immigration flows aligned with labor market demands; (b) comprehensive, acknowledging the need for immigrants of all types; and (c) balanced, minimizing the negative impacts on Malaysian workers, and protecting immigrant workers from abuse.