Lao PDR.: The Obstacles of State Regulation through Inter-state MOUs on Employment

Abstract

This article focuses on obstacles of state regulation through MOUs on employment between Lao PDR and Thailand and is based on fieldwork in Lao PDR. The article aims to understand problems which occur in the source country of labor, Lao PDR. Regulation theory, which is based on Marxist political economy theory, is used as the analysis framework. The article shows the significance of MOUs and is influenced  by two well-known discourses: free movement of labor and labor protection. The MOUs are also important in setting up and organizing state regulations on labor.  Moreover, they push markets into employment mechanisms. However, Lao PDR cannot carry out the new role because of domestic political and administrative conditions. The state cannot facilitate employment; instead it is an obstacle to  employment and it increases employment costs.  Furthermore, it is unable to increase the effectiveness of  markets but instead  increases monopolistic tendencies and inefficient markets. The article emphasizes that the main cause of the obstacles to state regulation through  MOUs is the lack of  administrative   good governance. This case reflects the challenges facing Lao PDR, which has participated  enthusiastically in the global economy. Development that focuses on growth while lacking good governance is an obstacle to creating economic efficiency and distributing wealth in society fairly.