Progress towards the MDGs in the Lao PDR
MDG 1: Eradicate Poverty & Hunger
 Poverty in Lao PDR declined steadily from 46% to 33% during the decade 1992-2002and the country is on course to attain the MDG target of halving poverty by 2015. While the incidence of poverty has declined, and the poor are getting less poor on average, the share of the poorest quintile in national consumption fell from 9.6% to 8%. This suggests an increase in disparity during 1992-2002, thereby confirming evidence from other sources about increasing gap among the poor and the non-poor.
Food poverty declined faster than overall poverty between 1992/3 to 2002/3, and the average number of months without sufficient rice in villages dropped between 1997/8 to 3. Malnutrition remains a significant concern in Lao PDR. Estimates suggest that despite considerable efforts, 38% of children under five years of age are underweight. Chronic malnutrition or stunting remains a problem in Laos (affecting 41% of children under the age of five) and requires urgent attention by both government and the development community. As a first step, it is recommended to include stunting as an additional MDG indicator for Lao PDR to ensure constant monitoring and action.
 Following the widespread conviction that poverty can only be reduced if people have a decent and productive job, a new target on employment was added under MDG 1in 2006: Reaching full and productive employment and decent work for all, including women and young people.
Even though a significant slice of growth in the last two decades has originated from the non-agricultural sector, the overall structure of the workforce has scarcely altered. More than 80% of workers are still engaged in subsistence-oriented agriculture and allied activities. There is little impact of the high and sustained growth in recent years on the workforce (especially agrarian and unprotected urban sectors), where low skills and poor health are widely prevalent.
Meeting the targets: Continued poverty reduction in Lao PDR needs to have a strong focus on sustainable agriculture, rural employment and income generation, and promote alternative livelihoods and development of rural infrastructure. In 2003 agriculture still contributed approximately half of the total GDP and provided employment to 80% of the workforce. Over the last decade, agricultural growth averaged nearly 5% per year and was the most important driver in reducing rural poverty. Non-farm rural income opportunities are limited and agriculture’s importance to rural households is high.
To sustain the reductions in poverty, Lao PDR needs higher employment and higher unskilled wage-rates. Lao PDR has the potential for high rates of sustainable agricultural growth that are key to continued reduction of rural poverty, and aiming for a 5-6% annual rate in the next decade is reasonable. Achieving this will involve transitioning from past reliance on extensive growth to a future that will depend more on intensive sources of growth.
Poverty reduction is a necessary but not a sufficient condition to meet the targets on reducing malnutrition. Poverty reduction will not automatically result into an improved nutrient dietary intake. There is an urgent need for inter-sectoral policies to address both malnutrition and poverty in a comprehensive way. An inter-sectoral Nutrition Policy is being set up and acknowledges that nutrition is central in development and has listed ten main objectives for 2020.
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