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publication November 19, 2019

Cambodia’s Future Jobs: Linking to the Economy of Tomorrow

Key Findings

There are 8 million jobs in Cambodia employing about 80 percent of the adult population—a rate that is well above the 63 percent average labor participation rate in the East Asia Pacific region. The gradual improvement in the quality of Cambodian jobs is a testament to the success of the country’s export-driven development strategy. However, global trends, such as the growing Asian middle class, shifting trade patterns, and automation, require that Cambodia re-think its jobs strategy as it advances to the next stage of export-led development. Building on the Royal Government of Cambodia’s Rectangular Strategy – Phase IV, Cambodia’s Future Jobs: Linking to the Economy of Tomorrow identifies cross-sectoral policies that, collectively, will create more, better, and more inclusive jobs in the long-term.

A Cambodian jobs strategy will have to address four core trends.

  • First, while the export sector has already been an important contributor of more, high-quality jobs, the sector has the potential to generate even better jobs. Cambodia’s participation in global value chains generates fewer benefits to workers than the export activities of Cambodia’s peers—a shortcoming that could be overcome if Cambodia diversified its exports.
  • Second, domestic firms outnumber foreign-owned firms, yet remain quite small. In 2014, 1.4 million people were employed in domestic firms that each employed on average 8 people. Meanwhile, 1.2 million people were employed in foreign-owned firms that each employed on average 124 people. If household enterprises and small businesses were to become more competitive and grow, they could hire more Cambodian workers.
  • Third, the export and domestic sectors of the Cambodian economy remain disconnected from each other. For example, the garments sector sourced only 25 percent of its inputs from local Cambodian firms, compared to 60 percent in the Vietnamese garments sector. Greater integration between the sectors would allow them to build off each other’s jobs growth.
  • Fourth, Cambodian workers are not yet ready with the skills to take advantage of the job opportunities of a modern economy. In 2016, 37.6 percent of exporters cited an inadequately educated workforce as a top business obstacle. Workers will need improved education and training opportunities to be able to contribute to and benefit from the changes in the Cambodian economy.