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World Bank report warns of need for diversification and skills development

Gerald Flynn / Khmer Times Share:
Inguna Dobraja, country manager for the World Bank in Cambodia, speaks at the report launch yesterday. KT/Chor Sokunthea

The World Bank yesterday launched a new report highlighting the success of Cambodia’s economic development and issued comprehensive policy reform recommendations in order to sustain that growth.

Attending the launch were representatives from the Ministry of Commerce, the Ministry of Labour and Vocational Training, as well as the Asian Development Bank and numerous luminaries from the Cambodian business community.

“Cambodia’s Future Jobs: Linking to the Economy of Tomorrow” lavished praise on the Kingdom for its strong annual GDP growth, but issued stark warnings of problems to come should Cambodia rest on its laurels.

The report congratulated Cambodia for the high labour force participation rate of 80 percent of all working-age Cambodians, although it notes that 94 percent of all jobs are low-skilled occupations. Managers and professionals, it asserts, account for less than 5 percent of Cambodian jobs.

Inguna Dobraja, country manager for the World Bank in Cambodia, said in her opening speech that “between 2010 and 2015, the number of wage jobs increased by 12 percent per year, and one-third of all wage jobs are in foreign-owned companies.”

Ms Dobraja was quick to note that external economic forces need to be taken into account.

“However, as successful as the employment development model has been in delivering more and better jobs – and without a doubt, it has been very successful – it is now time to reflect on how to sustain these things in the changing global economy.

“We worked closely with three ministries, the private sector, civil society, and international development partners,” explains Wendy Cunningham, who – along with Claire Hollweg – is one of the authors of the report.

Ms Cunningham, who works as the World Bank’s lead economist in East Asia and the Pacific, explained that four key shifts were going to impact Cambodia’s job market, notably the growing middle class, international trading patterns, increasingly knowledge-intensive jobs, and automation.

When asked if the Ministry of Labour and Vocational Training agreed with the findings of the report, spokesperson Heng Sour claimed that it did.

As such, Ms Cunningham and Ms Hollweg’s study produced seven job-specific policies that align with existing governmental frameworks on education and employment.

Firstly, the much-touted need for diversification once again reared its head – with the report citing the majority of jobs in Cambodia belonging to low-value segments of global value chains. There is a need, the report finds, to move into new exporting products and move up existing value chains such as garments manufacturing.

Other policies included addressing the cost and bureaucracy involved with setting up a business in the Kingdom, noting that many small and medium businesses here do not grow as well as comparable countries in the same length of time.

Recognising the volume and value of household enterprises – which account for 17 percent of all jobs – the report suggests enhancing productivity to allow them to create better jobs. This, it suggests, can be linked to digital literacy.

There was a clear need to build links between foreign direct investment-funded firms and domestic input-supplying firms, with particular attention to the garments and manufacturing sectors. It also highlights the need for reforms within the education system to match skills with the needs of the private sector.

Both traditional education and vocational training systems need to be realigned to meet the demands of the market, the report states, going on to explain policymakers and educators should work closely with the private sector to establish this.

Lastly, the seventh policy pertains to macroeconomic stability and warns of US dollar fluctuations that could mean lasting impacts for Cambodia’s economy.

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