Cambodia has received a $100 million loan from Asian Development Bank (ADB) to boost productivity by bridging the skills gap via reforms and investments in technical and vocational education and training (TVET) as well as private sector participation.
The new loan was approved by ADB on August 1, 2023 for the first subprogram of the Skills for Future Economy Sector Development Program, ADB said in its latest statement.
Accordingly, this would strengthen human capital resources, thereby transforming the country into a technology-driven, knowledge-based industrial economy.
The skills development environment would be further enhanced through industry-led inclusive training along with the use of additional funds to mobilise demand-driven skills development.
The bank estimated that Cambodia has nine million workers, with women representing 49 per cent of the workforce. In 2021, 54 per cent of Cambodia’s population was under 30 years old.
The large young population make-up presents a unique opportunity to raise investment in human capital development and enhance the skills of new entrants to the labour market, while also upgrading the skills of existing workers to match industry demand.
Jyotsana Varma, ADB country director for Cambodia, said reshaping Cambodia’s labour force and modernising its economy requires the continual reform of the TVET system through comprehensive strategies and well-timed, successive investments.
“These structural and institutional reforms in TVET are crucial in designing training programs that meet market demand, upgrade training facilities and equipment, and expand the Skills Development Fund (SDF),” she said.
Recall that the SDF was piloted by the government under the ADB-financed Skills for Competitiveness Project in 2019 to raise the skills and competitiveness of the labour force.
Since then, the SDF has been funding industry skills development training needs through co-financing partnerships with government institutions, industries, training providers and development partners.
In February, Minister of Labour and Vocational Training Ith Samheng pointed out that the labour market is strong, having maintained a 99.3 per cent employment rate, akin to some 10.8 million workers. It includes an estimated 1.3 million Cambodian migrant workers who are employed in Thailand.
The successful rate of employment is a result of ensuring the development of a resilient and high-income labour market for people with better working conditions, while focusing on the well-being of both formal and informal workers.
“This focus is aimed at improving people’s livelihoods and promoting vibrant business activities and sustainable investment in response to socio-economic development and the labour market,” he said.
A ministry report showed that the industrial sector employed 2.5 million people or about 23 per cent of the total workforce in Cambodia, 3.1 million in services (29 per cent), 3.4 million in the agricultural sector (31 per cent), 500,000 workers as civil servants (five per cent) and 1.3 million are migrant workers abroad (12 per cent).
Meanwhile, ADB pointed out three key challenges facing Cambodia’s TVET system, such as a lack of a focused and comprehensive skills development programme for the fourth Industrial Revolution.
It also said there are limited private sector roles in skills development and the transformational vision of industries, and inadequate financing and partnerships in skills development.
“Together, these challenges limit the employability and productivity of current and future labour force and may prevent post-pandemic Cambodia from diversifying and transforming into a knowledge-based economy.
“However, ADB said the Skills for Future Economy Programme would address these challenges,” it offered.