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Cheap exports, costly imports: Cambodia’s labour dilemma

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Construction workers at a high-rise building site. Construction attracts low- and medium-skilled workers, but many move to opportunities elsewhere in ASEAN once they gain new skills due to lack of skills accreditation. Pha Lina

Cheap exports, costly imports: Cambodia’s labour dilemma

Since 2007, when ASEAN member states agreed on the goal of fast-tracking the creation of the ASEAN Economic Community (AEC) by the end of 2015, which is expected to deepen market integration across the 10-nation bloc, the free flow of skilled labour – one of the integrations priorities –is expected to be minimal, local experts said.

The notion of labour migration was set in place to increase the mobility of workers to fill shortages in regional markets, allowing workers to have higher earning potential and better opportunities.

However, the flow of labour is currently restricted to eight mutual recognised professions that include accountants, architects, dentists, doctors, engineers, nurses, surveyors, and tourism industry workers.

Chan Sophal, Director for the Centre for Policy Studies, said these occupations account for only one per cent in a region with a workforce of over 600 million.

“Cambodians have a belief that they will not be able to compete with workers from other countries, and that all the jobs will be taken,” he said, adding, “I personally don’t see the AEC as being a big bang.”

While he explained that Cambodia has a skills shortage that by necessity will continue to attract labour from other countries to cushion the deficit, and also comfort investors looking to fill positions, he doesn’t predict a noticeable uptick in the general trend.

The real issue, Sophal explained, was the lack of a regional framework to compensate for the low-skilled labour migration moving in and out of Cambodia.

Kevin Britten, managing director of Top Recruitment, a local human resources firm, agrees. He said that the struggle that Cambodia faces presently is the retention of a low- to medium-skilled labour force, especially in Phnom Penh’s booming construction industry.

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Occupational breakdown by industry, full time employees (June 2012 – June 2013) Source: Study on large enterprise workforce and skills forecasting by BDLINK & HRINC Cambodia for ADB. 2013 Draft.

He explained that as workers who are primarily recruited from rural areas hone their skills, they then tend to search out better paying jobs in places like Thailand and Malaysia.

“Workers will come in from the countryside, learn their skills and then look for alternative places for employment,” he said. He believes that unlike high-skilled workers who tend to stay in Cambodia to be close to their family, as well as having a high earning potential, “blue-collar workers have already been away and have no problem with migrating to other countries,” he said.

According to Britten, this is the natural dynamics of the market at play.

Sophal said that the outflow and inflow of workers has had mixed effects for Cambodia.

“There are labour benefits for people to earn more but negative aspects as it may slow down the industrial development of the country.”

A joint publication by the Asian Development Bank (ADB) and the International Labour Organization (ILO) released late last year indicated that Cambodia could be one of the countries that benefits most by the AEC, with an estimated 1.1 million jobs added by 2025 above baseline estimates.

Content image - Phnom Penh Post
Occupational breakdown by province, full time employees (June 2012 – June 2013) Source: Study on large enterprise workforce and skills forecasting by BDLINK & HRINC Cambodia for ADB. 2013 Draft.

Low-skilled labour intensive jobs accounted for 71.2 per cent of this increase, while medium skilled workers could add an additional 722,000.

However, the publication added that without marketable improvements for workers to earn more, Cambodia could miss out on the job prospects if skills training lags and the market continues to pull workers abroad.

Sandra d’Amico, managing director of human resource broker HRINC, said that she is also concerned about filling the potential growth in the job market, as incentives to remain in the country do not fall in line with wage earning potential due the lack of skills verification.

While she doubted that the wages earned in Thailand are markedly different then in Cambodia, due to the fact that migrant labour hits an inevitable ceiling and is more dependent on a worker’s geographic location in regards to opportunity, “there needs to be more proactivity in finding ways to build the skills of the workforce for them to take on higher value added jobs,” she said.

While Britten said that with the private development of special economic zones, better paying and higher skilled jobs are already being created, thus the country is going in the right direction.

Yet, d’Amico explained that relying on the private sector was not enough to close the skills gap that is expected to worsen with high levels of investment and industry growth.

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Total workforce growth by occupation: 2011 - 2015 Source: Study on large enterprise workforce and skills forecasting by BDLINK & HRINC Cambodia for ADB. 2013 Draft.

For example, in construction, she said that skills need to be specialised, and until then, jobs will continue to be outsourced by subcontractors who can bring in skilled labourers from abroad.

“We do not have expertise in welding, brick laying . . . plumbing or electrical [work]. If we do not develop these skills, we can’t keep up with the diversification of the industry,” she said, adding that until vocational skills and certification methods are in place, these jobs will continue to be outsourced.

“There always has been a shortage of labour. We have seen that happening for years,” she said, adding that while Cambodia has retained the freedom to bring workers in and out of the country, “now that the labour laws are being enforced, we genuinely are starting to feel the shortages.”

While the government has been adhering to work permit laws in order to more strictly regulate its labour force ahead of the ASEAN integration, Sophal said that if these are too strict, it could be a detriment to industry growth.

“If we put in protective policies for our labourers or a few measures for recruitment, this will create a problem,” he said.


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