EuroCham Cambodia organised its 2024 HR Forum on April 25, 2024 at the Oakwood Premier Phnom Penh bringing together private sector stakeholders and government representatives to discuss topics related to human resource (HR) development in Cambodia.
This was the second time EuroCham hosted its flagship HR forum, with the Minister of Labour and Vocational Training (MLVT), H.E. Heng Sour, delivering the keynote opening remarks.
“I wish to take this opportunity to thank EuroCham for initiating this very important forum, especially since it has been named as one of [the chamber’s] flagships,” said the Minister.
Since the conclusion of the Government-Private Sector Forum, the Ministry of Labour has been tasked, and also agrees with the private sector, to take out many public services that are considered a hindrance to the business environment…
He explained that the Ministry of Economy was reviewing the MLVT’s proposal on April 29, 2024 to remove such requirements so employers would no longer need to submit a request to the ministry before introducing a new program or system that affects workers or employees.
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“So we will offer you more flexibility and more responsibility to your employees. It is also a good opportunity for your employees and workers, especially their representatives, to work more closely with the [employing] enterprise rather than count on the labour inspector who is not always within the enterprise,” added Heng Sour.
Legal And Policy Updates Concerning Labour In Cambodia
A brief summary of the latest legal and policy updates concerning labour and employment in Cambodia was delivered by Dr. Antoine Fontaine, Vice-Chairman of the EuroCham Human Resources Committee and Founding Partner of ANANT Law Firm, who also provided his own forecast of future trends in this legal sector.
Trends In Future Foreign Employment In Cambodia
Concerning foreign employment in Cambodia, Fontaine predicts that Cambodia may become less friendly to foreign workers and small investors in the future.
Cambodia is generally considered by many foreigners as one of the most welcoming countries to visit. There are many reasons for that and one of them is the possibility to easily establish a business or find a job in the vibrant developing economy.
He noted that Cambodia has an open economy that incentivises investors and workers to come, however, he stressed that things are now changing fast and the current “regulation is not is not as friendly as its implementation proves.”
Cambodia desperately needed foreigners, so the process to recruit was far simpler than what it should have been, and I can say that it's still the case that it is very straightforward and basically very easy to apply and to get a work permit. But everything is changing…
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He pointed to the evolution of the Law on Investment as a good example of this, as the former law allowed Qualified Investment Projects (QIPs) to recruit foreigners without specific conditions, while the new law requires QIPs to invest in educating Cambodian staff to work at the company and eventually replace foreign staff.
Fontaine also theorised that the increased number of recent Prakas and notifications released by the MLVT reminding businesses about the conditions to recruit foreign employees – including the latest Notification No. 110/23 released in December 2023, requiring foreign company owners and self-employed people to obtain work permits – can be read as a sign that the ministry will start to enforce regulation with more rigour.
Other trends he covered in his presentation concerned the growing social protection system, the development of minimum wage standards for all sectors, improved inclusion standards for hiring persons with disabilities, and further efforts towards formalisation (particularly of self-employed workers).
Addressing The Skills Gap: What Are The Top Skills Missing In Cambodia's Workforce?
To get a better sense of Cambodia's current skills gap, EuroCham Cambodia and Swisscontact conducted a survey in early 2024 with over 100 companies in the Kingdom (covering five different sectors: construction, electrical, manufacturing, mechanics, tourism and hospitality) to identify what skills are most sought after by businesses.
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Presenting the survey findings, Andries (Zandre) Van Straten, Services Coordinator at EuroCham, shared that almost three-quarters of businesses in Cambodia are currently facing skills gap challenges (66 per cent facing labour shortage due to location or skills gap, and 74 per cent reporting difficulty finding qualified staff) and nearly half of respondents (49 per cent) were unaware of available training support.
Regarding what skills companies appeared to be looking for most, soft skills emerged as the highest in demand.
Van Straten told B2B Cambodia:
Leadership was the most prominent skill (in demand) among all five sectors, [as well as] knowledge of quality control, customer service, and project management.
“These soft skills were the most featured at any points or categorisation we were making [in the survey], however, when we [looked at] very sector specific skills, while soft skills were at the top, we also started to see a bit more [demand for] hard skills and industry specific skills.
“For example, in construction we identified that project management and leadership were important, but we also saw the a very united need for a greater understanding of construction techniques," he added.
Van Straten also highlighted language, particularly English fluency, as one soft skill that Cambodian companies appear to have a better grasp of compared to its neighbours.
“If you compare with the average company in Thailand [for instance], Thailand, would not have the same level of English fluency as a Cambodian or Vietnamese company, and this is due to cultural, situational as well as social factors," he said.
Speaking further on prioritising hard skills vs. soft skills, Van Straten stressed that there should be equal attention given to both, but still advocated for a focus on soft skills as they can allow workers to be more competitive and have greater ease when transitioning between different sectors.
My argument for soft skills is that I would say it makes it very easy to transfer to different sectors, so that's going to make an employee a bit more competitive when compared to other candidates. For example, if someone is working in a soft skill sector, it's definitely much easier for them to find another job within a different sector than if they were working in a very hard skills (sector), such as [construction]. Transitioning to a service-based job would be definitely much more difficult and would require a high degree of training.
Cambodia’s Economic Progress And The Role Of Human Capital
The clear standout from EuroCham's 2024 HR Forum was a presentation delivered by Faya Hayati, Senior Economist for the World Bank, on Cambodia's economic progress, the significant role of human capital, and its implications for the country's future, based on data from the World Bank’s Systematic Country Diagnostic Update (SCD2) for Cambodia.
Contrasting the smaller-scope studies and conversations happening at the forum, Hayati's presentation focused on painting a broad picture of human capital development in the national context.
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Hayati discussed Cambodia's development over the last decade, highlighting its position as the 11th fastest growing country pre-COVID with a high employment-to-population ratio. Despite this, he noted persistent challenges in poverty reduction, education, and labour productivity.
He delved into the details of Cambodia's labour market, showing disparities in wages between urban non-agricultural workers and rural farmers, and the movement of people from rural to urban areas. He pointed out that while Cambodia's poverty rate has improved, the inequality in income distribution has increased, with the rich getting richer faster than the poor.
A significant portion of his talk was dedicated to discussing human capital development in Cambodia. He presented troubling statistics about education, noting that only a small percentage of the population completes high school and that the quality of education remains low.
While speaking with B2B Cambodia, Hayati stressed:
The human capital story in Cambodia has two sides to it. One is this narrative of progress – we see enrolment rates in Cambodia for upper secondary increase by 77 per cent… But at the same time, we're starting from a basis that is not comparable to our peers, so you go to places like Vietnam, and 90 per cent of those children are enrolling in high school, whereas in Cambodia, it's about 30 to 40 per cent.
Hayati emphasised the direct correlation between poor educational outcomes and low-skilled employment, which dominates the Cambodian job market. Other than enrollment rates, he noted that Cambodia’s PISA (Program for International Student Assessment) scores are still significantly below its comparators in the region.
The World Bank's Human Capital Index (HCI) also gives Cambodia a score of 49 per cent, indicating that “a child born today in Cambodia is only likely to achieve 49 per cent of their productive ability, because of the quality of education and nutrition and health outcomes that prevail in the country today."
He argued that without significant improvements in human capital and competitiveness, Cambodia might struggle to transition from a low-skilled, labour-intensive economy to one that can thrive in a more technologically advanced and environmentally conscious global market.
“But the good news is we're seeing signs of progress in most areas, which is promising, and we're seeing an appetite from the public and private sectors to take on these challenges, because it is a joint effort, including on education, particularly in the workforce," Hayati added.
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Despite the many challenges and hurdles ahead, Hayati ended his presentation on an ultimately hopeful note, reflecting on Cambodia's history of resilience and ability to progress against all odds.
The situation in Cambodia, if you look back 30 to 50 years ago, none of the results [we see today] were predictable, or realistic, to be honest – yet the country achieved them.
"Looking forward, the challenge is just as great – to achieve high-income status by 2050 requires the same sort of remarkable growth we had the past 30 years for another 30 years, and that's seldom been done by anyone on the planet.
"It takes a lot of structural reforms to raise the human capital, raise productivity, draw in foreign direct investment, and sectoral policies to help rise up the value chain in manufacturing… So there's a series of reforms that would need to be done to pull off another 30-year record sort of growth period.
It's a tough journey ahead… But I think the one thing we can all agree on is that if there's one place in the world that's demonstrated it can achieve and overcome, despite the odds, it's right here in Cambodia.