Supporting Low-Skilled Labor in the New Lower-Middle Income Cambodia
August 24, 2016
Last month, the World Bank upgraded Cambodia’s economic status from low income to lower-middle income, a classification that the ruling Cambodian People’s Party has been eagerly anticipating and holds up as a sign of its success in poverty alleviation and development.
A major part of this success story is a result of the abundance of cheap labor, particularly in the garment industry, that Cambodia has enjoyed over the past decade. The apparel industry accounts for nearly 80 percent of Cambodia’s export revenue and employs an estimated 700,000 people, the largest formal contract employer for low-skilled workers in the country. While this has helped to drive Cambodia’s economic success, some analysts warn that the upgrade to lower-middle income status could result in the departure of some foreign aid that the country is still heavily dependent on, which would put pressure on the country to make greater investments in human capital and jobs to attract investment and maintain growth.
According to a 2015 Asia Foundation survey of 3,000 Cambodians on expectations for the future, employment is perceived as one of the best way to improve livelihood. When respondents were asked who they felt could most likely help them find a job, 31 percent said “nobody,” while 39 percent said “family or relatives.” The survey also found that 45 percent of respondents said that “lack of skills or education” was an obstacle in improving their livelihood. The findings suggest that while finding jobs is one of the most important perceived strategies to improve one’s living standard, there is a gap in providing support for people when it comes to employment opportunity. Such a gap is present in both skilled and low-skilled labor.
In the past, when minimum wage was much lower, factories were more willing to hire non-skilled employees and train them in various skills, such as sewing. But with the continued increase in the industry’s minimum wage, from $128 in 2015 to $140 per month in 2016 and expected to rise again in 2017, factory owners are less likely to invest in untrained workers. The industry is also known for a high turnover rate, estimated at between 15-20 percent on average. As such, workers without work experience are facing greater challenges in landing their first job or switching to another position that require new skills.
In May, as part of The Asia Foundation’s project to assess the need for job information in the garment sector, I spoke to garment workers at several factories in Phnom Penh to better understand their job-seeking behaviors. When it comes to job information like what factories are recruiting, types of jobs available, or factory contact details, most workers I spoke with said they do not know where to turn. For skilled labor, there are more ways to access job information, including career websites, social media, and newspapers. But garment workers have fewer options. For example, at some factories I visited, I did see a recruitment announcement that the factory printed on a banner and posted to the factory gate. However, some banners stay up for months at a time without being updated. More commonly, workers go from one factory to another to apply for a job without knowing what is available. On a typical day, at around 6:30 am, workers line up in front of a factory they decide to try to find work at. They wait outside the gate, and just after 7 am, when work has started inside factory, a representative comes out and picks a few people for an entrance test. If they pass the test, they get a job. The others not picked would either try another factory or go home and come back again the next day.
Fortunately, there are potential innovative solutions emerging to improve access to job information. The Asia Foundation is currently piloting a job information portal called Bong Srey to provide job information to garment workers in Phnom Penh’s Stung Meanchey area. Bong Srey models a call center that allows workers to call in to ask for information, such as what factories in the area are recruiting, for what positions, and what benefits, like salary and allowances, are offered, as well as factory contact information. Factory owners can subscribe to Bong Srey to list hiring information for free.
Bong Srey is still at an initial stage, and so far we have received considerable interests from the workers. Many have called in to ask for job information for themselves or family members or friends who are looking for a job. An initial user feedback survey found that 60 percent of the 50 respondents who had called Bong Srey said they found the “information useful” and 82 percent said they would “continue to use Bong Srey in the future.”
However, we have learned that providing job information can be challenging. First of all, changing job seeking behavior is hard. Workers are used to finding jobs by walking from one factory to another. A new option, such as the call center in which they can call in to ask for job information, is a foreign concept. Unless workers know how to access the information provided to them, their options remain limited. Secondly, given the readily available pool of job-seekers on a daily basis, there is little incentive for factory management to provide recruitment information.
Another challenge that unskilled and young workers face is lack of access to training opportunities to advance. For first time job seekers, even basic skills training such as an introduction to sewing would be of tremendous help. Additionally, it is also important for workers to move up to a more technical skill set like design and patterns as well as leadership and management. Brands who source Cambodia’s garment products could play an important role in working with the factories to make job information more widely available as well as to help provide necessary skills training to workers. Given the challenges workers face, training should be subsidized or provided for free of charge. In the end, such an investment would help retain the workers and improve productivity. As Cambodia embraces its new elevated economic status, strengthening its workforce that got it there is essential.
Menghun Kaing is a program officer for The Asia Foundation in Cambodia. The views and opinions expressed here are those of the author and not those of The Asia Foundation or its funders.
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