Skilled Workers Key to Cambodia's Continued Economic Growth

News Release | 16 November 2009

MANILA, PHILIPPINES - Rising demand for skilled labor and inadequate investment in vocational training has created a shortage of skilled workers in Cambodia, impacting on productivity and economic growth.

To address these constraints, the Asian Development Bank's (ADB) Board of Directors has approved a $24.5 million grant from its concessional Asian Development Fund for a project to improve the government's technical and vocational education training (TVET) system to make it more responsive to the country's growing need for a skilled and educated workforce.

The project will provide an expanded and more integrated training system that is endorsed by industry and better aligned with the skills requirements of the formal and informal economies. Initially, the project will focus on three industry sectors - mechanics, construction, and business services and information and communication technology - to develop models for formal and nonformal training programs. Later, similar training models will be rolled out for other industries.

Cambodia's economy has grown significantly over the past decade, as the country transitions from a traditional agrarian base to a modern industrialized economy. However, the recent global financial crisis has significantly slowed Cambodia's economic growth rate and highlighted the country's vulnerability to shocks due to its narrow economic base. Agriculture, manufacturing and the services industry account for 85% of employment and 92% of its gross domestic product.

"The government recognizes that the issue of productivity must be addressed, as must the need to attract new industries to increase the diversification of the economy," said Wendy Duncan, Principal Education Specialist in ADB's Southeast Asia Department. "It strongly believes that TVET has an important role to play in the effort to meet these challenges, and it recognizes the need to transform TVET into a quality, demand driven training system that is relevant to industry." At the same time, the government recognizes the continuing importance of providing nonformal basic skills training to help the young and unemployed in rural areas raise their incomes.

The primary beneficiaries of the project will be the rural underemployed, including workers recently displaced from the garment and other industries hit hard by the global financial crisis. As well, by 2020 it is expected that there will be at least a 30% increase in the number of employees holding formal TVET qualifications.

"Beneficiaries will acquire skills responsive to the needs of industries, which should raise productivity and incomes and benefit the economy as a whole," said Ms. Duncan.

The government will contribute $3 million toward the project's total cost of $27.52 million. The executing agency is the Ministry of Labor and Vocational Training.