Under the theme«ការងើបឡើងវិញនៃសេដ្ឋកិច្ច និងការងារ និង​ដំណើរឆ្ពោះទៅកាន់ការចាកចេញពីក្រុមប្រទេសអភិវឌ្ឍន៍តិចតួច»

December 11, 2024, Sofitel Phnom Penh Phokeethra Hotel

Distinguished …………………………………………………………………………………………….!

First of all, on behalf of the Ministry of Labour and Vocational Training and in my own capacity, I am extremely pleased to preside over the opening of the 2024 National Conference on Labour Economics, held under the theme: “Economic and Labour Recovery and the Journey Toward Graduation from the Least Developed Countries (LDC) Category.” This is a highly significant and timely theme, as Cambodia is currently undergoing an evaluation process in preparation for its graduation from the group of Least Developed Countries. I would like to extend a warm welcome to all Excellencies, ladies and gentlemen—including representatives from relevant ministries and institutions, employers, workers, national and international organizations, development partners, associations, professors, experts, researchers, and all our distinguished national and international guests—who are present with us this morning, totaling approximately 250 participants.

On this occasion, I would also like to express my gratitude to our development partners—including the United Nations Development Programme (UNDP), the International Labour Organization (ILO), the Swiss Agency for Development and Cooperation (SDC), the Textile, Apparel, Footwear & Travel Goods Association in Cambodia (TAFTAC), the Cambodia-Japan Association (KIBO), and other national and international partners—for their generous financial and technical support in organizing this conference. This two-day conference on the labor economy has four primary objectives: First, to bring together experts in the fields of labor, social security, and vocational training from various institutions to share insights on emerging trends and provide recommendations for fostering a more dynamic labor market in Cambodia, while also addressing the implications of Cambodia’s graduation from the status of a Least Developed Country (LDC). Second, to share knowledge and best practices regarding technical and vocational skills training, involving representatives from the private sector, policymakers, intellectuals, and researchers. Third, to facilitate discussions and provide strategic inputs to ensure that Cambodia’s workforce is equipped to meet the demands of the digital age and the evolving socio-economic landscape. Fourth, to promote partnerships and innovation that support the transformation of the economy and the labor market. Distinguished Conference Participants,

Building upon a solid economic foundation and political stability, the Royal Government of Cambodia—under the 7th Legislature of the National Assembly and the energetic, astute, pragmatic, and visionary leadership of Samdech Moha Borvor Thipadei Hun Manet, Prime Minister of the Kingdom of Cambodia—has launched the “Pentagonal Strategy – Phase 1.” This strategy focuses on growth, employment, equity, efficiency, and sustainability, aiming to establish the foundation necessary to realize Cambodia’s 2050 Vision: transforming the nation into a high-income country. Indeed, sustained economic growth over the past two decades has transformed Cambodia’s economic structure—shifting it from a reliance on traditional agriculture toward a greater dependence on industry, smart agriculture, and services that offer higher value-added. Concurrently, the country’s integration into regional and global production and supply chains has become increasingly deep and interconnected.

To illustrate, in 2000, Cambodia’s industrial sector accounted for only 22% of the Gross Domestic Product (GDP), while agriculture and services represented 36% and 38% of GDP, respectively. By 2023, this economic structure had shifted significantly: the industrial sector’s share rose to 42%, the agricultural sector’s share declined to 15%, and the services sector accounted for 37% of GDP. In 2023, the share of Cambodia’s workforce employed in the industrial sector rose to 30% of the total, while employment in the agricultural sector declined to 31%; meanwhile, the service sector accounted for approximately 40% of total employment. Compared to the year 2000, the structure of employment has undergone a significant shift: back then, the agricultural sector was the primary driver of job creation, accounting for 72% of total employment, whereas the industrial sector made up only 8% and the service sector 20%.

Furthermore, the resilience of Cambodia’s economic structure is expected to drive further job creation across various sub-sectors. A study by the Ministry of Labour and Vocational Training indicates that employment growth in Cambodia’s industrial and service sectors for 2024 and 2025 will be highly resilient. Specifically, the industrial sector is projected to see employment growth of 1.9% in 2024 and 2.6% in 2025, while the service sector is projected to experience growth of 3.1% in 2024 and 4.6% in 2025. Conversely, employment in the agricultural sector is projected to decline by 3.5% in 2024 and 3.6% in 2025—a positive sign in the context of Cambodia’s ongoing industrialization. Overall, the projected employment growth in the industrial and service sectors reflects a strong sense of optimism, with total employment expected to rise from 9.8 million in 2023 to 10.1 million by 2025. In alignment with the key priorities of the Pentagonal Strategy – Phase 1, the Ministry of Labour and Vocational Training has launched the Strategic Development Plan for the Labour, Social Security, and Vocational Training Sector (2024–2028). This foundational document serves as a compass, outlining the key strategies, priority programs, clusters of activities, and specific tasks that the Ministry and all relevant stakeholders must implement and achieve over the next five years. In this context, the 2024 National Conference on Labor Economics serves as a significant initiative aligned with the Strategic Development Plan for the Labor, Social Security, and Vocational Training Sector (2024–2028). It is designed to foster collaboration, facilitate the exchange of knowledge and innovation, and examine challenges in order to identify key solutions for economic and employment recovery, as well as opportunities to enhance the labor market—all as Cambodia prepares for its imminent graduation from the category of Least Developed Countries (LDCs).

• Distinguished Conference Participants,

Based on past development achievements, Cambodia has already met the criteria for graduation from the Least Developed Countries category on two occasions: first in 2021, and subsequently in 2024. As a result, Cambodia is set to officially graduate from the category of Least Developed Countries (LDCs) in 2029, pending formal announcement by the United Nations General Assembly.

The journey toward LDC graduation presents both challenges and opportunities for Cambodia, necessitating a comprehensive, strategically considered policy response. Among the challenges arising from this transition is the potential loss of preferential tariff treatment in key export markets—such as the European Union (EU) and the United States—where the utilization rate of such preferences currently reaches approximately 90%. Furthermore, Cambodia will be required to comply with stricter “Rules of Origin” criteria; specifically, the threshold for “local content”—the proportion of domestic raw materials used in production—must increase from the current 30% to 60% following the country’s graduation from the LDC category. In this context, for products in the textile, garment, footwear, and travel goods and bags sectors, a “double transformation” process must be applied. This means that export products must undergo two stages of transformation: the first stage involves the production of the fabric, while the second stage consists of cutting, sewing, and assembly. Furthermore, Cambodia will lose its extended transition period for implementing the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS); consequently, the country will be required to assess and provide intellectual property protection to those who request it. Additionally, development cooperation assistance may also decline. These challenges could have certain impacts on employment levels and the structure of the labor market in Cambodia. Alongside the challenges, graduating from the group of Least Developed Countries (LDCs) will present several opportunities for Cambodia to strengthen its economic capacity. This includes increasing value-added in the industrial and agro-industrial sectors; diversifying industries and export markets; boosting domestic consumption and investment; developing high-quality infrastructure and adopting digital technologies; strengthening human capital; implementing domestic reforms to improve the business environment; and fostering industrial linkages (backward and forward linkages), among others.

In addition to the implications of its impending graduation from the Least Developed Countries (LDC) category, Cambodia faces increasingly complex and interconnected labor market challenges. These encompass frictional, structural, and cyclical labor market issues, stemming from:

Obstacles to the flow of information among job seekers, employers, and educational and training institutions—caused by a lack of information regarding job opportunities and the specific skills required by employers, as well as a mismatch between the supply of and demand for labor. The structural transformation of the economy toward the industrial and service sectors is deepening, relying heavily on a skilled workforce and high labor productivity. This process promotes the attraction of foreign direct investment—particularly by seizing opportunities within value chains shifting from other countries in the region—and leverages free trade agreements. These factors help create employment opportunities that increasingly demand a workforce with medium to high-level skills.

Demographic trends exert pressure to generate new, higher-quality jobs for new entrants to the labor market, as well as for those transitioning out of the agricultural sector. This is essential for maximizing the “demographic dividend.” Furthermore, there is growing demand for education and vocational training that is well-aligned with the needs of the labor market. However, demographic trends have also created more favorable conditions for expanding social security schemes—specifically by facilitating savings for investment in human capital development for both current and future generations.

Rapid technological advancement, driving the Fourth Industrial Revolution (Industry 4.0), is fundamentally transforming business operations and work practices. This shift demands higher-level skills across the board, while simultaneously leading to the replacement of human labor with automation and artificial intelligence—a trend that risks job losses, particularly among low-skilled or unskilled workers.

Furthermore, the high proportion of the workforce in the informal economy, combined with the rise of platform-based work (such as food delivery services), necessitates the development of new legal and regulatory frameworks. Such measures are essential to ensure decent working conditions and access to social security coverage for these workers. Meanwhile, economic and global labor market uncertainties are exerting both direct and indirect impacts on Cambodia. This necessitates a proactive approach from the Royal Government in formulating policy measures to ensure a robust labor market and the creation of employment opportunities for its citizens—particularly the youth—as the country prepares to graduate from the group of Least Developed Countries (LDCs) by 2029.

Indeed, the journey toward graduating from the LDC category brings both opportunities and inevitable socio-economic challenges. In summary, Cambodia must continue to pursue the structural diversification of its economy—optimally shifting toward priority industrial sectors where the country holds a comparative advantage. This entails enhancing export efficiency, ensuring sustainable output growth, and fostering inclusive employment. Furthermore, it is essential to strengthen workforce training in alignment with industrialization policies to meet future demands for skilled labor, while expanding social protection for vulnerable populations—ensuring that no one is left behind. This approach serves as a mechanism to distribute resources and the fruits of development with greater equity and effectiveness.

Distinguished participants of the conference! Over the next two days, we will hear insights from experts and practitioners, and engage in discussions on several key topics, including:

1. Shifts in the labor market and regional economic policies for inclusive employment growth.
2. A roadmap for human capital development strategies to prepare for graduation from the Least Developed Country (LDC) category.
3. The role of active labor market policies in enhancing labor market outcomes.
4. Skills development for building a competitive workforce.
5. Strengthening social security systems to enhance labor market resilience and promote integration into the formal economy.

I strongly hope that all conference participants will actively engage in discussions regarding best practices in the fields of labor, social security, and vocational training, as well as the significant challenges we are currently facing. Explore and select effective, innovative economic and labor policies—underpinned by digital technology—to support recovery and foster greater resilience. Furthermore, I hope that all conference participants will contribute inputs and propose actionable solutions to address challenges, ensuring that resource allocation is both sustainable and inclusive.

I wish for the 2024 National Conference to be a successful and fruitful event. I hereby declare the 2024 National Conference on Economic and Labor Affairs—themed “Economic and Labor Recovery and the Journey Toward Graduation from Least Developed Country Status”—officially open.