HRINC Insights

The following views were exchanged with the CAMFEBA Vice President at the CDRI Annual Outlook Conference in early 2015 in which Cambodia’s Industrial Development – Policy and Action Priorities were discussed. Speakers on the panel included H.E. Vongsey Vissoth, Secretary of State, Ministry of Economy and Finance, H.E. Son Chhay, Deputy Chair, Commission on Economics, Finance, banking and Audit, National Assembly, H.E. Dr. Mey Kalyan , Senior Advisor, Supreme National Economic Council (SNEC) and Ms. Sandra D’Amico, Vice President CAMFEBA, Managing Director HRINC Cambodia, Board member, CDRI.

How do you see Cambodia in the context of ASEAN?

The context in which we are developing and transitioning is essential and whatever we do, has to be Cambodia specific. Cambodia needs to find our “niche”, our advantage in the context of a very different world today. We are living in a world of global unrest, uprising, unemployment in major economies, in particular I mention the EU, which means less purchasing power for our exports, growing inequality in terms of wealth distribution more so today, than ever, regional and political changes all over, including Cambodia as well as importantly, let us not forget, a world of new technology where information is easy to access – a world of social media where people are making decisions without all the facts, a world where things happen much more quickly than we have ever imagined. And that global and regional context, is important in adjusting and managing change needed to diversify the economy.

First, I would like to stress the importance of Cambodia’s geographic location in ASEAN which is such an advantage. What is it that we can do, with such an advantage?
1. Access to markets and consumer markets: If our infrastructure, logistics and connectivity is better, Cambodia can be a hub.
2. Cambodia CAN BE a Central Hub of
  1. Finance
  2. Trade & Logistics
  3. Innovation
  4. Education
3. However… the window of opportunity closes quickly, if we do not react decisively and have policies to support such a strategy
Second, I want to stress the entrepreneurial spirit of Cambodian’s. There is a lot of ´unseen brilliance” and a lot that we need to promote in our new generation of leaders, their great stories and successes, some who are speaking here today. But in that context of entrepreneurialism, we need to create an enabling environment for SME’s to thrive and become part of global value chains. We have an opportunity to leap frog into Global value Chains, and perhaps SME’s partnering with Multinationals or regional players, and policies targeted to created such joint ventures, can give our SME”s access to advanced technologies, advanced and new ways or working, and more quickly enable Cambodian enterprise to integrate into global value chains.

What are the challenges in industrial policy – in particular from a labour perspective?

From a labour and social affairs perspective, there are three points I want to stress in the context of where Cambodia finds itself today…

First, is managing perceptions: We have had a lot of industrial unrest in the last two years, a lot of political change and empowerment. In particular industrial unrest is not favorable for diversification and creating more labour intensive industry. The intangible perception, which we cannot quantify, is as important in managing, as designing a new industrial policy. We must manage the intangible and ensure that our industrial policies manage the perceptions of people. In this, the following points are important to consider:

Access to clear and concise information for civil society in general, for SME’s and entrepreneurs so that they can play a role, and for foreign direct investors
Better government promotion of policies and opportunities which is linked to information access, but requires government to be more innovative in using websites to disseminate information, social media, TV, and radio.
A more service orientated government that is coordinated. There has been a lot of discussion (ref to H.E. Son Chhay) but I stress, service orientated public services.
Better urban planning in cities and SEZ’s because urban planning impacts perceptions. Industrial policies, including the new investment law mentioned by H. E. Sok Chenda in the previous session, as well as our SEZ policies and laws MUST include:
1. Reasonable housing infrastructure
2. Health and sanitation
3. Education and recreation facilities
Engagement between government and all actors in the country (Unions, employers, business chambers, civil society) and not only in our working groups which have been very effective, but up to the national assembly and parliamentary levels so that there is a better understanding of the realities everyone is faced with.

My second point is on Social Policies and Industrial Peace: Social peace is arguably our biggest challenges and threat which requires clarity and coordination of laws and importantly enforcement of laws. I stress this, as industrial and social peace is a pre-condition to get foreign direct investment, whether or not we have the best laws and regulations, not getting our goods and services out because of strikes or an unpredictable industrial environment, does no good for diversification. I have seven points to stress under social policies and industrial peace:

We need labour and social laws that support industrial policy and diversification.
1. We need wage policies that are predictable, encourage productivity, encourage employment
2. We need a trade union law that promotes a more constructive industrial relations environment in which everyone understands their rights and importantly, responsibilities.
3. In summary, our labour laws need to support industrial policy and need to be enforced, so that there is predictability and investors have security in how to operate in the country.
Our social security laws, while making remarkable progress, need to consider the impact and pressure of integration. The recent example where many Cambodian’s where expelled from Thailand, tested our resilience and ability to deal with what could’ve been, a potential disaster. Although well managed and in its infancy, we must also consider the future population structure, which is arguably going to age quickly with a young professional population having less children. Also we need to consider more broadly the protection of those working abroad which brings me to my next point on
Managing migration – the positives and the negatives, but to ensure that our workers abroad, are safeguarded, but also when they return, have institutions and protection to re-engage in Cambodia.
Fourth and SO IMPORTANT: Our Health Care Industry. There is a lot of talk about our Health Care, in particularly dentistry becoming extremely attractive to overseas people. I have no data to support this, but it is clear, we can be an attraction in fields we don’t think or focus on. But as much as a particular health care industry can be an attraction, the health care of our Cambodian people, are critical. We have an outflow of Cambodian people and revenues to neighboring countries to get quality health care, again, I have no data but my practical experience and engagement with society. Quality Health care and supporting health care systems for Cambodian people, is critical in our social policies.
Fifth, primary and secondary education: We need to keep the next generation in school. I have heard from education practitioners that schools on the borders are empty as people flock to industrial sectors to earn an income. All government resources, finance and people, must be focused on ensuring a literate and completion of quality secondary school. Managing wage policies and cost of living in this regard are important.
Finally, encouraging more science, technology, engineering, mathematics in Higher education. Our higher education sector can easily achieve excellence in consolidating the sector. Reforming those institutions which are not really universities into technical institutes that are focused on short term 1 year – 2 year programs that get young people a qualification that is practical and gets them into the labour force quicker.

My final point on Challenges with Industrial Policy is managing the transition from low value added garment manufacturing to a more diversified economy.

The jobs in the garment sector are critical as is the sector given its dominance in exports. The garment sector itself creates a host of knock on industries which we often do not talk about – whether it be food service, new business starting to service the sector and the importance of what those remittances mean to rural families in keeping people in school or developing the local economy in the provinces. We cannot forget about the importance of our garment sector in job creation and it’s indirect economic benefits. We need to prepare our workforce for “new industries and new opportunities” but we need our garment sector to maintain its dominance while we develop and diversify.
In developing and diversifying I want to mention that labour productivity is not only about skills development, but about the quality of investment that we are able to attract into Cambodia. Labour productivity also comes from advanced technologies and machineries, working smarter.
We need policies that don’t focus on low quality investment but Quality Investment and Quality Jobs. Policies that encourage joint ventures might be a good way to increase domestic investment into labour intensive industries.

Thank you.

About the speaker

Sandra D’Amico is the founder and Managing Director of HRINC (Cambodia) Co., Ltd (www.hrinc.com.kh), the Vice President of the Cambodian Federation of Employers and Business Associations (CAMFEBA) (www.camfeba.com) as well as a Board member of CDRI (www.cdri.org.kh) Cambodia’s leading think tank and research agency. She has been working and living in Cambodia since 2001 and works extensively and speaks regularly on labour, employment, education and economic themes in Cambodia, and within ASEAN. Ms. D’Amico also represents Cambodian employers extensively in the region and to the International Labour Conference (ILC). Most recently, she led the global employers group at the Global Dialogue on Wages and Working Time (2014), and is part of the International Employers Organisation (IOE) (www.ioe-emp.org) global industrial relations committee.

Other professional services companies that were founded by Ms. D’Amico and her team at HRINC, and renowned for their superior execution of complex research and superior data quality and management, include BDLINK (Cambodia) Co., Ltd, Cambodia’s leading market research and consulting firm (www.bdlink.com.kh) and The Society of Human Resource Management and Productivity (SHRM&P) which specializes in HRM and productivity training (www.shrmp.com.kh).

Ms. D’Amico can be reached on This email address is being protected from spambots. You need JavaScript enabled to view it..

Our Managing Director spoke at the first Global Alumni convention in Cambodia in February 2015. Her remarks address pertinent challenges and opportunities for developing the Cambodian Workforce.

Thank you for the opportunity to speak here today. I will address the points of characteristics of the workforce from an HRINC perspective where, on a daily basis, we are working with multinational and local clients to find the right talent as well as from a policy perspective where I represent employers as the Vice President of the Cambodian Federation of Employers and Business Associations (CAMFEBA).

If we look at our general workforce, there is no question that we have a multitude of strengths. We have what is perceived as a surplus of labour, although the extent of the surplus is today being questioned. None the less, it is a workforce that is passionate about learning and wanting to achieve. We have a workforce that is dynamic in the sense of wanting to achieve, wanting to be qualified and accredited, wanting to climb the career ladder…. But importantly we must remember that the majority of the workforce and the majority of jobs, are skilled and semi-skilled and not requiring higher education…

All of our positives must be viewed in the context of our economic environment and how it is changing. There is a growing pressure on wages. There is a growing pressure on productivity needs and being more productive. There is a growing pressure on compliance and enforcing laws and regulations. There is also a growing pressure on our place, as Cambodian, within ASEAN. It is also important to mention that all countries within ASEAN are facing challenges in addressing the competitiveness of our workforce.

So where does Cambodia stand in terms of challenges or negatives. It has been discussed this morning at length, the challenges we face. Lack of technical and hard skills, lack of soft skills, lack of flexibility and innovative thinking, lack of how education systems are able to respond to the broader needs of the industrial and economic changes we are undergoing. But I think that what we call “challenges or the negatives of the workforce, needs to be reflected in how private sector, unions and government manage whatever is the challenge we face. It is the ability to react to challenges, and quickly move into implementation that overcomes challenges and does not exasperate them. I am not going to focus on the general challenges of the work force but highlight today, some particular challenges more broadly, that should addressed more broadly, to be able to address the actual workforce challenges.

First is: managing a workforce expectations and perceptions. It is not only the expectations and perceptions of young people and the new entrants into the market that need to be managed, but given in our cultural context, the strong family influence on primary and secondary education, the need to manage the importance of completing secondary school. And here I stress in particular the need to manage not completing the compulsory levels required by government which has moved up from Grade 6 to Grade 9, but completely competing secondary school. And here, the economic environment plays a critical role. Allow me to provide you an example:

If a garment factory on the new minimum wages maintains its order levels providing the regular 2 hours over time and productivity incentives, our workforce survey of over 100,000 workers shows that a worker on the factory floor sewing can earn between 220 – 250 dollars a month. This amount of money is significant to a rural family who could possibly send 2 family members to work in a factory. The cost of staying and finishing school, vs. going out and earning an income for the family is clear – get into the workplace as soon as possible.
I am not saying that wages are too high, but the economic benefit for a family is clear. A year of work can bring home 2640 – 3000 dollars vs. no income and no guarantee of a good job in the future that multiplies earnings significantly if out of university, the decision is clear from a family perspective. Over a period of 7 years (completing 3 years of secondary and 4 years of university) a family would forego around 18, 500 – 21, 000 income to the household.
A final point on managing perceptions and expectations is the incomes of university graduates after university. Our studies show that large companies, who pay well above market averages are paying starting salaries of around 252 - 300 for a general university student after completing their studies. That is not the majority of young people. If the general and majority population is earning less than 250 – 300 after university, then it is clear that the quality of education comes into question, as well as the quality of jobs that we have in Cambodia. These challenges all need to be addressed at the same time and be given time to take effect – however at the heart is managing expectations of families to keep children in school so that we have a future generation of more highly skilled workers.
The challenges related to managing perceptions and expectations cannot be underestimated. If the economic benefits outweigh the education benefits, Cambodia risks having a workforce that will chase the highest minimum wages in the region and not be a qualified and skilled workforce.

The second point I wish to address is that while we have a vast lack of skills, these are resulting from a lack of diversified education opportunities, and arguably a great need to change the way we teach. Skills will always be lacking because economies and industries keep changing. What Cambodia needs to focus on is a more robust primary and secondary education in “how we are teaching” and giving young people the critical soft and analytical skills of discipline, problem solving, communication, asking questions, being inquisitive.

First, there was a long discussion this morning on TVET so I will not speak about this too much but there is a great need for TVET sector to take a great leap forward.
Second there is a need for private sector to participate and collaborate within industries, to address the challenges for industry and for Cambodia. We see a lot of development, but to date, we still do not see facilities and curriculum which are educating the masses with credible qualifications. Consolidation of a lot of the education sector could be an option to pursue rather than a proliferation of haphazard suppliers which are not producing qualified graduates.
Third, there is a need to start being stringent on education facilities – whatever kind of facilities, public or private, to ensure that there is a better quality of education. This means better access to information, teaching methodologies, case studies work etc. so that young people are getting real skills and real qualifications that can be applied in the workplace and beyond. The Accreditation Committee of Cambodia (ACC) needs to be more active, needs to be well resourced and play a more critical role in monitoring quality of education.
Forth, we need to accredited and qualify the masses with qualifications that are meaningful and respected in industry. This is particular important for those sectors which employ the majority such as the garment sector to enable workers to have a skills qualification that they can build on.
Finally, I think there needs to be greater focus on making sure that education provides young people with a robust foundation of analytical, problem solving and communication skills where they are taught how to apply their skills to different situations. A strong foundation will allow all young people to better adapt to more sophisticated and dynamic economic environment by adapting themselves more quickly.

I close my remarks by stating that workforce challenges or negatives, as well as their positives, are a greater reflection of how we in general are able to come together as private sector employers, workers, civil society and government, to really make a difference. Vietnam has an incredible education story which everyone refers to as the “silent education revolution”.

Building skills is not a task, it is a very long process which we all here sitting in the room today, will only see the impact of in the mid to long term future.

Cambodia has a vibrant, dynamic and incredibly talented workforce that has no different challenges to other countries – but we need to address our challenges today, by moving into action and ensuring that we are a dynamic and leading economy in ASEAN, and that our workforce is viewed as the preferred and most skilled workforce in ASEAN.

WE can do it! We MUST do IT!

Thank you.

About the speaker and the speech

Sandra D’Amico is the founder and Managing Director of HRINC (Cambodia) Co., Ltd (www.hrinc.com.kh) as well as the Vice President of the Cambodian Federation of Employers and Business Associations (CAMFEBA) (www.camfeba.com). She has been working and living in Cambodia since 2001 and works extensively and speaks regularly on labour, employment, education and economic themes in Cambodia, and within ASEAN.

Ms. D’Amico can be reached on This email address is being protected from spambots. You need JavaScript enabled to view it..