Cambodian Workers Can Gain From Aging Region, Experts Say

Rapidly aging populations in the region are expected to bring new economic opportunities and challenges in managing Cambodia’s young workforce, experts said in response to the World Bank’s report “Live Long and Prosper: Aging in East Asia and Pacific,” which was released on Wednesday.

The report emphasized the demographic challenges facing the region—home to more than a third of the global population aged 65 and older.

“By 2040, Thailand, Japan, China and [South] Korea are expected to lose between 10 to 15 percent of their working-age adults,” said Philip O’Keefe, lead author of the report, via video link from the report’s launch in Beijing. “This creates high potential for migration between young and old countries.”

As Cambodia faces a “demographic dividend”—with over 30 percent of its population between the ages of 10 and 24—countries with older populations may try to attract the country’s young workers to fill their labor shortages, the report says.

“To compensate for low birth rates, countries such as [South] Korea, Japan and China can take steps to attract younger immigrants,” the report says.

Jayant Menon, a lead economist at the Asian Development Bank, said he did not consider such efforts to be an imminent threat to Cambodia’s labor force.

“In the long run there is clear potential for labor migration—but that won’t materialize until Cambodia grows an indigenous population of skilled workers,” he said.

Yet with aging countries facing a dearth of low-skilled workers, they are likely to continue moving manufacturing activities offshore to younger and more cost-effective workforces like Cambodia’s, Mr. Menon said.

The government has a buoyant outlook on foreign direct investment (FDI) inflows, and the jobs created by such investment would outweigh the threat of labor moving abroad, said Education Ministry spokesman Ros Salin.

“The flow of FDI is greater than the labor force moving out,” he said. “But to sustain this we need more investment in human capital and training, and education reform.”

As Cambodia’s labor force looks set to reap the benefits of regional population and economic dynamics in the short run, the World Bank report warns that countries with younger populations must prepare for rapid aging down the road.

With labor income comprising around 90 percent of total income for people aged 60 and above in Cambodia, Sudhir Shetty, chief economist for the East Asia and Pacific Region of the World Bank, said during on Wednesday’s launch that if young economies cannot create more savings today, they would face severe imbalances later on.

“Developing countries are at risk of getting old before they get rich,” he said. “Alongside sensible economic policies at home, these countries must not only grow the quantity of the labor force, but also its quality.”

Sandra D’Amico, vice president of the Cambodian Federation of Employers and Business Associations, added that while the government had been actively working to develop stronger social security, it was equally important to move to higher income sources.

“Cambodia has launched its industrial development, and is looking to move out of low-end manufacturing,” she said. “We need to move up the value-chain, and need time to diversify and build up skills.”

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