Skills Deficit Bodes Ill for Future, UN Report Says

A new report by the UN De­velopment Program and Cam­bodia’s Supreme Natio­nal Economic Council warns that insufficient education levels and mismanagement of skills training is threatening the growth of the Cambodian economy.

The report, which was released on Friday, identifies human capital deficits in the country’s garment, tourism, construction, agricultural, mining and information technology sectors.

Titled “Human Capital Implica­tions of Future Growth in Cambo­dia: Elements of a Suggested Roadmap,” the report notes that dramatic changes took place in the economy between 1995 and 2009, which reflected a shift from agriculture to industry, and the new diversification requires upgrading of low-skill workers and training of new skills for new industries.

While the supreme economic council’s unemployment figures from 2009 are “quite low,” this was simply because the majority of people are forced into taking any work available due to the lack of social protection if they remain unemployed, the UNDP found.

The report also casts a critical eye on “the nature of the Cambo­dian economy,” saying that graduates with degrees in management, accounting and business administration lack “the essential skills…for employment in the field for which they were supposed to be qualified.”

The garment industry, the re­port says, has experienced “incredible” growth rates—exports increased from almost zero in 2004 to $2.8 billion in 2007—but the country has “a dangerous reliance” on the in­dustry, and “Vietnam could easily overtake [Cambodia], given its lower electricity costs” and manufacturing costs.

The report highlights a lack of university graduates in the garment sector, as well as the sector’s lack of creativity, poor decision-making skills, very poor technical skills and lack of commitment from employees.

In the hospitality and tourism sector, the report says that de­spite an increase in international and domestic travel, skilled employees in this area are still in short supply. A high turnover of staff is cited as a problem, along with a deficit in foreign language skills and a lack of basic computer skills.

In the construction sector, the human capital deficit is “widely visible, with only 20 percent of employers considering that graduates are fully equipped with the required skills” to do the work required of them.

Employers also had problems with so-called “soft skills” of their staff, such as time-keeping and communication skills.

In agriculture, the sector is facing a lack of modernization, “re­sulting in sector development being only a fraction of its capacity,” while the mining sector needs to increase skill levels to ensure its labor force is “specialized and highly skilled.”

In the information and communications technology sector, the outlook was similarly bleak, with the report citing the high cost of broadband Internet and a “low number of qualified ICT workers.”

“Employers face a small pool of labor and high turnover. Yet workers with only 2 or 3 years experience [in IT] get a wage of up to $600 per month, which shows the high demand for skilled workers in this field,” the report says.

On a brighter note, the UNDP has partnered with the Institute of Technology of Cambodia to re­open the country’s engineering and geosciences school, and says it aims to see its first graduates in 2015.

Speaking at the launch of the report, Hav Ratanak, deputy secretary general of the Supreme National Economic Council, said that “the commitment from the government” to create a skilled workforce “is clear,” while Oum Mean, secretary of state at the Ministry of Labor, said that the country’s youth have access to vocational training programs. Mr Mean, however, was unable to give details of such programs or how many people had been trained as a result.

“A big problem is that many children, especially in provincial schools, do not know what jobs are out there,” said Tuomo Poutiainen, chief technical adviser for the In­ternational Labor Organization’s Better Factories project.

“What can they aspire to? Many are not aware of what op­portunities are available to them,” said Mr Poutiainen, noting that “basic welfare, such as free education, health care and financial assistance are prerequisites” for allowing people to enter training.

Mr Poutiainen said that the UNDP report was in line with the ILO’s views on the labor force and human capital.

The author of the report, Satish Mishra, managing director of the consulting firm Strategic Asia, said industrial diversification was crucial to maintaining economic stability in Cambodia.

“You can create a new comparative advantage through skill development. Take Switzerland. They are a global chocolate producer and how many cocoa trees did they have? They managed to build an industry on skill and knowledge,” Mr Mishra said. The issue of a skill mismatch in Cambodia may not be as big a problem as it seems initially, Mr Mishra added.

“India invested heavily in mathematical and high-tech education, and many observers thought they were crazy. Twenty years on, they are at the cutting edge of IT and are cornering the software market. Comparative advantage should be thought of in a more dynamic context,” he said.

“You don’t train people in a vacuum; you need a social protection framework. This does not only have to be the work of the government, but can be done through scholarships, community capital or public-private partnerships,” he added.

“You need to give people incentives for wanting to train.”

(Additional reporting by Hul Reaksmey)

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