Download Cambodia: Toward a national employment strategy for

Cambodia: Toward a national
employment strategy for sustained
poverty reduction
Validation workshop on review and appraisal of the studies of
employment and social protection
Phnom Penh, 07-08 November 2011
Sukti Dasgupta, DWT for East and Southeast Asia and the Pacific
Makiko Matsumoto, Employment Policy Deparment, ILO Geneva
Outline
• What can be the framework of a National Employment
Strategy (NES) in Cambodia’s context?
– Context, achievements, and challenges
• How to ensure better fit of a NES with the Rectangular
Strategy II and its implementation plan (NSDPs)?
– Some issues for further consideration
The objectives of NES
• Objectives of NES:
– To provide support to policy makers, the social aprtners and
other stakeholders to formulate an integrated framework of
policies and programmes to achieve full employment with full
respect for workers’ and employers’ rights.
• A forward-looking policy document:
– Set employment-related objectives for the medium term
– Assess key employment challenges and identification of
priorities
– Details of concrete policy measures that could be taken to
address the priority challenges
– Budgetary implications and (social) returns to
policy/institutional investments.
The context:
Past policy achievements (1)
• Strong real GDP growth rate (%)
14
45
40
12
35
30
8
25
20
6
15
4
10
2
5
0
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Poverty rate
2004
2005
2006
Real GDP growth
2007
2008
2009
2010
2011
2012
2013
Poverty rate (%)
Real GDP growth rate (%, MEF)
10
The context:
Past policy achievements (2)
CMDGs – achievements
CMDGs – observations and
remaining challenges
•
• Goal 1:
1.1 Rural poverty still very high (35%) and
Rise in inequality (Gini)
Goal 1: eradicate extreme poverty &
hunger
1.1 Income poverty: Significant reduction in
poverty : 39% (1993) to 30.1% (2007),
target 19.5% (2015)
1.2 Achieve full and productive
employment and decent work for all,
including women and young people:
under consideration
- Decrease propotion of working children (5-17 year
olds): 16.5% (1999) to target 8% (2015)
1.3 Halve the proportion of people suffering
from hunger:
- Food poverty headcount ratio: 20% (1993) to 18%
(2007), target 10% (2015)
- Underweight, stunted and wasted children (<5
years old): tremendous progress, but recent
slowdown (reversal)
Area
1993/94
1997
2004
2007
Rural
0.27
0.33
0.34
0.36
Cambodia
0.38
0.42
0.30
0.43
1.2 There are 4 ILO indicators, more useful
for monitoring (and not for targeting);
and for working children: no data => no
assessment possible
1.3 Some foreseen difficulties in achieving
the targets:
- The rates of decrease in malnutrition indicators
need to be accelerated substantilly.
The context:
Past policy achievements (3)
CMDGs – achievements
CMDGs – observations and
remaining challenges
•
• Goal 3:
3.2 Significant achievements in
agriculture and industry, but slow
progress in service sector.
Goal 3: promote gender equality
and empower women
3.2 Eliminate gender disparities in
wage employment in all economic
sectors
- 75% of female wage employment is in
agriculture.
- the share of informal employment needs to
be gauged.
The development challenges:
• Structural change and broad-based growth:
Sectoral composition of real value added and employment
1998, real GDP composition (%)
36.3
2008, real GDP composition (%)
39.1
42.8
27.5
16.8
Agriculture
Industry
Services
1998, Employment shares (%)
4.2
26.5
Agriculture
Industry
Services
2008, Employment shares (%)
18.3
19.3
8.6
72.1
77.0
Agriculture
Industry
Services
Agriculture
Industry
Services
The development challenges:
A re-think in the post-crisis period
• A significant shift in the RGC’s development strategy
towards rural development:
– NSDP update 2009-2013: a move away from a narrowbased export oriented growth strategy.
– Cambodia has a comparative advantage in land-intensive
growth and exports.
– Acknowledgement that binding constraints on broadbased growth are not simply eased through stability and
liberalization: major efforts are needed toward structural
change, skills development and employment generation.
– Broad-based growth may be further enhanced by the ongoing deconcentration and decentralization policy efforts.
The employment challenges (1)
• ‘Open’ unemployment rates are not really the
issue in Cambodia:
Unemployment rates (%), 1998 and 2008
14.0
12.2
12.0
12.0
10.0
8.0
1998
6.0
5.8
4.0
2.0
2008
5.3
3.3
3.3
2.9
1.8
1.6
3.6
1.3
1.1
0.0
Both sexes
Both sexes: 15-24
Both sexes: 25+
Female
Female: 15-24
Female: 25+
The employment challenges (2)
• Employment-to-population ratios (%)
100.0
91.8
90.0
93.3
86.6
77.0
80.0
77.4
82.2
79.6
81.0
74.7
73.0
74.5
69.2
70.0
61.2
58.1
60.0
55.1
53.3
57.1
49.3
50.0
1998
2008
40.0
30.0
20.0
10.0
0.0
M/F
M
15+
F
M/F
M
15-24
F
M/F
M
25+
F
The employment challenges (3)
Employment status (% of
employed), 1998 and 2008
Real average daily earnings of
vulnerable workers (11.2000=100)
16000
70.0
Rice field workers
14000
62.1
61.5
12000
60.6
60.0
10000
54.5
8000
6000
45.9
2000
24.5
20.0
17.3
18.618.6
20.7
Unpaid family worker
14.0
12.3
10.0
Own-account
Feb-10
Aug-09
Nov-09
Feb-09
May-09
Nov-08
Paid employee
25.3
2006
31.0
30.0
0
Nov-07
Employer
2005
40.9
40.0
Unskilled
construction
workers
4000
42.9
39.6
2004
50.0
Garment workers
16000
14000
12000
Cyclo drivers
10000
Porters
8000
6.3
Vegetable traders
6000
Male,
15+
1998
2008
1998
2008
Female, Female,
15+
15+
1998
2008
Waitresses
2000
Motor taxi drivers
0
Feb-10
Male,
15+
Aug-09
Total,
15+
Nov-09
Total,
15+
Feb-09
0.0
Scavengers
4000
May-09
0.1
Nov-08
0.1
2006
0.2
Nov-07
0.2
2005
0.1
2004
0.2
Skilled
construction
workers
The employment challenges (4)
Working poverty ($1.25 a day) by
education (ILO estimates)
Working poverty ($1.25 a day) by
status (ILO estimates)
45.0
45.0
41.6
41.1
40.0
39.0
37.1
38.8
40.6 39.9 40.2
40.0
36.9
35.3
33.5
35.0
30.0
35.0
32.7
29.5
30.0
28.4
26.2
26.1
24.1
25.0
35.7
34.2
33.8
25.0
20.7
20.0
20.0
15.0
15.0
10.0
10.0
8.0
6.8
4.0
5.0
3.7
5.0
2.8
0.0
0.0
0.0
Less than
primary
Primary
Male
Secondary
Female
Tertiary
Total
Other
Wage and salaried
workers
Employers
Male
Own-account
workers
Female
Total
Unpaid family
workers
The employment challenges (5)
• Average annual growth rates of real value
added per worker (%), 1994-2008
1994-1997
1998-2004
2005-2008
Period avg
1994-2008
Total
1.8
1.6
6.9
2.9
Agriculture
-2.2
-0.9
3.9
0.6
Manufacturing
16.1
-8.0
11.3
2.8
Mining
0.0
6.5
10.5
7.2
Others
8.9
-3.4
5.2
0.9
The employment challenges:
In summary….
• Growth of paid employment and/or formal
sector jobs across sectors.
• This is linked to the structural transformation
of the economy.
• Productive employment generation for the
working poor beyond the sectors (garments,
construction, hotel & tourism) where formal
jobs grew during 1998-2008.
The employment challenges:
Further issues….
• Real wages and earnings across the labour
markets reflect the demand and supply of
workers -> needs further monitoring.
• Physical mobility of workers is often pushinduced: A high incidence of internal migration ->
large share end up in informal economy -> and in
some instances, link to international migration.
• Difficulties and group-specific constraints faced
by women, youth and other vulnerable groups.
The link bewteen NES and eocnomic &
sectoral development policies
• Macroeconomic policy, growth and
employment critical for raising aggregate
demand and employment
– To boost employment, a degree of fiscal space
needs to be created.
– There is need for I/GDP ratio to expand further –
foreign I was 48 percent of GDP in 2008, which is
already large, and declined since 2009, poses on a
whole an investment constraint for Cambodia.
– Non increasing public investment to crowd in
private I.
Investment: drivers of growth and
structural diversification
• Public and private investment (% GDP)
25
20
15
10
5
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Public investments (% GDP)
2004
2005
2006
2007
Private investment (% GDP)
2008
2009
2010
2011
2012
2013
Need to review macro framework both with regard
to goals and policy instruments for improved
employment and SP outcomes
• Current constraints:
– Limited role of NBC with regard to control over
policy rate
– Inflation targeting not through controlling rates of
interest but buying and selling dollars
– Currently donor support to meet fiscal deficits but
ODA falling globally
– Dollarisation imp – recent depreciation of dollar
has raised import costs.
Sectoral policy and structural change
• There has been a shift out of agriculture towards
industry and services, but sectoral employment
shares have moved slowly, still mostly agricultural.
• Agricultural pdty (measured by crop production per
hectare) still small compared to other Asian
countries.
• Current policy emphasises agriculture – welcome,
but need to ensure balance so as not to become food
insecure,
Sectoral policy and structural
change
Value of crop prodcution per hectare, Cambodia and other Asian countries
Need for broad based industrial
growth for sustained employment
growth
• Industrial growth led by garment sector – partly due to a
number of fortuitious conditions, and by construction and
tourism
• Heavy reliance on FDI and foreign markets meant severe
impact of economic crisis in garments
• Need to re think a broad based industrial strategy, with
enhanced sectoral linkages and a training system that
responds to market needs
• Need also to develop productivity and decent employment in
the SME sector – address their liquidity constraint.
• Potential for Tourism sector – but supporting employment
and productivity measures required.
• Investment in hotel and restaurant sector has increased
rapidly, but sustained growth will depend on growth of
supporting sectors.
Labour market policies – Skill
development will drive future
employment growth
• Employability and skills developmentsubstantial progress but remaining
constraints.
– A WB study estimates that 63 percent of
cambodia’s youth never attended school or
completed it
– Need to raise skill profile, reduce skill mismatch
– Proper LMIS required to address the skill and
other needs of growing economy
Labour policy - Migration
• Many Cambodians going abroad to work,
especially to Thailand, but information on
them is patchy
• Need to have a clear migration policy to better
manage migration – pre departure training,
how to manage remittances etc
• Could be a source of jobs since many Asian
countries aging rapidly whereas Cambodia still
a young population.
Labour Policy – the labour regulatory
framework
• Industrial Relations critical to job creation
• Existing instruments need to be reviewed to
adjust to Cambodia’s changing circumstances
• Key is to improve protection of workers along
with industry competitiveness.
Social Protection and Employment
• Low coverage currently
• RGC fully committed, as enshrined in Constitution, a
NSPS recently introduced, but to be implemented –
nevertheless a bold framework
• An employment oriented growth strategy and
expansion of domestic fiscal space critical for
sustained social protection – growth of formal jobs
will expand contributory schemes
• Social protection through cash transfers and their
link to ALMP will enhance the employment outcomes
Some concluding remarks
•
This study analyses the current employment challenges and lays out the broad
policy areas that need attention, and an input into the formulation of a NES
•
A more detailed analysis of projections needed to understand the quantitative
challenge, and to place employment outcomes at the heart of macroeconomic
policies
•
Useful to review Cambodia’s true comparative advantage and identify priority
sectors as this would promote sustained decent employment
•
Given its largely rural nature, a careful analysis of factors that will make the rural
sector more dynamic needed to improve productivity and employment in the
rural sector
•
Measures to promote skills in a sustained manner, improved IR and managing
migration all critical to employment generation
•
Since employment creation would require coherence between different policy
areas and implementation of the NES would require coordination between
several ministries, the setting up of an Interministerial Committee is critical to the
development of a NES for Cambodia.
Thank you!
Policy issues: Appendix
Fiscal
deficit
Fiscal
revenue
ODA
Public expenditure
Development priorities
(NSDP)
Policy issues: Appendix
Social safety
net
• Balance between
contributory and
non-contributory
schemes
Employment
interventions
Development
priorities
(sectoral
priorities)
Skills and
employability
• Self-employment
• Wage-based
employment
Aggregate
demand
Sustained demand
for labour
Infrastructure
spending
• Private and
public investment
Employment,,
wage, and income
from work
Enhanced
fiscal space