Cambodia’s GDP growth has been running at something like 6% throughout 2012 but this national figure masks a much higher growth figure in the capital and the provinces adjoining the capital. Major labour market issues which have dominated 2012 and look set to dominate 2013 are continuing demand for local skilled managerial and technical talent and continuing demand for blue-collar workers.
We are seeing a number of key features dominating the labour market:
Cambodia is blessed with some of the most liberal business laws in the region and this is a factor in the attraction of FDI. Cambodia combines this with a very clear labour law. We are seeing more and more inbound start-ups seeking full compliance with Cambodia labour laws and this is strengthening the economy – we are not just seeing more jobs being created but we are seeing more ‘good jobs’ being created. Labour naturally moves from less compliant to more compliant employers thus a side effect of this increased compliance is that ‘old style’ ‘family-run’ or ‘non-standard’ companies are experiencing difficulties attracting skilled employees. As has happened in other economies in the region these companies themselves are starting to modernise and come up to compliance with Cambodia labour law.
As there are no petrol (or other) subsidies in Cambodia everyone pays the market rate for petrol, petrol prices rose 28% in Q1 of 2012. Phnom Penh is also, unusually, a city without public transportation of any kind and this means everyone is immediately impacted by petrol price rises as they use their own transport to travel to work. As a consequence of these two issues Cambodian blue-collar workers will not accept a long commute to work, economically they cannot. They relocate to rooms close to their workplace once they have a secure job as this means they are not vulnerable to petrol price rises and that they can be more easily available for overtime work.
One effect of this lack of mobility – the lack of willingness to commute – is localised shortages of labour. Rapid factory development in an area creates demand but the housing market can be slower to catch up, and in some cases unable to catch up. In Q3 2012 we are seeing this clearly in the Chom Chau area. For example, in that area expansion of garment factories has resulted in many more jobs being created for garment operators. With overtime and allowances included the average take-home of a garment operator is $110 to $130/month. Female blue collar workers who were previously employed as cleaners on $80/month have taken jobs as garment operators (cleaners generally get little or no overtime work so live on their basic wage). The immediate result has been a shortage of female cleaners in that are.
Shortages of people with specific technical skills are a feature of all rapidly developing economies and Cambodia is no exception to this. The shortage of local talent with managerial experience in the industrial/manufacturing field is a legacy of the garment-based industrial sector. Vocational training initiatives are being discussed to address this issue but any outcomes must, by definition, only have impact in the medium to long term. In the meantime in-house training is the only way to address the issue. Companies which come to the market willing to train and develop their staff, not just technical/operational training but higher-level soft and managerial skills, will bring with them the best retention tool possible. In a country where the availability of educational and training opportunities in a formal setting are limited, an employer who actively skills, develops, values and rewards employees has no problem recruiting and retaining a workforce.
To illustrate this let us consider the pleasant surprise most newly-arrived businesspeople have when they discover that the level of English in Cambodia is generally higher than they had expected. Generally businesspeople arriving in Cambodia have experienced Vietnam and Thailand where the general level of English is lower. This willingness to speak and learn English is a reflection of Cambodians’ thirst for improvement, their thirst for knowledge, their desire for a better tomorrow. If you encounter the English teaching methods your Cambodian staff have been exposed to you quickly realise that their English was not learned in a classroom. Classrooms in language schools here normally use a teacher-centred, translation-based methodology. This is a methodology which has been proved to be useless in developing communicative language skills. Communication skills, practical confidence building and work-related language skills (like writing emails) are all acquired on the job. When an employer formalises and systemises this training and adds vocational/skills training to the programme then you can only imagine the impact!
Many inbound businesspeople overlook the innately conservative nature of Cambodians. Conservative here does not mean backward-looking, it means cautious in the face of a development which may turn out not to be an improvement. A few ‘modern jobs’ which have yet to gain popular acceptance are:
- Shift and night work – new working practises which are accepted reluctantly in some cases. There are practical dimensions to a dislike of evening shift work – in the outer parts of Phnom Penh in particular the streets are much less safe in the late evening. Another issue is the widespread habit or custom of many owners and operators of buildings where workers live to lock the gates at 10.00pm.
- Direct sales – is it a job or isn’t it? In this market a job has a salary in exchange for duties performed over specified hours. Being faced with a commissions-only situation is something new and something still not readily accepted.
- Selling things out of office-hours which involves working on weekends, evenings and public holidays is a new idea. Lot of products and services have to be sold to people outside the buyer’s working hours – homes, cars, insurance, the list is long. This is new to the market and many excellent salespeople are still at the stage where they ask themselves why give up an office-hours job to take a job which involves lots of work outside office hours.
With investment in the provinces in both the agriculture/secondary processing and the tourism industries we may see some narrowing of the divide between Phnom Penh and the provinces. Historically there were very few career opportunities outside Phnom Penh but this may change. It is, however, unlikely that we will see people relocating their families to the province – an employee will take temporary rented accommodation, leaving family members in the city where they have access to education and a higher standard of living. Regional centres like Battambong and Siem Reap may be an exception to this.
The SEZs which are outside Phnom Penh are mostly located on the borders and none are located in urban areas – even the one in Sihanoukville is over 10 kilometres out of town. As these are all new, modern developments they have been built with the knowledge that they must attract a labour supply and they are doing this. Employers also enter the SEZ knowing in advance that they will always have an issue attracting managerial and technical talent and develop strategies to deal with this.
Inside the city proper we continue to see transport and infrastructure issues impact a labour market dominated by rapid economic growth. We continue to see salaries increasing well above the inflation rate for people with the skill-sets in highest demand and we continue to see the employers with the best training and development strategies win in the recruitment and retention of talent.
The writer is the owner and Managing Director of Top Recruitment Cambodia. His company has been delivering a full range of recruitment services and flexible staffing solutions to the Cambodia market since 2006. The company works in a range of sectors and many of its clients are foreign-owned and foreign-operated companies.