Working Paper 18:
A Stuy of the Cambodian Labour Market: Reference to Poverty Reduction, Growth and Adjustment to Crisis
Martin Godfrey, So Sovannarith, Tep Saravy, Pon Dorina, Claude Katz, Sarthi Acharya, Sisowath D. Chanto and Hing Thoraxy (August 2001)
Working Paper 18 in English, 55 pp.
Working Paper 18 in Khmer, 66pp.

Abstract

This working paper explores the nature and trajectory of Cambodia's labour market, analysing both its structure and recent trends. On this basis, it examines the links between the labour market, poverty reduction and growth, and the impact which recent political and economic crises have had on the conditions of labour.

Cambodia faces the dual and difficult objectives of attempting reconstruction of a society and economy torn by conflict and war, along with transition from a centrally-planned to a free-market economic system. Since 1998, when a coalition government was formed after a general election and mass defection of Khmer Rouge members to the government, the country has enjoyed some peace and stability for the first time in over 20 years. Progress with economic reform, though it has accelerated somewhat in the last two years, is still slow. Nevertheless, the economy grew fast in the first six years of the 1990s (at an annual average rate of around 7 percent) and, while it was interrupted by the internal and external crises of 1997/98, growth resumed in the final year of the century.
Growth has been accompanied by an apparent reduction in poverty. The proportion of Cambodians living in poverty (measured by the headcount index) was estimated to have fallen from 39 to 36 percent between 1993/94 and 1997, according to the socio-economic surveys pertaining to those years. The poverty profile based on the 1999 survey has not yet been released, though unofficial records show that there was no real change between 1997 and 1999, a period that experienced virtual economic stagnation due to the July 1997 fighting.

This paper pays particular attention to the actual and potential links between growth of employment, particularly wage employment, and transformation of the economy as a whole. No attempt had been made to construct a comprehensive poverty profile, but the association between the labour market and poverty is explored. The impact of the crisis was measured by analysis of changes in such indicators as wage employment, real wages, net earnings of self-employed and own-account workers, and the extent of labour migration. The paper attempts to integrate gender into the analysis of the labour market, rather than to treat it as a separate subject. This paper is comprised of ten chapters. Chapter 1 discusses the factor endowment of the country, hence establishing the premise. Chapter 2 analyses the labour market structure, and Chapter 3 studies distortions in the labour market. Chapter 4 looks at the nature and extent of migration. Chapters 5, 6, 7 and 8, respectively, examine recent trends in the labour market; links between the labour market and poverty reduction; links between the labour market and economic growth; and, how the labour market has adjusted to crises. Chapter 9 discusses current policy, with specific reference to labour and poverty alleviation, and the final chapter presents conclusions and recommendations.

Contents