The World Bank
Cambodia Skills for Better Jobs Project (P179159)
Project Information Document (PID)
Concept Stage | Date Prepared/Updated: 23-Feb-2023 | Report No: PIDC34546
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The World Bank
Cambodia Skills for Better Jobs Project (P179159)
BASIC INFORMATION
A. Basic Project Data OPS TABLE
Country Project ID Parent Project ID (if any) Project Name
Cambodia P179159 Cambodia Skills for
Better Jobs Project
(P179159)
Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead)
EAST ASIA AND PACIFIC Jun 27, 2023 Nov 16, 2023 Social Protection &
Jobs
Financing Instrument Borrower(s) Implementing Agency
Investment Project Financing Ministry of Economy and Ministry of Labor and
Finance Vocational Training
Proposed Development Objective(s)
To enhance quality and relevance of skills among Cambodia's upcoming and existing workforce, and in case of an
Eligible Crisis or Emergency, respond promptly and effectively to it.
PROJECT FINANCING DATA (US$, Millions)
SUMMARY-NewFin1
Total Project Cost 40.00
Total Financing 40.00
of which IBRD/IDA 40.00
Financing Gap 0.00
DETAILS -NewFinEnh1
World Bank Group Financing
International Development Association (IDA) 40.00
IDA Credit 40.00
Environmental and Social Risk Classification Concept Review Decision
Moderate Track II-The review did authorize the preparation to
continue
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Cambodia Skills for Better Jobs Project (P179159)
Other Decision (as needed)
B. Introduction and Context
Country Context
1. Cambodia has seen vibrant economic growth and, while it was one of the hardest hit countries in EAP during
COVID-19, it is also seeing a relatively rapid recovery from COVID-19. Cambodia has seen Gross Domestic Product (GDP)
growth of 7.7 percent per year between 1998 and 2019, one of the fastest growth rates in the world, allowing Cambodia
to reach lower middle-income status in 2015. GDP contracted by 3.1 percent in 2020, with tourism, manufacturing, and
construction sharply affected by the COVID-19 pandemic. However, GDP had already recovered in 2021 with GDP growth
of 3 percent, and the latest Government estimates for 2022 indicate GDP growth of 5.5 percent.
2. This growth has benefitted the poor, with a sharp decline in poverty rates from 33.8 to 17.8 percent between
2009 and 2019/2020, mostly driven by workers moving into non-farm wage jobs, including 1 million foreign direct
investment (FDI)-driven jobs in manufacturing. Macroeconomic stability, openness to trade and benefits of regional
(Association of Southeast Asian Nations - ASEAN), global (World Trade Organization - WTO), and preferential access to the
EU market under the “Everything but Arms�? agreement, helped Cambodia attract high inflows of FDI that have had broad
benefits in terms of employment.1,2
3. While this is remarkable progress and structural change away from agriculture, most workers in Cambodia still
work in low skilled, low productivity jobs. The challenge in Cambodia is not the availability of jobs but rather the quality
of these jobs. Labor productivity is low in Cambodia, when compared to its income level, and it has been stagnant in
manufacturing and services.3 Furthermore, stagnant or modest increases in productivity have been outpaced by increases
in wages, in particular in the apparel sector and manufacturing, making unit labor costs very high among comparators.4
4. The low-skilled and low-productivity jobs reflect the low education among Cambodia’s workforce. Despite
significant improvements over the past decades, less than 14 percent of the Cambodian workforce has completed
secondary education. The low skills among the workforce pose a challenge for firms, which report challenges in finding
qualified workers, in particular in key sectors of the Cambodian economy, such as tourism, logistics and transport, and
finance and insurance; with most of these shortages being in medium-skilled occupations. While education levels have
increased among younger cohorts, still, enrollment rates even in lower secondary education remain low, at 47 percent. In
other words, half a cohort enters the labor market every year without any qualification and very low skills. In particular,
women’s education levels are lower than men’s, affecting, together with occupational segregation and gender norms,
women’s labor market outcomes. Female labor force participation (LFP) is high in Cambodia, at 84 percent, which is much
higher than both regional and global averages (61 percent and 50 percent, respectively), but still lower by seven
1
World Bank. 2019. Cambodia Future Jobs.
2
World Bank. 2022a. Poverty Assessment.
3
World Bank. 2022b. Resilient Development: A Strategy to Diversify Cambodia’s Growth Model - Cambodia Country Economic
Memorandum (English). Cambodia Country Economic Memorandum Washington, D.C.: World Bank Group.
4
World Bank. 2019. Cambodia Future Jobs.
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Cambodia Skills for Better Jobs Project (P179159)
percentage points than men’s LFP.5 While the gender pay gap has decreased since 2011, women still earn an average of
11 percent less than men.6
5. Cambodia’s impressive economic performance could be challenged by the country’s high vulnerability to the
negative impacts of climate change. Cambodia is one of the world’s most flood exposed nations and faces high
temperatures, droughts, and sea level rise.7 Climate change may reduce the country’s GDP by 2.5 percent in 2030, and up
to 9.8 percent in 2050.8 The Royal Government of Cambodia (RGC) is committed to combating climate change and
accelerating the transition to a climate-resilient, low-carbon sustainable mode of development.
Sectoral and Institutional Context
6. Cambodia has set goals to improve jobs and upskill its population in the Rectangular Strategy 2019-2023 and in
the National Employment Policy 2015-2025. One of the four strategic goals of the rectangular strategy is “Creating more
jobs, in terms of both quality and quantity aspects, for the citizens of Cambodia, especially for the youth through skill
training, provision of job market information, improvement in working conditions and promotion of business and
investment inside and outside the country.�? The National Employment Policy 2015-2025 outlines three goals: (a) Increase
decent and productive employment opportunities; (b) Enhance skills and human resource development; and (c) Enhance
labor market governance.
7. Furthermore, Cambodia’s Industrial Development Policy (IDP) 2015-2025 has set objectives to “modernize
Cambodia’s industrial structure from a labor-intensive industry to a skill-driven industry by 2025�?. This diversification
includes moving away from the garment, travel goods, and footwear (GTF) sector, and into sectors that require medium
and high skills. The IDP outlines an increased focus on higher value-addition and linkages with regional and global value
chains. Cambodia has adopted two sector roadmaps, in automotive and electronics, to move up value chains.
8. Given Cambodia’s current positioning in value chains and comparative advantage, it can realistically aspire to
move into moderately complex products that require medium-skilled occupations, which can be supplied by technical
and vocational education and training (TVET). However, firms report skills as the third major obstacle to their operations
and 50 percent of firms across all sectors report challenges in hiring; in particular in medium-skilled occupations. TVET can
play an important role in providing both the current and upcoming workforce with in-demand skills through providing
one- to four-year long courses and mixing classroom training with work-based learning. TVET can respond to immediate
labor market needs, as well as prepare the upcoming workforce to be adaptable given the changing nature of work,
particularly if TVET is modernized to teach a broad set of transferable skills, such as digital and socioemotional skills, all
the while catching-up with the technical skills needed for specific occupations.
9. The TVET sector in Cambodia is dominated by public training institutions and rather centralized, with the
Ministry of Labor and Vocational Training (MLVT) tasked to lead and manage the TVET sector. Of the 119 training
providers reporting to MLVT, 37 are public, and these cater to a majority of the reported learners.9 Decision-making in
5
World Bank. 2019. Cambodia Future Jobs.
6
Gavalyugova, Dimitria; Cunningham, Wendy. 2020. Gender Analysis of the Cambodian Labor Market. World Bank, Washington, DC.
© World Bank. https://openknowledge.worldbank.org/handle/10986/34201 License: CC BY 3.0 IGO.
7
Climate Risk Profile: Cambodia (2021): The World Bank Group and Asian Development Bank.
8
Cambodia’s Updated Nationally Determined Contribution (2020). https://unfccc.int/sites/default/files/NDC/2022-
06/20201231_NDC_Update_Cambodia.pdf
9
MLVT’s TVET Statistics for 2020-2021. Data for the first semester of the year 2020-2021. 50 training institutions reported data: All 37
public institutions under the MLVT reported data. The percentage of students in public institutions among institutions that reported
data is 92 percent. When assigning the mean values of enrollment in private and NGO-run institutions that reported information
(which is 329) to those private and NGO-run institutions with missing data, the proportion of students in public institutions is still the
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Cambodia Skills for Better Jobs Project (P179159)
public TVET institutions is relatively high with respect to pedagogical decisions but limited when it comes to financing and
hiring. Several reputable NGO-run and private training institutions are considered delivering quality and relevant training.
Besides the MLVT, eleven other ministries also provide TVET training programs, including, among others, the Ministry of
Education, Youth and Sports (MoEYS), the Ministry of Tourism, and the Ministry of Women Affairs. Despite the existence
of the National Training Board, which was established in 1996 in order to set the direction for TVET policy and to coordinate
the sector, inter-ministerial coordination and information sharing continues to be challenging, and each ministry oversees
their own training institution using different mechanisms for quality assurance.
10. There are challenges with both the quantity and quality of TVET trainees. According to the National Census 2019,
a small proportion of the population aged 15-59 (0.7 percent for males and 0.6 percent for females) had completed a TVET
program. These proportions are much smaller than those with upper-secondary education (3.2 percent for males and 2.5
percent for females) and a bachelor’s degree (3.5 percent for males and 2.4 percent for females). In terms of quality,
employers indicate not being fully satisfied with workers’ skills and mention gaps in all of basic and advanced cognitive,
socioemotional, digital and technical skills. TVET trainees are often from vulnerable backgrounds and seem to end up in
TVET as the result of “negative selection�? when they do not qualify for general education. These ind ividuals may need
support to catch-up with foundational skills in order to be successful in the labor market. Gendered perceptions of
occupations and mobility constraints may limit the participation of women in TVET. Female participation in formal TVET
is low and concentrated in certain fields.
11. Both a symptom and cause of challenges in TVET, employer engagement in skills development (EESD) in
Cambodia is low when compared to best practice; impeded by poaching concerns and a lack of familiarity and know-
how among key stakeholders on EESD benefits and best practices. On the side of TVET institutions, teachers often lack
the capacity to reach out to employers in a strategic manner. Employers indicate they find the training in TVET to be too
generic to respond to their needs and they also do not perceive that teachers and TVET institution leaders see themselves
as service providers for employers.10 All in all, there seems to be lack of trust among employers about training providers’
willingness and ability to provide demand-responsive and high-quality training.
12. The limited engagement between TVET institutions and the industry affects quality at both sector and
institution-level. This low industry engagement has implications on quality of training as training institutions do not teach
on up-to-date curricula or methods, do not benefit from regular training of teachers in industry or receive teachers from
industry, and can struggle to find meaningful internships. The limited industry engagement affects the quality of training
in multiple ways: (a) the relevance of skills curricula; (b) the quality and relevance of teaching given that full-time teachers
lack industry experience while there are few (part-time) teachers that come from industry; (c) having up-to-date
equipment that matches what is used by industry; and (d) availability of internships and other opportunities for trainees
to learn on the job and thereby acquire the latest knowledge and use the latest equipment. Ultimately, these challenges
affect the preparedness of the current and upcoming workforce. There are efforts to strengthen coordination at sector-
and institution level, in particular the establishment of sector skills councils (SSCs), although they are to be enhanced and
operationalized. The RGC has established the Skills Development Fund (SDF) in 2018 to expand demand-driven training
with and in firms.
13. Lack of information may also hinder enrollment in TVET – for men and women – and, more broadly, investment
in human capital. The labor market information system (LMIS) in Cambodia includes two functions: labor market
intelligence and job matching, out of four possible functions (the other two being career guidance and a government
information portal). The National Employment Agency (NEA) has been created to address LMIS gaps and while some useful
data on occupation shortages and skills needs is collected, this is done on an ad-hoc basis but there is no routine exercise
majority, at 62 percent.
10
Veung Naron and Ven Seyhah. 2021b. Exploring Insights into Vocational Skills Development and Industrial Transformation in
Cambodia. CDRI Working Paper Series No. 131. Phnom Penh: CDRI.
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Cambodia Skills for Better Jobs Project (P179159)
for data collection, analysis, and dissemination. This results in information gaps to guide skills programs, at all of
policymaker, institution, and individual levels. Dissemination of labor market information (LMI) is key to guiding workers
toward better jobs, including to transition out of informality, through both career orientation and job counseling as well
as the use of technology.
Relationship to CPF
14. The proposed project is fully aligned with the Country Partnership Framework (CPF) of the World Bank Group
(WBG) for the period of FY2019-FY2023 (Report No. 136500-KH) as extended to FY2024. The project will contribute to
the achievement of Objective Four: Enhance quality and alignment of education with labor demands, under Focus Area II
Fostering human development, which mentions that “skills development will be the key to move from a low-technology
and low-skills economy to one built on knowledge and innovation, and a skilled and productive workforce with better
qualifications is essential to sustain Cambodia’s economic development and enhance its competitiveness�?. The proposed
project will also support aspects of the CPF’s cross-cutting theme “strengthening governance, institutions and citizen
engagement,�? which underpins reforms in the CPF’s three focus areas.
C. Proposed Development Objective(s)
To enhance quality and relevance of skills among Cambodia's upcoming and existing workforce, and in case of an
Eligible Crisis or Emergency, respond promptly and effectively to it.
Key Results (From PCN)
1. Employers’ satisfaction level with the skills of graduates from project-supported training programs
2. Percentage of graduates of project-supported training programs receiving certification, disaggregated by gender
3. Percentage of graduates of project-supported training programs in good jobs, disaggregated by gender
4. Number of individuals receiving career orientation (online and offline), disaggregated by gender
D. Concept Description
15. The proposed project will emphasize industry engagement and focus on delivering skills that are in demand by
industry, in order to support the RGC in achieving strategic goals to move up value chains and increase productivity. To
respond to the challenges faced in developing skills among the workforce, the proposed project will put emphasis on
expanding industry engagement in all its activities, building on global evidence as well as on the available lessons in
Cambodia. The project is aligned with National TVET Policy 2017-2025 and will support the second phase of the IDP 2015-
2025.
16. In order to respond to industry’s demand and spur a change in mindset and approach, participating training
institutions would need to work closely with industry to develop training programs from the project’s outset. Given the
agreement on the need to respond to industry needs under the proposed project, training institutions could be asked to
demonstrate their demand-responsiveness by showcasing their collaboration with industry through joint proposals. The
project can support participating training institutions in reaching out to industry and developing partnerships in an initial
phase but with the objective of forming the partnerships relatively quickly, for institutions to then benefit from project
support.
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Cambodia Skills for Better Jobs Project (P179159)
17. The proposed project will comprise four components: (a) skilling-up to respond to industry needs; and (b)
information and orientation for better jobs; (c) project management; and (d) Contingent Emergency Response Component
(CERC).
(a) Component 1: Skilling-Up to Respond to Industry Needs will improve the quality and demand-responsiveness of
TVET by strengthening and incentivizing industry’s engagement in the design and delivery of TVET. It will support
sector-wide activities to promote effective collaboration between industry and training institutions; strengthening
select sector skills councils; capacity building among both employers and the management and teachers of training
institutions on the benefits of employer engagement in skills development (EESD), and updating curricula to meet
current skill demand. It will also improve industry engagement and quality of training delivery in select training
institutions, through establishment of industry-school committees (ISC), financial incentives for EESD activities,
capacity building of training institutions, and upgrading of equipment and facilities.
(b) Component 2 - Information and Orientation for Better Jobs will support labor market information and expand
services on job search and orientation. It will support a Labor market information system (LMIS) with the functions
of labor market intelligence, job matching, and career guidance. It will also support services of job search and
career orientation, and rehabilitation and equipment of select job centers.
(c) Component 3 – Project Management will support the establishment and maintenance of the project
implementation arrangements, the operation of an effective project management unit, stakeholder engagement
activities and the operations of a grievance redress mechanism (GRM).
(d) Component 4 – CERC will provide swift response in the event of an Eligible Crisis or Emergency.
Legal Operational Policies Triggered?
Projects on International Waterways OP 7.50 No
Projects in Disputed Areas OP 7.60 No
Summary of Screening of Environmental and Social Risks and Impacts
.
18. At concept stage, the overall E&S risk is Moderate. The Environmental Risk Rating is Low, with the potential risks
related to (a) disposal/recycling of package and electronic waste of ICT upgrades of some learning facilities, job centers,
and for LMIS; (b) generation of noise, dust, minor hydrocarbon spills, waste and sedimentation during minor civil works
from rehabilitation of selected training facilities and job centers. The Social Risk Rating is Moderate, with the potential
risks related to (a) exclusion of indigenous groups and (b) site-specific Occupational Health and Safety (OHS) risks to
workers and potentially to the community living close to the TVET locations. The Gender Based Violence (GBV) Sexual
Exploitation and Abuse (SEA) and Sexual Harassment (SH) risks are screened as low, while the project will be mindful both
during rehabilitation and the operation of the project supported TVET facilities.
19. To mitigate the project Environmental and social risks and impacts, an Environmental and Social Management
Framework (ESMF), a Stakeholder Engagement Plan (SEP), and an Environmental and Social Commitment Plan (ESCP) will
be prepared, consulted with project stakeholders, and disclosed prior to appraisal. The ESMF includes specific risk
management instruments such as the electronic waste management plan, Environmental Code of Practice (ECOP), Labor
Management Procedures (LMP), and OHS procedures. The SEP, including a Grievance Redress Mechanism (GRM), will
guide the Government to identify stakeholders, build and maintain a constructive relationship with them, and to meet
communication and disclosure requirements with a particular focus on project-affected parties. The ESCP will set out the
important measures and actions that will be required for the project to meet environmental and social requirements over
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Cambodia Skills for Better Jobs Project (P179159)
the project’s lifetime.
.
CONTACT POINT
World Bank
Abla Safir, Lansong Zhang
Senior Economist
Borrower/Client/Recipient
Ministry of Economy and Finance
H.E. HEM Vanndy
Secretary of State
hemvanndy@hotmail.com
Implementing Agencies
Ministry of Labor and Vocational Training
H.E. Pich Sophoan
Minister attached to the Prime Minister, Permanent Secretary
info@mlvt.gov.kh
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D.C. 20433
Telephone: (202) 473-1000
Web: http://www.worldbank.org/projects
APPROVAL
Task Team Leader(s): Abla Safir, Lansong Zhang
Approved By
APPROVALTBL
Practice Manager/Manager:
Country Director: Maryam Salim 28-Feb-2023
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Cambodia Skills for Better Jobs Project (P179159)
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