Cambodia's economic productivity is in trouble, struggling with an inability to turn a youthful population into a skilled workforce and stunted by an over-reliance on agriculture, according to a new World Bank report.

In Cambodia and Vietnam, diversification of labour from the farming sector contributed to more than 70 per cent of both countries’ poverty reduction, the bank’s regional study, East Asia Pacific at Work: Employment, Enterprise and Well-Being, states.

Yet 75 to 80 per cent of the population of the Kingdom relies on agriculture-based income, hindering productivity and creating a “volatile” economic output.

“In Cambodia, non-farm business incomes . . . are a main source of income for the richest people, while the poorest people derive most of their income from farm production,” the report, released on Friday, says.

To lift rural youth out of poverty and farm work, the government has focused on improving access to education, with a Millennium Development Goal to achieve universal primary education by 2015.

“Expanding and deepening access to education, however, does not necessarily equate to an adequately skilled labor force,” the report says. “Just because more children are going to school does not necessarily mean that they are learning and building skills.”

While Cambodia has attained a 97 per cent net primary school enrolment rate, the system is plagued with quality issues, absenteeism and poor retention rates; educators have estimated that only a third of primary students develop reading skills and, according to the World Bank, less than 4 per cent of the working population has finished secondary school.

“Productivity gains have been handicapped by shortages in basic skills in Cambodia and Lao PDR,” the report states.

In addition to the lack of foundational skills, 76 per cent of respondents in a recent survey of Cambodian employers said that the Kingdom’s universities produced graduates with inadequate

abilities and unrealistic expectations.

“Quality of education depends on the accountability of the system. More fair and equal testing means students study more and attain more abilities,” said San Chey, coordinator for the Affiliated Network for Social Accountability in East Asia and the Pacific. He added that while the Ministry of Education is pushing for more vocational training to boost badly needed industry skills, “the first step is to improve basic education quality”.

“To move forward it will take time and dedicated resources,” Chey said.

The minister of education, youth and sport could not be reached for comment.