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Responding to labour market challenges from the AEC

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Young people take a selfie on the first day of the World Economic Forum on Asean in 2017. Post pix

Responding to labour market challenges from the AEC

Asean regional integration continues to bring both opportunities and challenges to its member states, and as one of its core pillars, the Asean Economic Community (AEC), is no different.

A study by Asia Development Bank (ADB) and International Labour Organisation (ILO) suggested that greater integration under AEC could raise aggregate output by as much as seven per cent and generate around 14 million additional jobs across the region.

Increased integration has the potential to bring about significant productivity gains that will shift the region’s global market competitiveness towards higher value-added production, and away from an over reliance on low-skilled industries.

However, this can only be accomplished if managed correctly.

Key mechanisms for the promotion of the anticipated knowledge and skills transfers are the AEC’s Mutual Recognition Agreements (MRAs).

Their purpose is to promote the free flow of labour, prioritising eight professions – doctors, dentists, nurses, architects, engineers, accountants, surveyors and tourism professionals.

Nevertheless, due to the current structure and division of labour within the region, the gains stemming from MRAs could simply cluster around already highly developed states, such as Singapore, leaving Cambodia and other less developed countries reliant on low value added production.

In the short term this creates a clear challenge for the Cambodian labour market.

If well trained professionals from Asean’s developed states are able to freely gain employment in the Kingdom, how will local workers in those same professions compete?

Rapidly changing labour market

In light of this issue, what steps need to be taken in order to avoid the negative externalities in the labour market stemming from the MRA process and what should Cambodia’s approach be to ensure competitiveness in the eight prioritised professions?

The answer is two-fold – higher and technical vocational training.

The Ministry of Education, Youth and Sport is positioned to continue to support the development of Cambodia’s human capital, maintaining a focus on future employment and the dynamics of a rapidly changing labour market.

With regard to current practice, the Ministry of Education has already begun to invest in the national training and education systems that ensure the development of the human capital capacity necessary to meet present and future labour market requirements.

Outlined in the Education Strategic Plan 2014-2018, the ministry recognises the importance of providing appropriate higher education opportunities and assuring the relevance and quality of tertiary education.

This strategy seeks to achieve three main objectives: (i) to increase the percentage of scholarships and opportunities for eligible students, particularly disadvantaged groups, to gain access to higher education; (ii) to improve the quality and relevance of higher education; and (iii) to support higher education institutions to meet national and regional standards.

Building on these objectives, AEC integration provides a distinct opportunity for Cambodia to develop the quality of its educational system through collaboration with regional partners.

The Asean Foundation is one such platform that facilitates opportunities for inter-regional knowledge exchange.

Technical and Vocational Education and Training (TVET) is an additional area of importance that can equip Cambodians with the knowledge and skills demanded by today’s economy and which are essential to future economic growth and competitiveness.

Recognising this, many countries have already taken steps to strengthen policy guidance and regulatory frameworks to improve partnerships with the private sector in order to boost productivity.

Accordingly, it will be crucial for the Ministry of Labour and Vocational Training to work alongside the Ministry of Education, and private sector partners to promote TVET.

Nevertheless, it is important to remember that TVET in Cambodia is still in a nascent phase when compared to traditional higher education.

According to the Ministry of Labour, the total number of students enrolled in TVET nationwide in 2017 was only 39,207, compared to 454,141 students in tertiary education.

Time sensitive

Additionally, TVET faces challenges of weak management, questions as to technical staff effectiveness and a limited reach in rural regions.

These impediments urgently need to be addressed if TVET is to effectively address the potential skills gap.

According to current projections, the Kingdom is unlikely to be zrepared to address the emergent labour mobility issue between Asean member states.

The relevant ministries therefore need to recognise the time sensitive nature of this issue in light of the challenges presented to the Cambodian labour market by the MRA system and push forward more rapidly towards the identification, review and implementation of the various educational mechanisms.

The development of quality higher education practice and procedure should be prioritised.

This will not only address the labour market risks stemming from the MRA process, but as an investment in human capital, it provides a sound footing for the future trajectory of Cambodian economic growth.

Finally, support for higher education must be matched by an equally strong commitment to the development of a strong, broad and accessible TVET curriculum developed and implemented through deeper, institutionalised collaboration between Ministry of Labour, the Ministry of Education and private sector stakeholders.

Top Proloeng is a Young Research Fellow of Future Forum, a public policy think tank based in Phnom Penh. He is now conducting a research project on skills gap and higher education in Cambodia.

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