By Emmanuel Asomba, Development Policy Researcher, and Ji-Yeun Rim, Youth Inclusion Project Co-ordinator, OECD Development Centre

Some countries in the South Asia and Pacific region are experiencing a rapid increase in the number of working-age people. This will create some opportunities as it will contribute to reducing the dependency ratio and increasing the possibilities for social cohesion policies. But if these people fail to find decent jobs, then per capita income may slow down. With less income, people face lower living standards and difficulties accumulating capital and assets. For young people, these changes potentially bring significant challenges. Take, for example, youth in Cambodia.

In the 1990s, Cambodia transitioned from a country with a relatively high dependency ratio to one with a relatively high working-age population. Such a demographic dividend poses important questions for policy makers. How can they make it easier for young people to find decent work and contribute to progressive pension programmes? How can they overcome deficiencies in the country’s social security system and promote pro-poor structural growth policies that improve fairness and equity in the distribution of wealth?

In Cambodia, we see the complexity at work. The country’s labour force grew 2.71% annually between 2001 and 2013, compared to a 1.63% average annual growth in population (see graph). As the dependency ratio falls and more youth enter the labour force, Cambodia has to find ways of reinforcing the health system for both the elderly and vulnerable youth while simultaneously expanding high-end manufacturing for more productive jobs.

Working-age population (15-64), annual growth (in millions), and growth rate (%) 2000 – 2013 CAMBODIA

Source: Asian Productivity Organization – Productivity Database 2015 and World Development Indicators

Youth, after all, make up one-third of the total population in Cambodia. One young person in five is deprived in at least two out of four well-being dimensions — health, employment, education and civic participation¹ — while 40% fare poorly in at least one of these dimensions. Children from poor households are most likely to drop out early from primary and secondary schools, which is why a large proportion of the young labour force is low educated and low skilled. Currently, 63% of Cambodia’s secondary- and tertiary-aged youth have already left the education system.²

What does this mean for the government in Cambodia? This means finding ways to catalyse growth and establish public-private partnerships to expand employment services, education and vocational training. It also means taking a more targeted approach to policy design.

First of all, the 15-17 age group in Cambodia is particularly vulnerable as they have reached legal working age but are still legally minors. Appropriately weighing such changes in ages — that is, using a life-cycle approach to policy design — can lead to significant improvements in the social contract. It can also foster rigorous assessments of specific risks tied to periods of unemployment amongst different groups of young people.

Second, upgrading the low human capital base requires improving the quality of education and vocational training. The large number of low educated and low skilled youth calls on policy makers to urgently develop a comprehensive skills strategy.

Third, labour supply and demand should match and adjust coherently with the increased level of skills. Investment patterns can be changed to support local, small and medium enterprises that create jobs and bolster the production of value-added products and high-end goods and services.

Fourth, it is crucial for the government to work toward innovative solutions to bridge the growing disparities between cities and rural areas, where over 80% of Cambodia’s youth live. One option is to use decentralisation schemes to diffuse and strengthen social protection floors, public health and education at local levels. Agricultural productivity too will need to be improved through better infrastructure and production techniques. Young farmers should be trained on business development and marketing skills. Motivated young rural entrepreneurs should be supported to develop new value-added products and services along the agro value chain. Access to finance and social protection will be crucial to enable rural youth to become entrepreneurs and launch small and medium enterprises in the agriculture sector as well as in non-farm activities, which have the potential to create jobs for youth in rural areas. More adequate training for young women should be offered in entrepreneurship, business management or agricultural skills to improve productivity. These should be accompanied by support mechanisms such as child/day care and basic social protection to allow women to divide their time between work and family.³

In short, through more diversified and targeted policies for its youth population, particularly those in rural areas, Cambodia can boost its competitiveness. This would not only expand workers’ productivity, but also anchor long-term policy making to guaranteeing decent jobs and, consequently, decent living standards.

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^{1. Using the OECD’s well-being adjusted framework that considers well-being in both objective and subjective terms, a Youth Multi-dimensional Deprivation Indicator was calculated to measure the proportion of youth suffering from multiple deficits in the areas of health, education, employment and civic participation.}

^{2. OECD (2017), Youth Well-being Policy Review of Cambodia, EU-OECD Youth Inclusion project publication, Paris.}

^{3. Idem.}