The situation in Cambodia
Since the 1990s, economic development in Cambodia has been positive but with considerable impact on the environment. In 2016, Cambodia attained the status of a lower middle-income country by the World Bank definition. Major structural shifts, such as redistribution of economic activity between agriculture, manufacturing and service, are some of the explanations for the rapid economic growth.
Cambodia's economic success is largely due to the emergence of new jobs mainly in the low-skilled echelons. This is especially true for young people and women in labor-intensive activities for production in lower value chains. An example of this is the textile industry, which at present represents more than 70% of total export-led growth. However, increased wage costs combined with a lack of investment in equipment and machinery upgrades risk undermining the productivity and the international demand for Cambodian goods.
Attracting a more advanced assembly industry with production of products in higher production chains is thus one of the country's major economic challenges. However, human capital constraints such as low level of education and skills represent an increasing obstacle to economic diversification and development towards manufacturing in higher value chains.
Furthermore, wage differentials and a gender-disaggregated labor market represent challenges to achieve evenly distributed welfare between the sexes. Gender pay gap in lower education professions is as high as 30%, while it decreases to 7% among groups with upper secondary general education. In addition, women often carry out a larger portion of domestic work.
Cambodia and Sweden are both part of the Global Deal which was initiated by the Swedish Prime Minister and developed in cooperation with ILO and OECD. Through the Global Deal, Sweden and Cambodia have a platform for bilateral dialogue on labor-related issues. Furthermore, Sweden has been giving long term support to the education sector in Cambodia in order to improve the quality of education and capacity building.
Long-term development goal
Cambodia's long-term development goal is to achieve the status of higher middle-income country 2030 and high-income country 2050. Cambodia's current Rectangular Strategy phase IV, the National Strategic Development Plan (NSDP), focus on increasing economic growth and employment, strengthening good governance and the rule of law, strengthening democratic institutions and improving social services. In addition to the national strategy, Cambodia has adopted the global Sustainable Development Goals (SDGs) 2016 to 2030 and localized the goals to the local context known as the Cambodian Sustainable Development Goals (CSDGs) framework.
The Embassy and its partners have reviewed how Sweden’s assistance can be adapted to the needs caused by the COVID-19 outbreak and crisis. In Cambodia, the pandemic has severe economic consequences due to the country’s heavy reliance on tourism, supply-chain disruption in the garment sector and decreased demand on export markets. Sweden’s response to the COVID-19 crisis is based on principles of equity, gender equality, democracy and human rights, transparency and evidence-based responses.