The past two years have brought a period of unprecedented stability to Cambodia. The priorities of the Royal Cambodian Government have now clearly shifted from peace building to poverty alleviation and socio-economic development. The main objectives of the First Socio-Economic Development Plan (1996-2000) have been poverty reduction, human resources development and social development for vulnerable groups. Relying heavily on external support, the Government is pursuing political and economic reforms in areas such as public administration, the judicial system, public finances, banking and military demobilisation. Co-operation between the two main political parties, which entered a coalition government in November 1998, has been relatively smooth. Foreign aid, both financially and technically, has been very substantial over the past five years, representing roughly sixty per cent of total public funds. Disbursements of loans totalled USD 81 million in 2000 B a significant increase compared with the last three years. The level of grants provided to Cambodia remained with USD 367 million similar to the previous year.

The economic situation has been improving slowly but steadily. Real GDP growth for 2000 was 5 per cent and is expected 5-5.5 per cent for 2001-02. The exchange rate of the Cambodian Riel against the USD remained stable in 2000. Heavy flooding in some provinces along the Mekong River during the second half of 2000 has slowed economic growth and has led to a price increase in seasonal crops and other goods. Nevertheless, inflation is expected to stay low in the future. Fiscal performance was significantly improved in 1999 and 2000. Domestic revenues increased by 40 per cent, partly due to the successful introduction of the VAT. Public expenditure management was also improved, resulting in a current budget surplus of 1.6 per cent of GDP. The trade and current account deficits are forecast to widen.

With 78 per cent of the labour force engaged in agriculture (mostly unpaid and own-account workers), and a GDP share of 43 per cent (1998), the Cambodian economy is highly agrarian-based. Within the emerging industrial sector (five per cent of the labour force, 20 per cent of GDP), the rapidly growing garment industry is the most important sector both in terms of export value and employment. Other growth sectors of the Cambodian economy are tourism and telecommunications. However, investment was particularly low in 2000. Fixed assets approved by the Council for the Development of Cambodia totalled USD 270 million, down from USD 490 million in 1999.

Exports in the first half of 1999 increased by 45 per cent compared to the same period last year. Garment products represent almost 3 quarters of all exports for which the United States are the major destination (over 80 per cent). The lack of diversity of the Cambodian export structure combined with the reliance on export quota granted by the USA and the EU, contribute to the vulnerability of the industrial sector.

Since per capita income is less than USD 300 and nearly four out of ten citizens live in poverty below one USD per day, Cambodia remains one of the poorest countries in Asia. The population of 11.4 million could increase to 20 million by 2020 based upon the current growth rate and this, in turn, could double demand for employment. Almost 45 percent of the population are under 15 years of age. Around 85 percent live in rural area. Less than 12 per cent of the labour force are engaged in wage employment, around 52 per cent are self-employed and 35 percent are unpaid family workers. Given the nature of employment, Cambodian labour continues to suffer from serious unemployment, low productivity and low income, especially in the rural areas. Employment generation is hence a serious challenge for the country. Furthermore, as a consequence of decades of war and unrest and the systematic purge of educated people during the Khmer Rouge Regime (1975-79), the skill profile of the Cambodian work force continues to be very low. As many as 42 percent of Cambodian women and 21 percent of men above the age of 15 have never attended school and only 10 percent of the labour force could be classified as skilled. With an estimated 150,000 new people seeking employment annually in Cambodia, expansion of domestic and foreign investment is crucial to ensure adequate job opportunities for Cambodia's rapidly expanding workforce. Unfortunately, slow and uncertain growth in investments raises concerns about the country's ability to employ the expanding working-age population.

Women represent 53 per cent of the population and of the labour force. Their contribution to the country's development as paid and unpaid workers is considerable, but their position in society remains subordinate to men in all spheres of life. Poverty is widespread, especially in rural areas where women play a major role in meeting the basic family needs. Women are increasingly entering the realm of paid employment. The garment industry contributes greatly to employing a large number of low-skilled female workers entering the labour force (between 70,000 and 90,000 workers, accounting for about 18 per cent of all workers in regular wage employment). However, it is estimated that women earn on average 30 to 40 per cent less than men. In 1999, 672,000 children (or around 16 per cent) in the age group of 5 to 17 years were working. Despite the fact that progress has been made in drafting and passing legislation to protect women and children's rights, law enforcement remains weak. Nevertheless, the Government is strongly committed to eliminate the labour exploitation of women and children.

Government

The Ministry of Social Affairs, Labour, Vocational Training and Youth Rehabilitating (MOSALVY) emerged from the old Ministry of Social Action, Labour, Vocational Training and Veteran Affairs after the general election in 1998. MOSALVY has significant responsibilities relevant to social and economic development in Cambodia. MOSALVY gives top priority to the enforcement of the Labour Code (which is generally in line with the ILO Standards) and has been attempting to ensure the application of ratified ILO conventions. The Minister of Labour chairs the Labour Advisory Committee, which is the only national forum for tripartite consultations.

In a large number of foreign-owned enterprises employers have little knowledge or understanding of the internationally accepted labour standards and violations of workers' rights are frequent. The ILO has been addressing the situation by involving employers in all the seminars and workshops on labour standards. The forming of the Cambodian Federation of Employers' and Business Associations (CAMFEBA) in late 2000 as well as the garment sector project (see technical co-operation, below) provide important opportunities for the ILO to expand technical assistance to employers in Cambodia. CAMFEBA is comprised of representatives from various employers' associations that are organised by sector or on the basis of national business origin. Of these, the Garment Manufacturers Association of Cambodia (GMAC), which is a financial contributor and active partner in the garment sector project, has been the principal interlocutor for the ILO. The Chairman of GMAC is also the President of CAMFEBA. The ILO has officially confirmed its willingness to co-operate with CAMFEBA as the national employers' organisation.

There are five major workers' organisations: Free Trade Union of Workers of the Kingdom of Cambodia (FTUWKC), Workers' Union for Economic Development (WUED), Cambodian Union Federation (CUF), Cambodian Federation of Independent Trade Unions (CFITU), and the National Independent Federation Textile Union of Cambodia (NIFTUC).

Legal registration is no longer a major issue for trade unions and the Cambodian Labour Code guarantees the Freedom of Association and the Right to Collective Bargaining. However, union rights are often violated and union leaders have not been adequately protected.

In the 1990s, Cambodia had the largest ILO technical co-operation programme among ILO member states in this region (total disbursement from 1992-1999: USD 34 million). With a budget of USD 1,96 million (regular budget and non-UN extra-budgetary programmes), the ILO's technical assistance continued to be significant in 2000.

The ILO provides technical assistance to MOSALVY in the areas of ILO standards and labour law, labour statistics, labour administration and industrial relations, working conditions, occupational safety and health, social security and skills development. Technical assistance to the employers' organisation CAMFEBA has so far included advisory services and the organization of a Cambodia Employers' Workshop on Industrial Relations and the Improvement of Labour Code Awareness, in July 2001. With regards to workers' organisations, the ILO/DANIDA Workers' Education Assistance to the Cambodian Trade Union Movement entered its second phase in February 2001. The project is providing much needed technical support to strengthen the Cambodian trade unions.

Since 1992, the ILO has promoted labour-based appropriate technologies as effective means to generate employment by improving and maintaining essential rural infrastructure. Current priorities are the strengthening of private sector capacity in the infrastructure sector, the strengthening of the engineering programme at the Institute of Technology of Cambodia and assistance to, and capacity building for, the Ministry of Rural Development in maintaining rural roads.

The Japan-funded project to promote the access of people with disabilities to mainstream training programmes has successfully assisted disabled persons in rural areas in gaining appropriate skills training and finding employment. The project will phase out in 2001. The ILO is currently providing technical assistance to the consolidation of a Business Advisory Council, which comprises prominent employers and business associations and helps to improve training opportunities and employment prospects for Cambodians with disabilities.

The ILO-IPEC activities started in 1997 after an MOU was signed with the Cambodian Government and a national steering committee was created. IPEC's strategic objectives in Cambodia include local capacity building for local partner agencies in combating worst forms of child labour, the promotion of the enforcement of relevant legislation and policies (including the ratification of C. 182) and the addressing of root causes of child labour through action programmes. In 2000-01, six action programmes and seven mini-programmes with a total budget of 625,000 USD are being implemented in Cambodia. In addition, Cambodia is one of the five countries covered by the UK-funded Mekong Sub-Regional Project to Combat Trafficking in Children and Women for Labour Exploitation (2000-2002).

Gender concerns are built in all the ILO major projects in Cambodia. The promotion of women workers' rights will gain new impetus with the launch of the Cambodia component of the Japan-funded regional programme on the Expansion of Employment Opportunities for Women, which is foreseen later in 2001. In early 2001, the ILO carried out a needs assessment of the training centers operated under the Ministry of Women and Veterans' Affairs and a project outline to promote integrated economic development, entrepreneurship and employment for women has subsequently been submitted to donors for funding.

In the field of small enterprise development it is also planned to adapt and translate the ILO's Start and Improve Your Business (SIYB) materials. Furthermore, IFP/SEED is seeking to stimulate small business development through the boosting of private sector service markets. Preparations are under way to launch a weekly TV programme for small enterprises and support for private-sector providers of managing training.

In January 2001, a project on improving working conditions in the garment sector through the application of Cambodian Labour Law and internationally recognised core labour standards was launched. Main components of this jointly by the USDOL, the Royal Government of Cambodia and the GMAC funded project include information dissemination and training on the Cambodian Labour Law and internationally recognised core labour standards and the monitoring of their application in the factories.

A US DOL funded project on Labour Dispute Resolution in Cambodia is expected to start in the second half of 2001. The project foresees the improvement of Cambodia's dispute prevention and conciliation processes, the establishment of an arbitration mechanism as required by the Labour Law and the establishment of a labour court system. Other project proposals under review concern the strengthening of the labour administration, labour statistics, social dialogue, OSH and HIV/AIDS.

Cambodia has ratified 12 ILO Conventions, of which 7 are fundamental Conventions. The ILO continues to actively promote the ratification and enforcement of C. 182.

Since the ratification of 6 fundamental Conventions in August 1999 (C. 29 had already been ratified in 1969), a technical assistance programme has been implemented to raise awareness of the fundamental conventions and the Cambodian Labour Law and to promote the application of these conventions among the constituents. Two training of trainers workshops were conducted for MOSALVY officials, provincial labour administration officers, trade unionists, employers' representatives and IPEC staff in 2000. In addition, four regional workshops were carried out in order to provide opportunities for trained trainers to practice their skills, and to test the specifically developed training materials for a target group of local labour officials, enterprise managers and trade union representatives. As an outcome, a team of sixteen Cambodian trainers is now able to disseminate the knowledge and information on the Labour Law and ILO fundamental standards in Cambodia with a minimum technical and financial support from the ILO. These trainers have subsequently conducted a series of 15 provincial workshops in local language.

The ILO is helping MOSALVY to identify gaps in the labour law. Among others, technical assistance is being provided in drafting a Prakas (regulation) and subsequent amendments to the Cambodian Labour Code to guarantee greater legislative safeguards for trade union representatives and officers.