Management of Apprenticeship Funds REF#6432

26 Sep 2023 | Human Resource Issue Tackled

Last modified date: 9 Oct 2023

Issue Description

Prakas No.4, Article 8 states that for companies that are unable to comply with the apprenticeship requirements stipulated by the Labour Law, such companies shall pay an apprenticeship tax of 1% of the total annual salaries paid by the company, failing to do so will otherwise result in fines for non-compliance. This Prakas also affirmed that the collected funds are to be deposited into a cash fund that the Ministry of Labour and Vocational Training will use for training development, in collaboration with the Ministry of Economy and Finance and other relevant institutions.

Whilst our members certainly welcome the financing of much needed training and skills development, there are concerns that without private sector involvement, the deployment of the Apprenticeship funds may overlook certain sectors as the Ministry has not yet published guidelines on their use. As the purpose of the funds are to increase the abilities of Cambodian citizens and ultimately raise the productivity and competitiveness of businesses, the private sector is best positioned to advise on the priority areas that stand to benefit the most from improved training and additional funding. Without such involvement, there is an increased risk that the training delivered will be inappropriate for the needs of industry, and the current skills gap that exists across many sectors will continue.

The Royal Government of Cambodia (RGC) has already recognised the importance and benefit of involving a wider group of stakeholders in the planning and management of public funds, as seen by the governing body responsible for the implementation and management of the National Social Security Fund (NSSF), created in 2007. This body is comprised of representatives from the relevant ministries, employers, workers and trade unions, to ensure all stakeholders are given a viable voice in the use of the funds.

Regarding stakeholder engagement in technical and vocational education training, the RGC has also made commendable efforts to more closely involve the private sector in the provision of training to Cambodian workers. The Skills Development Fund (SDF) was set up by the Ministry of Economy and Finance in 2018. It is an industry-driven workforce development programme, providing public funds to complement those from private companies, to build the capacity of their workers by training them across vocational skills in key economic sectors such as manufacturing, construction, ICT, electronics and tourism. As of early 2023, it had implemented 95 training projects, benefitting 10,709 workers in Cambodia, at the expense of USD 5.8 million. SDF relies on a strong network of support from the private and educational sector, comprising 231 enterprises, 33 training providers and 15 business associations.

The range and extent of private-sector engagement in the implementation of the NSSF and the SDF can provide positive inspiration for the RGC on how to engage with the private sector on the management of Apprenticeship funds as well.

Impact on business

Lack of involvement on the part of the private sector in the planning and management of funds for apprenticeship training could carry risks for Cambodia’s business environment and economic development agenda.

Firstly, it could limit the effectiveness of the apprenticeship training programme. The private sector has a wealth of knowledge and experience in the industry, and their involvement in the management of funds could help ensure that the training provided meets the needs of businesses and is relevant to the current job market.

Secondly, not involving the private sector could limit the number of training opportunities available. Private sector companies may be more likely to offer apprenticeships if they are involved in the management of funds, as they could ensure that the training provided meets their specific needs.

Thirdly, not involving the private sector in the management of funds could limit the growth and competitiveness of businesses in Cambodia. Without a skilled workforce, businesses may struggle to compete in the global market, limiting economic growth and development.

Lastly, it could limit the RGC’s ability to achieve its skills development agenda. The implementation of such agenda will be more challenging without the support of the private sector.

Recommendation

  • Continue engaging with the private sector in the planning and management of funds collected from the Apprenticeship Tax.

We respectfully call for the Ministry of Labour and Vocational Training to continue engaging with representatives of the private sector – particularly via the country’s business associations – to be actively engaged in the planning and management of the funds collected from the Apprenticeship Tax for deployment into workforce training and development.

By doing so, the Ministry will increase the likelihood that the funds will be used on training programmes that maximise the skills and abilities of Cambodian citizens in areas where the economy most demands and effectively prepare individuals for entry into the workforce. We anticipate that by involving more stakeholders in the planning and management, the Royal Government of Cambodia will be able to vastly accelerate its plans for the development of the country’s human capital and workforce.

Dialogue with

Royal government of Cambodia

Initiative from Eurocham: The issue has been raised by the Human Resources Committee within The White Book edition 2024 in the Recommendation No. 76.

No response from the Royal Government of Cambodia

National Counterparts

Ministry of Labour and Vocational Training 

Issue supported by

Contributors

Mr. Chheav Narath

ROYAL UNIVERSITY OF LAW AND ECONOMICS

Dr. Antoine Fontaine

BUN & ASSOCIATES

Mr. François Schnoebelen

NGO ECOLE D’HOTELLERIE ET DE TOURISME PAUL DUBRULE