Cambodia’s Poverty Rate Halved in 2019

In the World Bank's latest report, Cambodia’s labour-intensive manufacturing and export jobs played a crucial role in poverty reduction, although the pandemic slowed down the progress of poverty elimination
A woman sleeps on her coffee motorbike in Phnom Penh, September 20, 2022. Kiripost/Siv Channa
A woman sleeps on her coffee motorbike in Phnom Penh, September 20, 2022. Kiripost/Siv Channa

Rising non-farm earnings, such as tourism, garment and construction sectors, helped to cut Cambodia’s national poverty to 17.8 percent from 33.8 percent between 2009 and 2019, the World Bank’s latest poverty assessment report for Cambodia stated.

In that time, nearly two million Cambodians escaped poverty, it said, adding that since 2020, the rate has expanded by 2.8 percentage points, indicating that some 460,000 people fell below poverty income thresholds. That said, the Covid-19 pandemic reversed poverty reduction progress.

“Efforts to accelerate Cambodia’s structural transformation have helped reduce poverty,” said Maryam Salim, World Bank country manager. “However, despite this impressive success, many households remained vulnerable, with few savings or safety nets. This meant Covid-19 dealt a setback to the country’s progress in combating poverty as employment and wages diminished.”

Released on Monday, the report “Toward A More Inclusive and Resilient Cambodia” said the country experienced growth and widespread income gains between 2009 and 2019.

“Rapid economic expansion, combined with structural change, led to rising wages and higher standards of living,” it wrote.

Trade and investment-led growth supported structural transformation toward more productive sectors, creating better-paying manufacturing and services jobs. Workers were able to move out of low-paying agriculture into better-paying sectors of the economy and boost their earnings.

Manufacturing (mainly garments) and services attracted low-skilled workers from agriculture, offering higher and faster-growing wages.

Real wages increased over the decade, with those at the bottom of the wage distribution benefitting. Average real non-agricultural wages quadrupled between 2009 and 2019/20, and average real non-agricultural self-employed income doubled.

“Most garment and footwear jobs paid at least the minimum wage and offered a range of monetary and non-monetary benefits. The minimum wage, applicable only to garment and footwear industries, was hiked up eight times between 2009 and 2019, increasing to $182 in 2019 from $50 in 2009,” it said.

While non-farm job and wage growth contributed to the decrease in poverty rates, nearly nine in 10 in the labour force are still employed in the informal sector, which typically means lower-quality jobs.

Meanwhile, living conditions and access to basic services such as electricity, water supply, sanitation, health and education improved for broad segments of the population. This improvement has narrowed standard-of-living gaps between rural and urban households.

To support a more inclusive and resilient recovery from the pandemic and the economic shocks that came with it, Cambodia could consider a range of policy actions, the report suggested. “These include targeted cash transfers, steps to strengthening social protection, investments in health and education.”