Cambodia at the Crossroads: Automation and the Future of Work

Strategic Insights -

Cambodia is on the cusp of a revolution in the workforce as automation transforms industries across the East Asia and Pacific (EAP) region. According to the World Bank's report, Future Jobs: Robots, Artificial Intelligence, and Digital Platforms in East Asia and Pacific in 2025, the kingdom's manufacturing sector is slowly shifting towards automation, with robots and artificial intelligence (AI) increasingly becoming part of the workforce. However, this shift poses a double-edged sword for Cambodia, with the potential to both create jobs and displace low-skilled workers.

Key Takeaways:

  • The World Bank report notes that Cambodia's robot adoption has remained limited, largely due to low wages that reduce the economic incentives for investing in automation, as stated by Manuela V. Ferro, vice-president of the East Asia and Pacific region at the World Bank.
  • The report suggests that low-skilled workers, particularly those in routine physical tasks, are at high risk of displacement due to automation, with an estimated 1.4 million low-skilled formal workers engaged in routine manual tasks displaced between 2018 and 2022 in Indonesia, Malaysia, the Philippines, Thailand, and Vietnam.
  • Despite the risks, Cambodia's unique circumstances, including low labour costs and a relatively high employment-to-population ratio, could make it an attractive destination for foreign investments in automation-driven industries such as electronics and automotive manufacturing.
  • The World Bank report highlights that economic viability, rather than just technical feasibility, largely determines the pace and scope of technology adoption, which varies by country income level, labour cost, and sector.
  • Cambodia's workforce is at risk of being left behind in the automation revolution, with low-skilled workers potentially facing displacement, but the report suggests that upskilling the workforce could help the kingdom leverage its comparative advantage in low-cost manufacturing.

Statistics:

  • Estimated job displacement in Indonesia, Malaysia, the Philippines, Thailand, and Vietnam from 2018 to 2022: 1.4 million (3.3% of formal workers engaged in routine manual tasks)
  • Estimated job creation in Indonesia, Malaysia, the Philippines, Thailand, and Vietnam from 2018 to 2022: 2 million (4.3% of formal skilled employment) for skilled workers engaged in non-routine manual and cognitive tasks
  • Estimated ratio of employment to the size of the working-age population in EAP countries: Mongolia 60-67%, Philippines 60-67%, Malaysia 60-67%, Indonesia 60-67%, China 72-83%, Thailand 72-83%, Vietnam 72-83%, and Cambodia 72-83%

Sources:

  • World Bank report, Future Jobs: Robots, Artificial Intelligence, and Digital Platforms in East Asia and Pacific in 2025
  • World Bank report, quote from Manuela V. Ferro, vice-president of the East Asia and Pacific region at the World Bank