Cambodia is set to graduate from the Least Developed Country (LDC) category on December 19, 2029, following the resolution adopted by the UN General Assembly in December 2024. While this milestone signifies a significant achievement in Cambodia’s development journey, it testifies to the Kingdom’s increased wealth (Gross National Income per capita), progress in human capital development (Human Asset Index), and enhanced economic and environmental resilience (Economic and Environmental Vulnerability Index).

However, it will also lead to a gradual withdrawal of international support measures, such as preferential trade agreements, grants, and concessional funding, which will necessitate structural socioeconomic and environmental transformations in the Kingdom’s development model as it prepares for LDC status graduation.  

What are the implications for women?

LDC graduation is a whole-of-society endeavor that will bring about challenges and opportunities requiring collective action by the Royal Government, its development partners, the private sector, and civil society to mitigate potential risks and harness opportunities. Challenges would include employment precarity and increase in poverty levels, deprivations and inequalities. On the other hand, opportunities can bring improved creditworthiness, economic diversification, higher-value exports, and the ability to attract more diverse investments. As such, without an effective transition strategy, retrocession on development gains and lost opportunities will derail the growth path of the Kingdom.

The anticipated change associated with transition from LDC status, namely structural transformation, the loss of trade preferences, and changing labor market dynamics, will affect the most vulnerable social groups. If we take women workers as an example, they will find themselves at a critical juncture. A recent policy brief jointly published by UNDP and the Ministry of Planning on Cambodia’s Preparedness and Potential Economic and Social Impacts of LDC Graduation on key economic sectors found that women, particularly those working in the garment sector, will be disproportionately affected, backsliding progress made in gender equality and women’s economic empowerment. In 2024, the GTF sector is employing around 1 million workers, over 75 percent of whom are women. They contribute to the national economy and support their families, indirectly benefiting around 3 million persons.  

Around 165,000 jobs may be lost, mostly among women in the garment sector.

The rapid economic growth in Cambodia is underpinned by the export-oriented garment, textiles and footwear (GTF) sector, which has been leveraging the benefits of preferential international trade measures under preferential trade schemes like the European Union’s Everything-But-Arms and Canada’s Least Developed Country Tariff. Upon graduation, these trade privileges will gradually be removed and more stringent requirements on the Rules of Origin and double transformation will apply to Cambodian exports on par with other countries. These would require different or higher skillsets and technology, higher productivity, and a more competitive production cost. Many workers, particularly women, may be forced into lower-paying and/or informal jobs with fewer social protection or they will be crowded out of the labor market, if timely measures are not applied.

Informality is another pressing concern. It prompted the Royal Government to launch its strategy 2023-2028 for developing the informal sector. Currently, 88.3 percent of the Cambodian workforce is engaged in informal employment, with women making up 87.6 percent of the informal sector. Many work in informal sectors such as street vending, domestic work, and subsistence agriculture, characterized by low skillsets, modest wages, scarce benefits, and limited legal protections. As Cambodia transitions to a more modern economy, the demand for a more qualified and productive workforce and productive sectors’ value chains, and their alignment with responsible business conduct will increase. But are Cambodians prepared to respond to the demands of a highly competitive global economy?

Cambodia faces gender disparities in education and skills development, which hinder women’s access to opportunities in higher-value and better-paying sectors. A significant occupational segregation by gender can be observed. Prevalent gender norms lead to some occupations being considered more appropriate for women. For instance, occupations such as vending, dressmaking, and food processing are domains meant for women. In addition, women’s high workload compounded by caregiving responsibilities limit their educational and professional prospects. As the economy undergoes structural transformation, women’s underrepresentation in technical and vocational training programs is a critical issue limiting their ability to accompany and benefit from the economic shift toward high-value industry and service-based economy.

What has been done?

The Royal Government of Cambodia adopted recently the latest update of the framework policy Neary Rattanak VI (2024-2028) which aims to mainstreaming gender equality and women empowerment in sectoral policies, programs and institutional capacity development. It particularly prioritizes promoting women’s participation in the labor market, improving access to financial services, and encouraging entrepreneurship.

This agenda is further supported by the National Strategy for Informal Economic Development 2023-2028 aiming to support informal businesses and workers, particularly women, to gradually transition to the formal economy. Two key reforms included in this national strategy that will benefit women in the informal sector are the introduction of a voluntary contributory social security scheme for self-employed individuals and the establishment of the onboarding platform to facilitate the registration of informal businesses, allowing them to access a range of benefits, including access to finance.

UNDP Cambodia has been actively supporting gender-responsive policies through initiatives that improve women’s access to finance (Women Guarantee Scheme of the Credit Guarantee Corporation of Cambodia), capacity-building for women entrepreneurs, e-Commerce, and formalisation, decent jobs and social protection (through the framework of the National Roadmap for Accelerating Decent Jobs and social Protection). UNDP also advocates for Gender Responsive budgeting, the facilitation and maximization of remittance flow for Cambodian migrant workers (40% of migrant workers in Thailand are women) and the Development of care economy and family support policies for affordable care services for children, the elderly, and persons with disabilities to unlock the potential of women allowing them to balance their family and their growth prospects.

What strategies should Cambodia focus on to sustain women in the workforce?

To ensure a smooth, sustainable, and just transition for LDC graduation, it is crucial to chart the way forward through the adoption of a comprehensive Smooth Transition Strategy. This all-of-government and all-of-society strategy should go beyond trade, placing people, including women, their wellbeing and prosperity at the heart of economic transformations and remove barriers that perpetuate exclusion. It will have to mainstream environmental and climate change considerations for economic/ trade, health, food and human security considerations, among others. Prioritizing just transitions and environmental sustainability are smart derisking strategies.

Closing the gender gap in higher education and vocational training is essential to equip women with the skills needed to participate in Cambodia’s future growth sectors. This can be done through targeted scholarships and incentives to encourage more women to pursue studies in higher education and technical fields, creating a supportive learning environment, and promoting family supportive policies and care services. Partnership with the private sector will accelerate change and help in aligning education and skills with the job market needs.

Finally, promoting women's entrepreneurship through financial literacy, skills development, and access to finance will accelerate the transition given the high level of women's participation in the labor force—Cambodia consistently reported the highest participation in the ASEAN region, with 78.9 percent in 2023.

Alissar Chaker is UNDP Resident Representative and Rada Khoy is UNDP Economist.