Cambodia 2025 Labor Regulations and Market Insights
Key Regulatory Updates
Dynamic Minimum Wage Adjustment
The minimum wage for the textile/garment/footwear sectors is adjusted annually (2025 projected increase: 5%-7%), serving as a benchmark across all industries. Enterprise Response: Establish a flexible compensation mechanism and incorporate adjustments into annual budgeting.
Strengthening Union Rights
The law ensures the right to form unions and engage in collective bargaining. The government is enhancing tripartite dialogue (Government–Enterprises–Unions). Enterprise Response: Set up quarterly labor-management consultation mechanisms and develop preventive solutions for collective disputes.
Dismissal Risk Management
For employees under Unlimited Duration Contracts (UDTC), termination compensation can reach up to 6 months’ salary, with high risk of collective labor disputes. Enterprise Response: Use standardized contract templates and implement dual-layer dismissal reviews (HR + Legal).
Expanded Mandatory Social Security Coverage
The National Social Security Fund (NSSF) contribution base is expanded to 120% of total income, with plans to include gig economy workers. Enterprise Response: Deploy automated payroll systems to calculate NSSF contributions and provide quarterly social security benefit statements.
Core Labor Market Insights
Demographic Structure & Skills Gap
-The working-age population exceeds 60%, but there is a shortage of 230,000 skilled workers (mainly in engineering and mid-level management).
-Only 18% of the workforce has received systematic training; the government has launched the 2025 Skills Revitalization Plan targeting 25% coverage.
Dual-Track Wage Differentiation
-Base manufacturing salaries are driven by statutory wages, with an expected increase of 6%-8% in 2025.
-IT/Finance tech roles will see wage growth of 10%-12% due to talent competition.
-Cost Advantage: Manufacturing labor costs are 15% lower than Vietnam and 28% lower than Thailand.
Structural Employment Challenges
-Youth unemployment (ages 15–24) stands at 5.6%, higher than the national average of 2.8%.
-Digital economy jobs are growing at over 15% annually, emerging as a key employment driver.
Enterprise Action Guide
Compliance Optimization
-Track MLVT policy alerts and conduct biannual employment audits (focus areas: contracts/dismissals/social security);
-Prioritize mitigation of two major risks: dismissal procedure errors (62% of disputes) and social security underpayment (28%).
Cost Control
-Promote automation in areas with rising wages (e.g., raise smart cutting equipment penetration in garment factories to 40%);
-Explore labor outsourcing in border provinces to leverage regional wage differentials and reduce labor costs by 15%-20%.
Talent Strategy
-Collaborate with the National Technical Training Institute (NTTI) for demand-based vocational training;
-Establish fast-track programs for management trainees (promotion cycle compressed to 18 months).
Conclusion
Cambodia retains a regional labor cost advantage, but sustainable growth depends on technology adoption, skills upgrading, and regulatory compliance. Enterprises should focus on proper dismissal procedures and social security compliance, while leveraging government tax incentives for training to enhance talent competitiveness.
