Cambodia To Move Millions of Women Into the Formal Economy

The Cambodian government’s strategy seeks to expand women’s access to social protections, health insurance and pensions.

Cambodia’s government is rushing to empower millions of women working in the informal sector and shift them to the formal sector, with all the benefits and protections that come with it.

The shift also benefits the economy and society by increasing the tax base, reducing health costs, and strengthening social cohesion.

“The government has always considered women as the backbone of the economy and society, and has increased investment in promoting the rights, status, roles and socio-economic status of women and families,” says Women’s Affairs Minister Ing Kantha Phavi.

Just over 88 percent of Cambodia’s 10-million-strong workforce is in the informal sector — and almost 88 percent of those are women, according to the International Labour Organization.

More than 7.7 million women across the country are in the informal sector, working on farms, in family businesses, as street vendors, construction workers, in wet markets, hairdressers and similar jobs.

Economic exclusion and barriers

Men working in the informal sector also experience problems, but women face extra challenges, including gender-based violence, lagging behind men in technical, vocational, education and training skills and limited access to finance due to lower collateral and “thin financial records,” says Chanbora Tep, executive director of Banteay Srei (Citadel of Women), a nongovernmental organization working with vulnerable women.

“Most of them are without health insurance, injury protection, or pensions, even though women are over-represented in these informal roles, including small agriculture and micro-enterprises,” she told UCA News.

“They face barriers for registration and compliance for micro and small enterprises. This includes time and cost of registration, complex tax and admin rules, and the perceived low benefit from formalization.

“Women also lack leadership skills, lack access to technical, vocational, education and training skills, budget, and digital literacy, and have limited market access.”

Gender-based violence in Cambodia

Gender-based violence is an obstacle and a threat to women in both the informal and formal sectors, adds Tep.

“About one in five partnered women report emotional, physical, or sexual violence by a partner,” she says. “Over 50 percent do not seek help. Injuries are common, and health care-seeking is low.

“Gender-based violence reduces labor force participation and productivity, increases absenteeism, and pushes women out of formal roles back into informal, home‑based work — or out of work entirely.

“Gender-based violence and restrictive norms limit women’s attendance at co-op meetings, training, and leadership functions, and can block travel to markets or extension services.”

Transitioning women into the formal sector also benefits the economy and society as a whole.

“Formalization expands social protection, reduces catastrophic health spending, and boosts productivity,” says Tep.

“A broader tax base improves revenue and levels the playing field for compliant firms; incentives aim to bring women‑led micro, small and medium enterprises, co-ops, and agricultural groups into the system.

Formalization will extend benefits

While formalization brings some benefits, there are also disadvantages.

The government’s main strategy for promoting gender equality and women’s empowerment is the five-year Neary Rattanak (Jewel of Women), now in its fifth iteration, and the National Strategy for Informal Economic Development 2023-2028.

Combined, the two policies aim to support informal businesses and workers, particularly women, to gradually transition to the formal economy ahead of the country’s graduation from Least Developed Country status in 2029.

Cambodia has a comprehensive and compulsory health insurance and pension scheme, the National Social Security Fund, to which employers and employees contribute.

But it is only available to workers in the formal sector.

Under the Neary Rattanak/National Strategy for Informal Economic Development plan, self-employed individuals will be able to make voluntary contributions to the NSSF, and an onboarding platform is being established to facilitate the registration of informal businesses, allowing them to access a range of benefits, including access to finance.

Justice, the heart of the fight against discrimination

Neary Rattanak outlines 41 key points that focus on empowering women in leadership, enhancing access to education, health, and economic opportunities, and addressing gender-based violence.

It also prioritizes promoting women’s participation in the workforce, improving access to financial services, and encouraging entrepreneurship.

Referring to Neary Rattanak, Eng Chandy, Programme Manager of Advocacy for Gender and Development for Cambodia, said: “The strategic plan is helpful to combat discrimination against women and bring justice to all women who come from different backgrounds. It also helps institutions or organizations in Cambodia find mechanisms when they want to create policies about gender that cooperate with the ministry.”

The government has closed the gender gap in education to give women better skills when they enter the job market, but that is taking time to filter through. There is still a large gap in literacy between men (90.4 percent) and women (63.6 percent).

Banteay Srei has been working with vulnerable women and rural communities for more than a quarter of a century for political, economic, and social transformation. It focuses on promoting gender equality, women’s rights, and combating gender‐based violence.

It is currently helping almost 2,000 women under its livelihood and empowerment program in the northwestern provinces of Siem Reap and Battambang, Tep says.

The group also runs “safe houses” for women in the two provinces. So far, about 450 survivors of gender-based violence have passed through.

“We have provided them counseling services, support transportation, a food allowance, and refer them to organizations that provide legal services,” says Tep.

Featured image: An impoverished mother and her children gather around the cooking fire at their home, a shack in a settlement of Cambodia. (Sean Sprague/Cambodia)