Rapid Assessment on Digital Wage Payments for Decent Work in Cambodia’s Tourism and Agro-Processing Sectors (Албания - Тендер #64626280)

Introduction and Background

Globally, an estimated 165 million workers without bank accounts receive private sector wages solely in cash. Additionally, millions more are paid digitally into accounts that do not meet their financial needs. In Cambodia, 75 per cent of private sector wage payments were made in cash in 2021, with over two-thirds of government payments also disbursed in cash.[1] However, a significant shift towards digital wage payments is underway. This transition to responsible digital wages offers the potential to foster business efficiencies, promote worker rights and business formalization, and advance financial inclusion.

The ILO established the Global Centre on Digital Wages for Decent Work to accelerate the transition from cash to responsible digital wage payments. The Global Centre seeks to enable women and men workers around the world to have better control over their wages and use worker-centric digital financial services for better resilience and economic opportunities. In the first phase of its interventions in Cambodia, the ILOs Global Centre on Digital Wages for Decent Work and Better Factories Cambodia focused on supporting Cambodias garment, footwear, and travel goods sector (GFT) to promote a responsible transition to digital wage payments. The project partnered with sectoral employers organization: TAFTAC, the Ministry of Labour and Vocational Training, trade unions, international brands and buyers, local and international development partners to raise awareness on digital wages, facilitate the buy-in from the stakeholders and provide needed support to factories and workers in their transition to digital wage payments.

As a result, wage digitization in export factories has increased from 50 per cent in early 2022 to 75 per cent as of December 2024.[2] Now, more than 550,000 workers in over 700 export factories receive their wages through digital accounts, with the percentage of workers cashing out their entire wages on payday has dropped from 40 per cent[3] in 2021 to 20 per cent in 2023, and workers have expressed greater confidence in using digital accounts and higher trust toward their employers.[4] This progress resulted from extensive awareness-raising campaigns, knowledge sharing, training, factory advisory services, and financial education for workers, including factory-led financial literacy campaigns, a chatbot-based solution, and a conducive digital financial ecosystem.

The evidence is clear that when managed responsibly, digital wages have led to improved efficiency, reduced payroll costs, enhanced safety, better protection of wages, and improved access to financial services for both employers and workers. The ILOs experience in other countries including Indonesia and the Philippines has shown that the transition to digital wage payments also brings benefits to micro and small enterprises and their workers in other economic sectors. By digitizing their wage payments, these companies save time and costs, improve efficiency and transparency of their payroll processes, and unlock a broader array of formal financial services for themselves and their workers. In some cases, wage digitization helps employers to establish records for their workers and register them to national social security systems, leading to their formalization.

Cambodia has more than 700,000 non-agricultural establishments, collectively engaging approximately 2.99 million persons.  This employment landscape is diverse, encompassing various sectors, enterprise sizes, and a high rate of informality. One-third of this workforce is employed in the GFT sector and is well underway in transitioning to digital wage payments. The remaining two-thirds of the 2.99 million people (1.99 million) are engaged in other economic sectors and/or presumably smaller enterprises. Approximately 99.8 per cent of the