How to solve Asia's youth unemployment crisis

Youth unemployment in Asia-Pacific is alarmingly high, with rates in countries like Armenia, Sri Lanka, Malaysia, and Bangladesh more than double the overall unemployment rate, according to the Asian Development Bank’s Basic Statistics report. This could cause severe economic and social consequences for an entire generation.

What’s behind these problematic numbers? Many young people leave school or university with qualifications that are not in demand. Asia is producing far too many graduates in business, the arts, and social sciences and not nearly enough graduates in science, technology, engineering, and mathematics (STEM) subjects, vocational trades, or with information and communication technology (ICT) skills.

In urban Asia, auto electronics and textile manufacturing used to be the entry point into the labour market for millions of young people. But with much of industrial production now mechanised, we live in an era of far fewer jobs in those traditional sectors.

The average car factory today employs only around 15 per cent of the workforce it needed 25 years ago. Likewise, repetitive low-skilled assembly work everywhere has been largely ceded to increased automation.

The economic reality in many of Asia’s developing countries is that although there has been significant and largely sustainable growth, that has not been accompanied by millions of new jobs.

Many economies have been growing by automating, by focusing on capital-intensive industries (like mining or high-tech manufacturing), or by developing services or knowledge. Much of Indonesia’s recent growth has been due to mining and mineral processing that these days do not employ many people.

Bangladesh’s economy has been growing by an average of 6.5 per cent a year for the last decade, but that growing economy has not dented youth unemployment. The opposite is happening; the percentage of young people without work remains higher at 11.5 per cent compared to overall unemployment at 4.6 per cent in 2022.

Meanwhile, populations keep growing and better-resourced education systems deliver increasing numbers of graduates demanding, quite rightly, decent employment. India, Bangladesh, and the Philippines have massive youth populations entering the workforce each year. According to the development organisation IBON, at least 900,000 young people joined the workforce in the Philippines in 2024, adding to youth unemployment which was almost 7 per cent in 2022, more than double the national average.

Quality of employment is also declining in many parts of Asia-Pacific. Where young people can find work after finishing their education, it’s more and more likely to be irregular, temporary, and low-paying. Young women are more likely to be unemployed than their male counterparts. Cultural expectations that women will become homemakers and mothers rather than career professionals remain prevalent.

Tackling youth unemployment requires different strategies, given the region’s diversity and the differing causes. First, education needs to be urgently reformed so it produces far fewer academics and far more young workers who have the skills needed to thrive in a modern economy, like computing, technology, digital know-how, and entrepreneurship.

A big upgrade in vocational training is essential to turn out large numbers of workers with the craft and trades skills required by growing economies. Initiatives like Skills’Future Singapore programme, which works to ensure the economy will have the type and number of appropriately qualified people, should be replicated in other countries where unemployment is a challenge.

If modern economies are growing and people are wealthier, but the jobs are simply not there, then young people need help to create their own jobs through entrepreneurship. That should include startup loans, tax breaks, subsidised premises, and mentorship.

Surveys suggest Asian youth are clamouring to start their own enterprises, but most require initial capital, comprehensive training, and simpler ways of registering a new business. In the Philippines, Go Negosyo has been successfully helping hundreds of aspiring youth entrepreneurs with its “money, markets, mentoring” support package since 2005. Support is out there, but it needs to go mainstream.

The Bhutanese government is reforming and expanding its technical and vocational education and training system, emphasising STEM subjects with the objective of reducing the education/economy skills mismatch.

Other programmes aimed at job seekers/youths include skills trainings in traditional crafts like carpentry, masonry, and weaving.

These programmes often lead to employment and enterprise creation while promoting the country’s rich cultural heritage, often to the benefit of its growing niche tourism sector.

Sri Lanka adopted a National Education Policy Framework in 2020 to align the education sector with the needs of the labour market and wider economy. It is hoping the new approach will help reduce its very high rate of youth unemployment of nearly 22 per cent. ICT and popular vocational skills are prioritised, with the framework being versatile, agile, and constantly responsive to the demands of the labour market.

Although Laos has a regionally low youth unemployment rate of only 2.3 per cent, the gap between the needs of the labour market and youth skills remains a significant issue. To address this, the country has prioritised vocational training and is identifying potential growth areas that could generate plenty of jobs.

Tourism is one. In 2024, the country welcomed over five million visitors, generating more than $1 billion in revenue. So, training young Laotians to work in ecotourism could help reduce youth unemployment further in the coming years.

Asia-Pacific can no longer rely on piecemeal fixes to youth joblessness. Governments and educators must realign curricula to meet fast-shifting market needs, while policymakers channel a modest foreign direct investment or partnership levy into seed capital for young entrepreneurs.

Acting now will arm the region’s next generation with the skills and resources to build resilient, inclusive economies – an investment we cannot afford to delay.

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