INVESTING BOLDLY IN YOUTH
Youth unemployment threatens economic and social stability. Beyond immediate costs, it fuels brain drain as skilled graduates seek opportunities abroad, depriving countries of future growth drivers. This is already playing out in Indonesia, Thailand and Malaysia.
Unemployment also delays key life milestones such as family formation and home ownership, weakening consumption and long-term resilience.
Governments must act decisively. Singapore’s GRIT scheme, which offers subsidised traineeships and on-the-job training, is a step in the right direction. Similar initiatives should be scaled up across the region, alongside reforms to align education with industry needs, strengthen vocational training and foster industry-academia collaboration.
Indonesia, with a large informal sector and high youth unemployment, faces a particularly acute challenge. It needs labour market reforms, including education system improvements and strategic investment in job-creating sectors such as manufacturing and logistics. The government has revised its National Education Law to extend mandatory schooling from nine to 13 years, a move that could significantly boost long-term employability.
Crucially, Southeast Asia must invest boldly in its youth – even if it means breaching fiscal limits temporarily. Strategic spending on skills, infrastructure and job creation is not a cost but an investment in future productivity and stability.
Equally important is regional synergy. Southeast Asian economies should leverage each other’s strengths and expand intra-ASEAN trade, which stands at just 22 per cent of total trade compared with over 50 per cent in the European Union. Greater collaboration can unlock opportunities in sectors such as electric vehicles, healthcare and manufacturing.
For example, Singapore, Malaysia, Indonesia, Thailand and the Philippines can partner to train young workers and develop the electric vehicle and healthcare sectors. Vietnam and Indonesia can build on their strengths in manufacturing and textiles, setting up factories to employ young workers and export to other Southeast Asian markets.
These projects will pay for themselves many times over through higher growth and social stability. Structural reforms and sustained cooperation are essential if the region is to realise the potential of its youth – before its demographic dividend turns into a demographic reckoning.
Enrico Tanuwidjaja is ASEAN economist at UOB.
https://www.channelnewsasia.com/commentary/southeast-asia-asean-youth-dividend-unemployment-jobs-5578781
