Southeast Asia is often described as one of the world’s most demographically advantaged regions. Home to more than 680 million people, over half of its population is under the age of 30. This youthful profile has long been touted as a powerful engine for economic growth, innovation and consumption — a demographic dividend that could propel the region forward for decades.
Yet across the region, that promise is increasingly under strain. Rising youth unemployment, widening income inequality and deepening skills mismatches are eroding confidence among young people and threatening to turn a demographic advantage into a structural liability.
Recent months have laid bare the growing frustrations. In August, parts of Indonesia witnessed episodes of social unrest, driven in part by young people angered by the rising cost of living and limited job opportunities. In Singapore, a country long seen as an outlier for economic stability, young jobseekers are taking longer to secure employment, prompting public acknowledgement from policymakers of mounting youth anxieties.
These developments reflect a broader regional trend. Across Southeast Asia, unemployment rates for those under the age of 24 remain significantly higher than for the general population. Even where headline unemployment appears manageable, deeper problems persist — including underemployment, labour market mismatches and a widening gap between the skills young people possess and those demanded by employers, particularly in fast-growing sectors such as technology and green energy.
If left unaddressed, youth unemployment risks undermining economic momentum, worsening inequality and placing additional strain on public finances. More critically, it could corrode trust in institutions and weaken social cohesion. The demographic dividend, economists warn, can quickly become a demographic reckoning.
The youth unemployment crisis is unfolding differently across Southeast Asia, shaped by each country’s economic structure and stage of development. However, a common thread runs through these varied experiences: job creation has not kept pace with the aspirations and qualifications of a growing young population.
Thailand reports some of the region’s least alarming figures. As of the second quarter of this year, the unemployment rate among those aged 24 and below stood at 5.9 per cent. But beneath the surface, structural weaknesses remain. The Thai economy continues to struggle with a lack of high-value job creation, and underemployment is widespread. Nearly a third of the workforce remains employed in agriculture, a sector characterised by low wages, limited productivity gains and few opportunities for career progression. For many young Thais, employment exists, but pathways to upward mobility do not.
Singapore presents a different picture. The COVID-19 pandemic accelerated structural shifts in its labour market, sharply increasing demand for skills in artificial intelligence, data analytics, cybersecurity and other digital domains. While the city-state has invested heavily in upskilling initiatives, the local talent pipeline has struggled to keep pace. As of June, the unemployment rate among those under 30 stood at 5.7 per cent, according to Ministry of Manpower data.
There are, however, signs of stability. Young Singaporeans who do find work are increasingly securing permanent roles rather than precarious employment. Between 2024 and 2025, the proportion of resident employees aged 15 to 24 in contract positions fell from 29 per cent to 27 per cent, while those in casual or on-call roles declined sharply from 13 per cent to 7 per cent, according to a November labour market report. This suggests improving job quality, even as access to employment remains a challenge.
In Malaysia, youth unemployment remains more pronounced. About 10 per cent of those under 24 were unemployed as of August. While labour market mismatches have eased somewhat since the pandemic, wage growth has lagged, particularly in skilled professions. Many young graduates find themselves overqualified for the roles available to them, accepting positions that do not match their training or turning to multiple informal jobs to make ends meet.
Indonesia faces the steepest climb. As Southeast Asia’s most populous nation, it also records the region’s highest youth unemployment rate. In February, around 16.2 per cent of Indonesians under 24 were unemployed. Compounding the challenge is the country’s vast informal sector, which employs more than half of the workforce. Many young people work in low-productivity activities such as subsistence agriculture, food delivery or ride-hailing — jobs that offer limited income security, few benefits and little long-term career development.
Despite differing national contexts, the diagnosis across Southeast Asia is strikingly similar: labour markets are demanding skills that many young people do not have. At the same time, graduates often possess qualifications that do not align with industry needs.
Statistical trends point to a worrying pattern. Job vacancies and unemployment are rising simultaneously, an indication that labour markets are not functioning efficiently. Employers struggle to find suitable candidates, while young jobseekers face prolonged job searches, accept lower starting salaries or settle for roles below their qualifications. Over time, this fuels frustration and disillusionment.
The consequences extend beyond the labour market. Persistent youth unemployment accelerates brain drain as skilled graduates seek opportunities abroad, depriving their home countries of future innovators, taxpayers and leaders. This dynamic is already evident in Indonesia, Thailand and Malaysia, where outward migration among educated young people is rising.
Unemployment and underemployment also delay key life milestones such as marriage, home ownership and family formation. This weakens domestic consumption and undermines long-term economic resilience, particularly in societies that will eventually face ageing populations.
Governments across Southeast Asia have begun to respond, though the scale of the challenge demands more decisive action. In Singapore, initiatives such as the GRIT scheme — which provides subsidised traineeships and structured on-the-job training — aim to help young people gain practical experience in growth sectors. Similar programmes exist elsewhere, but coverage and effectiveness vary widely.
Education reform remains critical. Aligning curricula with industry needs, strengthening vocational and technical training, and fostering deeper collaboration between universities and employers are essential steps. Indonesia’s decision to revise its National Education Law to extend mandatory schooling from nine to 13 years could significantly improve long-term employability, particularly if accompanied by quality improvements and stronger links to labour market outcomes.
Labour market reforms are equally important. Countries with large informal sectors must find ways to encourage formalisation, improve worker protections and raise productivity. Strategic investment in job-creating industries — such as manufacturing, logistics, renewable energy and healthcare — can provide scalable employment opportunities for young people.
Crucially, policymakers may need to accept higher short-term fiscal costs. Investing in youth through skills training, infrastructure development and targeted employment programmes is not merely social spending; it is an investment in future productivity, stability and growth.
Beyond national policies, regional cooperation could play a transformative role. Intra-ASEAN trade accounts for just 22 per cent of total trade, far below the levels seen in more integrated blocs such as the European Union. Deeper economic integration could unlock new opportunities for job creation, particularly in cross-border value chains.
Collaborative initiatives in sectors such as electric vehicles, healthcare and advanced manufacturing could allow countries to leverage complementary strengths. Singapore, Malaysia, Indonesia, Thailand and the Philippines, for instance, could jointly develop training pipelines for EV and healthcare industries. Vietnam and Indonesia could expand manufacturing and textile hubs geared toward regional markets, creating employment while boosting exports.
Southeast Asia’s youthful population remains one of its greatest assets, but the window to harness this advantage is narrowing. Failure to address youth unemployment and skills mismatches risks entrenching inequality and social instability for years to come.
The region stands at a crossroads. With bold reforms, sustained investment and deeper regional cooperation, Southeast Asia can still unlock the full potential of its young people. Without them, the long-celebrated demographic dividend may give way to a far more costly reckoning.
