Microcredentials: Asean’s answer to the youth jobs crisis
YOUTH unemployment remains stubbornly high across Southeast Asia. According to the International Labor Organization, more than 16 percent of young people in the region were not in education, employment or training (NEET) in 2024. In Indonesia, the rate reached around 21 percent — among the highest in the Association of Southeast Asian Nations (Asean), surpassed only by Lao People’s Democratic Republic and almost double the levels in Cambodia, Vietnam and Thailand. This persistently high NEET rate highlights the hurdles first-time jobseekers face, even amid overall economic growth.
Two structural shifts are intensifying this challenge. First, slower economic growth, shaped by trade uncertainty and higher interest rates, reduces opportunities for entry-level positions as firms hold back from investing in inexperienced young workers. Second, automation and artificial intelligence are steadily replacing routine tasks that often serve as stepping stones for fresh graduates. Together, these trends lengthen the time it takes for youth to secure stable employment.
Traditional responses, such as extending years of schooling, are proving insufficient. As of 2025, Indonesia has more than 1 million unemployed university graduates, even as the economy faces a looming shortage of digital skills. By 2030, Indonesia will need an estimated 12 million digital talents, compared to a current base of only 3 million. This disconnect shows that degrees alone are no longer enough to prepare youth for the evolving labor market.
Microcredentials as a game changer
Firms are increasingly prioritizing skills-based hiring over educational pedigree. LinkedIn’s 2025 analysis reveals that shifting to skills-based screening dramatically expands candidate pools — especially for nondegree holders. What youth need, therefore, are skills-development pathways that can keep pace with industry change rather than the slower cycle of traditional curricula.
Microcredentials provide such a pathway. These short, targeted programs deliver job-relevant skills, assessed and certified in alignment with industry standards. They are faster, cheaper and more adaptable than degree programs, making them well-suited to address specific gaps in the labor market. They also support lifelong learning, allowing individuals to incrementally build their skills over time.
Importantly, microcredentials can expand opportunities beyond domestic markets. By participating in freelance and gig-economy platforms, young people can demonstrate their skills, work ethic and professionalism to global clients — building portfolios that enhance employability both online and offline.
Importantly, microcredentials can expand opportunities beyond domestic markets. By participating in freelance and gig-economy platforms, young people can demonstrate their skills, work ethic and professionalism to global clients — building portfolios that enhance employability both online and offline.
Embedding microcredentials into education systems
Microcredentials should complement, not replace, traditional education. A hybrid approach — combining the depth of degree programs with the flexibility of microcredentials — can better prepare youth for the dual demands of foundational knowledge and practical skills. Policymakers must also ensure that microcredentials are accessible to those who cannot pursue higher education, thereby expanding inclusivity.
Real-time labor market intelligence is essential for effective program design. Southeast Asian countries are already experimenting with labor-market information systems (LMIS) that link vacancies, skills requirements, wages and training options. Singapore’s SkillsFuture, for instance, publishes public dashboards that map direct pathways from learning to work. Seamless integration between LMIS platforms and microcredential systems would allow programs to stay aligned with market demand.
A policy priority for the Asean
Integrating microcredentials into workforce strategies offers Southeast Asian governments a powerful lever to accelerate reskilling and upskilling at scale. But success depends on regulatory reform, institutional support and careful program design. International organizations such as the Organization for Economic Co-operation and Development, the European Center for the Development of Vocational Training, and the United Nations Educational, Scientific and Cultural Organization are already developing standards to ensure quality, portability and stackability — frameworks that Asean can adapt to local contexts.
Regional initiatives provide a useful guide. Singapore’s SkillsFuture and Indonesia’s Kartu Prakerja demonstrate how digital learning platforms and microcredentials can empower workers to pivot, adapt and thrive in fast-changing labor markets. Scaling such approaches across Southeast Asia could help unlock the region’s demographic dividend — turning today’s youth unemployment challenge into tomorrow’s engine of growth.
Rashesh Shrestha is an economist at the Economic Research Institute for Asean and East Asia (ERIA). Romora Edward Sitorus is the chief economist at the Coordinating Ministry for Economic Affairs of Indonesia. The views expressed here are those of the authors and may not, in any circumstance, be regarded as stating an official position of the ERIA.