This commentary is contributed by Malaysian Youth Policy Advisory and Engagement Society (MYPAS)
There is no doubt that ASEAN has made remarkable strides in economic growth and regional cooperation but the reality remains that its achievements are not evenly distributed across the diverse conditions of its member states. The shared challenges faced by the bloc, including rising youth unemployment and aging population, demand a unified yet flexible response that respects each nation’s respective priorities. (ASEAN: Association of Southeast Asian Nations)
Malaysia is set to assume the ASEAN Chairmanship in 2025 which will present a pivotal opportunity for the country to stand in solidarity with the bloc through these complex demographic challenges and lay down a solid foundation for the successor chair.
Youth Unemployment
Across ASEAN, youth unemployment remains a pressing issue, compounded by challenges posed by aging population in certain member states. This dual demographic shift could have profound implication for labour markets and economic integration, affecting the region’s economic resilience and growth.
Earlier this year, the founder of Malaysian Youth Policy Advisory and Engagement Society (MYPAS), Edwin Oh published a commentary through Channel NewsAsia (CNA) entitled “Young and Jobless in Malaysia” where he noted that youth unemployment is not solely a “Malaysian problem” but a regional issue, particularly with “low-skill, low-wage” employment dominating many ASEAN countries. This demographic concern warrants strategic attention as ASEAN positions itself to enhance its competitiveness in key industries like tech and semiconductors.
Encouragingly, the proportion of youth in NEET (not in education, employment, or training) status stood at 16.3% in 2023 – below both the global average and pre-crisis levels. However, gender disparities persist, with the female NEET rate at 19.6%, which is 6.6% higher than the male rate of 13%. Additionally, only 42% of young adults aged 15 to 24 are in secure employment, defined as paid work with a contract lasting at least one year which means that majority are still in insecure or temporary roles.
Over the years, ASEAN governments have taken numerous steps to address youth unemployment and economic integration, with initiatives such as the ASEAN Work Plan on Youth 2021-2025, which aims to enhance youth employment opportunities. Many programmes led by the ASEAN Foundation and ASEAN Youth Organization (AYO) have also been executed over the years, aimed at empowering young entrepreneurs and enhancing both their technical and soft skills.
All these efforts are a step in the right direction, but while they are commendable, additional measures need to be considered. Specifically, there must be a stronger emphasis on aligning educational curriculum with evolving market demands, fostering more robust private-sector partnerships to create sustainable job opportunities, and addressing the gender disparities that persist within youth unemployment and NEET rates.
Moreover, policies must prioritise investments in technology and digital skills training to future-proof ASEAN’s workforce. These measures, however, require action not only at the ASEAN level but also within individual member states, where tailored national strategies are necessary to effectively meet the unique challenges faced by each country.
Ageing Population & Inadequate Pension Coverage
On the other end of the age spectrum, a brief look into ASEAN’s ageing population presents another set of challenges for ASEAN’s economic trajectory. Member states are witnessing significant growth in their aging population. For instance, Indonesia, Thailand, and Vietnam are
expected to maintain a combined total population of 1.9 billion over the next 30 years. However, the proportion of individuals aged 65 and above is projected to nearly double, rising from 250 million to 485 million.
Malaysia faces similar challenges, with projections indicating it could transition to an aged nation – where individuals aged 65 and older comprise at least 7% of the population – as early as 2044. While the aging phenomenon presents numerous socioeconomic challenges, the primary consideration is the adequacy of existing pension systems across ASEAN.
Countries like Singapore, Thailand, and Vietnam are experiencing significant ageing ratios of 18%, 16%, and 12%, respectively. Despite this, pension coverage for age eligible individuals remains critically low in many nations. Vietnam, for instance, only covers 28% of this group, while Cambodia and Lao PDR fare even worse, with coverage rates of 7% and 0%. This inadequate coverage, coupled with minimal social spending by the government, is alarming.
This concern becomes more apparent when considering country-specific issues. For instance, in Malaysia – the decision to allow special withdrawals from retirement savings accounts during the COVID-19 pandemic has left EPF members with substantially depleted savings. Such policies, while providing short-term relief, highlight the fragility of pension systems and underscore the urgent need for more sustainable and forward-looking reforms to safeguard the financial well-being of ageing population across the region.
Many countries over the years have also adopted the practice of injecting cash into pension systems as a quick fix. In Thailand, approximately 4 million senior citizens are expected to receive 10,000 baht (US$289) each as part of the government’s digital wallet handout scheme in January 2025, just before the Lunar New Year. While these measures offer immediate relief, they do little to address the structural weaknesses of pension systems. Instead, they risk creating dependency and fail to ensure long-term financial security for ageing population.
ASEAN member states should implement lifecycle approach to ensure pension systems address individuals’ changing needs over time. For example, Singapore’s CPF LIFE provides payouts that adjust according to retirees’ needs, ensuring lifetime income security. A similar model could be adapted across ASEAN, where feasible, to encourage better financial planning and inclusivity while reducing the risk of old-age
poverty.
