Traditional higher education is no longer enough to bridge the skills gaps in the ASEAN labor market, so governments in the region should start investing in scalable and flexible solutions such as micro-credential training to overcome this divide and prepare the workforce for the digital era, advises a new report.
The policy brief noted how ASEAN’s labor market is facing unprecedented transformation driven by three intersecting megatrends: digitalization, the green transition, and the gig/freelance economy.
“These trends present new opportunities but also introduce significant risks of exclusion and mismatch,” said the report published last month by the Economic Research Institute for ASEAN and East Asia (ERIA).
While digitalization is projected to create more jobs than it displaces, nearly two-thirds of youth are not receiving adequate digital skills education in schools to leverage this opportunity, the report warned.
The green transition is expected to generate 30 million new jobs in Southeast Asia by 2030, but it will require workers to develop the specialized skills demanded by low-carbon industries.
Additionally, the talent-on-demand or gig/freelancing economy is emerging as one of the fastest-growing labor market segments, with an estimated 154 million to 435 million online gig workers globally.
“With the right investment in skill development, ASEAN’s ‘digital native’ youth can broaden their employment prospects beyond domestic labour markets and tap into the global digital economy,” the document said.
It further said that a survey of global employers operating in ASEAN—focused on workforce trends, employer expectations, and transformation strategies for 2025-2030—shows that regional employers increasingly recognize the importance of government support in reskilling and upskilling efforts to improve talent availability, with expectations in ASEAN surpassing the global average.
But relying solely on traditional higher education pathways is no longer sufficient, the paper continued, as it called on ASEAN governments to “invest in lifelong learning, promote flexible upskilling models, and mainstream micro-credentials as a central element of workforce development.”
It argued that conventional higher education models are increasingly ill-suited to keep pace with the fast-moving technological and industrial landscape.
“In many sectors—such as artificial intelligence, cybersecurity, renewable energy, and digital services—employers are prioritising practical, job-specific skills over formal academic qualifications. As such, modular and competency-based learning approaches, including micro-credentials and stackable certifications, have emerged as critical tools for helping workers stay competitive,” it said.
According to UNESCO, unlike conventional degree programs, micro-credentials are typically focused on a specific set of learning outcomes in a narrow field of learning and achieved over a shorter period of time.
Micro-credentials enable individuals to “respond quickly to labour market shifts without the long-term commitment of a full degree,” said the ERIA report. “By targeting particular competencies rather than broad academic domains, micro-credentials effectively bridge the divide between formal education and employment outcomes.”
For individuals, micro-credentials offer an affordable and flexible means of enhancing employability. They facilitate career mobility and support lifelong learning by allowing learners to build skills incrementally outside of traditional academic settings.
Furthermore, micro-credentials function as strong labor market signals to employers, reducing uncertainty in the hiring process and improving overall job market efficiency.
Some of the primary benefits of micro-credential training programs include the following:
• Highly scalable
• Low cost
• Labor market alignment
• Decentralized learning
• Modular pathways
• Job-relevant skills
• Flexible delivery
Several ASEAN member states have already introduced government-supported lifelong learning initiatives, such as Indonesia’s Kartu Prakerja and Singapore’s SkillsFuture program, said the policy brief.
Launched in 2020, Kartu Prakerja provides financial assistance for vocational and digital learning, including practical micro-credential training.
Singapore’s SkillsFuture, launched in 2015, offers structured training pathways, industry-recognized certifications, and financial incentives to support continuous learning, foster workforce adaptability, and ensure a competitive labor force amid evolving economic and technological demands.
Both projects “demonstrate that combining digital training platforms, micro-credentials, and financial incentives can yield inclusive and adaptive skills ecosystems,” said the research paper.
“Integrating micro-credentials into ASEAN’s regional skills agenda offers a high-potential avenue to scale up workforce readiness. However, successful implementation will require strong political will, regulatory innovation, and thoughtful programme design to ensure effectiveness and equity,” concluded policy brief authors Romora Edward Sitorus and Rashesh Shrestha.
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