The findings were published in the IMF’s October 2026 Regional Economic Outlook: Asia and Pacific. A chapter titled “Asia’s Labour Market in the Age of AI: Challenges and Opportunities” analysed nearly 40 million online job postings across 19 economies. The analysis found that recruitment demand in occupations highly exposed to AI had declined by around 10 percent compared with less-exposed occupations, although demand for workers with AI-related skills was increasing.
The report noted that AI is changing not only the number of jobs available but also the nature of work and the skills required. Economies with large young populations may struggle to create enough jobs, while those facing labour shortages due to ageing populations could use technology to address workforce gaps.
Graduate Unemployment on the Rise
The IMF analysis found that youth unemployment in several emerging Asian economies was significantly higher than the national average. In some countries, unemployment among university graduates was close to 30 percent. Many graduates are also unable to find jobs that match their educational qualifications.
In the Philippines, around 70 percent of university graduates are employed in jobs that do not require a degree, according to the report. The mismatch between skills acquired through education and employers’ requirements is one of the key factors behind the problem.
Low Unemployment Masks Labour Market Weaknesses
Although Asia’s overall unemployment rate remains relatively low, it does not fully reflect the condition of the region’s labour markets, the report said. Young women who remain outside the workforce and people employed in the informal sector often face limited job security and fewer opportunities for career advancement.
Export-oriented industrialisation has long played a major role in driving economic growth and employment across Asia. However, as manufacturing becomes increasingly capital-intensive and technology-driven, the demand for workers is declining. Geopolitical and trade fragmentation is also creating uncertainty over access to international markets.
Demographic Changes Pose Two Different Challenges
Many countries in South and Southeast Asia have growing working-age populations, while several East Asian economies are experiencing a decline in their working-age populations.
Creating sufficient quality jobs in countries with large youth populations could boost economic growth and living standards. However, a shortage of relevant skills and employment opportunities could limit these benefits.
In economies facing labour shortages due to ageing populations, AI and other technologies could help increase productivity and ease pressure on the workforce.
According to the IMF analysis, the future of Asia’s labour markets will depend on creating new employment opportunities, aligning education systems with labour market needs and helping workers adapt to technological changes. The report emphasised that policymakers must look beyond unemployment rates and pay greater attention to job quality, skills utilisation and labour force participation.
