BANDAR SERI BEGAWAN, Oct. 11 (Xinhua) -- The latest International Monetary Fund (IMF) 2019 country report indicated that youth unemployment in Brunei poses a concern and needs to be addressed, which is now highest among ASEAN countries.
In the report sent to Xinhua on Friday, IMF recommended a need for strong economic growth and a structural labor market reform to address the unemployment issue. The report also suggested the country to leverage on technology and digitalization that could help turn Brunei's young and tech-savvy population into an asset.
The report stated that the unemployment rate increased to 9.3 percent in 2017 from 6.9 percent in 2014, when the Labour Force Survey was last conducted. The youth unemployment rate increased from 25.3 percent to 28.9 percent, the highest among ASEAN countries.
Unemployment for locals increased to 11.5 percent from 9.0 percent, with youth unemployment of locals rising to 31.7 percent from 29.9 percent. While unemployment rates for all levels of education are high, those with vocational background have the highest unemployment, underscoring the need for enhancing the quality of vocational training and reducing skill mismatches.
Based on international experience, IMF warned that large and persistent unemployment rates lead to skill attrition, depreciated human capital, outward migration of skilled labor, and an increase in social and political resistance to reforms. Long-term youth unemployment can even erode social cohesion and institutions.
IMF stated that youth unemployment is more sensitive to economic growth than adult unemployment. The sensitivity may be due to the concentration of youth unemployment in cyclically sensitive industries, such as manufacturing, wholesale and retail trade, hotels and restaurants, and SMEs, which employ a big share of the labor force.
Growth alone may not solve the problem, thus IMF recommended a structural labor market reform.
Diversifying the economy, supporting entrepreneurship, attracting more foreign direct investments, and developing private sector growth are also critical, IMF said.
Brunei should also focus on improving the flexibility of labor market, streamlining the public sector, scaling up quality training programs, and reducing skill mismatches, IMF added.