Unpacking India’s Unique Employment Challenge: A Deep Dive into the NEET Phenomenon and Labour Market Dynamics

India, home to the world’s largest youth population, faces a distinct challenge in its employment landscape.

Despite its demographic advantage, the country grapples with high unemployment rates, particularly among its youth.

However, a lesser-known aspect of this challenge is the significant portion of young people classified as NEET – Not in Education, Employment, or Training.

As of 2022, a staggering 103.4 million youth in India, representing one-third of the youth population, find themselves in the NEET category, as revealed in the India Employment Report 2024 jointly released by the International Labour Organization (ILO) and the Institute for Human Development.

This demographic segment poses a critical concern as many may never enter the job market, exacerbating India’s unemployment crisis.

Of the NEET population, women constitute a substantial majority, with 84.9 million falling into this category compared to 18.5 million men.

The prevalence of NEET status is notably higher among youth aged 25-29 and 20-24, underscoring the urgency of addressing this issue to harness India’s demographic dividend.

Moreover, India’s employment landscape showcases a worrying trend of declining labour force participation rates (LFPR) among youth, particularly females.

Despite robust economic growth, employment generation has not kept pace, resulting in a mismatch between the growing workforce and available opportunities.

The situation is compounded by a structural transformation in the labour market, with a notable shift away from agriculture towards non-farm sectors such as construction and services.

While the services sector has seen significant growth, employment elasticity remains low, indicating a disconnect between economic expansion and job creation.

India’s labour market is characterized by a significant informal sector, where the majority of workers are informally employed.

Although the formal sector has shown some growth, informal employment remains pervasive, highlighting the need for policies to formalize the workforce.

Addressing the NEET phenomenon and revitalizing the labour market are imperative for India to unlock its demographic dividend and sustain economic growth.

Failure to do so risks squandering the country’s youth potential and perpetuating its unemployment crisis.

As India stands at a critical juncture, concerted efforts are needed to equip its youth with skills, create employment opportunities, and promote inclusive growth.