August 13, 2023

Youth Unemployment and Growing NEET Segment

Sanjay Roy

HIGH unemployment rates among youth in the past three decades have been a major concern in India’s labour market. Although unemployment rate among youth has increased during the pandemic and the rate of absorption during recovery continues to be low compared to other age groups, but it is not only related to the pandemic. In fact, for the age group 15-24, the ratio of employed people within the age group was quite high in the nineties which declined in the first two decades of the new millennium and stands at 23.2 per cent in 2020. The low labour force participation rate among the youth is also because of high unemployment rates which discourage workers to express interest in the labour market.

The other worry is the discouraging effect of labour market towards the educated youth. General unemployment rate used to be lowest among people who have very little education because they are mostly absorbed in low skilled jobs and hardly do they have an option to wait for better jobs. Unemployment levels used to be higher for people having middle levels of education since they might not be interested to undertake low skilled work involving hard labour but also not adequately qualified for skilled work. People with higher levels of skills and education have greater mobility and greater opportunities to be absorbed in skill intensive works and hence unemployment rate falls with higher educational attainments.

In case of India surprisingly it has not been the case. Unemployment rate for graduates and above had been 35.7 per cent in 2019-20 and for technical graduates it was 39.1 per cent. In 2021-22 unemployment rate for people with education between 10-12th standard was 10.4 per cent and for those having no education was 1.8 per cent. Unemployment increasing for people with higher educational attainments simply means that the economy has not evolved in a manner to employ more skilled people. This may be reflected by increased out-migration of people often seen as ‘brain drain’ for a small minority of highly skilled population and also may lead to a rise of the segment of youth who are neither employed nor in education or training (NEET). This increases because there are not enough jobs to absorb people and at the same time not enough incentives to acquire education.


One of the major arguments often advanced in the context of the US labour market is that the rise in the supply of educated people would actually incentivise skill-complementary technology changes in the production process that in turn increases the demand for skilled workers and hence the skill premium also increases. But in case of developing countries such as India where the unemployment rate is high for skilled workers, the outcomes of increased use of technology requiring higher skills, either because of global competition or due to availability of skills, may not lead to a similar virtuous path of growing demand for skills and consequently higher skill premium for educated youth.

In fact, because of deficient demand in general, the demand for skills as well might not be growing at a pace that can push up the prices for skill. In that case beyond a point people may not be interested to pursue education as it does not fetch a higher return. As a result, the possibility of the number of people neither being employed and nor in education or training (NEET) increases. True, that globally this segment of people within the youth has expanded in the recent past which is primarily being attributed to the pandemic but in case of India and might be for other developing countries there are structural reasons for such a rise. The problem can be both from the demand and supply side mutually constituting each other. It may be because the current growth path being exclusionary in nature and since it does not depend on a wider base of demand both in terms of quantity and quality it could not generate enough demand for skills in the job market.

The other possibility but of course a related one is a shift towards a technology path which involves deskilling so as to take advantage of the vast reserve army of unskilled workers. In other words, the production process seeks competitive advantage by lowering labour cost and specialises in those phases of production that requires less skills. This also creates a mismatch between the skill sets required and skills acquired through training. The drivers of growth and the nature of production determines the profile of skills required and if it is the case that the more people are educated the less they have a chance of getting jobs commensurate to their acquired skills, there is enough reason to believe that our competitive economic operations both in domestic and global markets are not being upgraded to higher skill demanding activities. It need not be the case always that use of higher technology would be demanding higher skills. Instead through internalising human skills within machines capitalism takes recourse to deskilling labour in order to exercise greater control over the labour process.


A survey conducted by NSSO (78th round) of household members of age 3-35 provides figures for different age groups between 15-35 who are undergoing any sort of formal or informal education during the last 12 months. The all India figures suggest that among rural males within age 15-24, 48.8 per cent are into some kind of formal or informal education or training. In the urban areas this percentage is 56.3 per cent. For females the respective shares for rural have been 40.9 per cent and for urban 54.1 per cent.

The rise in female enrolment in education has been one of the encouraging facts in India’s labour market in the recent past. But if we widen the age group to 15-35, the share of males involved in any education or training falls to 28.3 per cent and 31.2 per cent respectively for rural and urban segments. In the case of females also the share drops to 22.7 per cent and 27.9 per cent for rural and urban segments respectively. This particularly indicates the fact that very little share among the age group 15-35 pursue education beyond 24 years of age.

The decline in the share of young people involved in education and training as age increases has been true for all states but within 15-24 age group of males the highest percentage involved in any kind of education and training has been recorded in the case of Chandigarh followed by Manipur and Kerala. For females also among the major states, Kerala ranks first and considering all states and UTs the sequence remains same as for males. Considering all persons within that particular age group, states that record a lower share than all India average are West Bengal, Jharkhand, Uttar Pradesh, Madhya Pradesh, Odisha, Gujarat and Assam. The decline in the share of people undertaking education and training at higher ages falls drastically for all states which might be reflective of the fact that there is no incentive to acquire education and skills as those do not increase the probability of getting jobs.

It is quite alarming that the percentage of youth between the age group 15-24 years who are neither undertaking education or training nor being employed (NEET) is as high as 29.3 per cent which increases to 32.9 per cent if we widen the age bracket to 15-29. This simply shows that a large proportion of young people is neither being employed nor undertaking any education or training because they do not see much hope in the job market. The survey underlines that among males in the NEET group, 63 per cent in rural areas and 70 per cent in urban areas are seeking or are available for work but not getting work. But for females, the situation is even worse. Roughly 92 per cent of females within the NEET group in the age of 15-29 in rural areas are attending domestic duties and only 4.2 per cent are seeking or are available for work. In urban areas, within female NEET group those involved in domestic duties account for 85 per cent and those available for job is 10.4 per cent.

This basically indicates the dismal picture of youth unemployment in general, high unemployment rates among educated youth and the growing frustration among them reflected through high proportion of NEET segment and furthermore the way patriarchy pushes females out of the labour market and confines them once again into domestic work taking advantage of the depressing job market.