Future of youth Not in Employment, Education and Training (NEET) is not neat in India

Among the many facets of economy that the COVID pandemic upended, one is the labour income share, which caters to the larger section of society by measuring the total income earned by employed people by working. This, clubbed with the capital income, which is the income earned by employers, asset holders etc., makes the national income. The International Labour Organization (ILO) observes in their World Employment and Social Outlook: September 2024 Update, that global labour income share has been on a descent for a long time, aggravated by the pandemic a few years back, and now with the emergence of artificial intelligence-led transformations across sectors.

In their study spanning 36 countries, data shows technological advancements as key drivers of declines in the labour income share. The correlation between technological innovations such as artificial intelligence regulates the income share ratios. It has a significant bearing on the percentage of youth not in employment, education, or training (NEET). Although ILO observes a modest decline of 0.9 per cent in global youth NEET incidences, from 21.3 per cent in 2015 to 20.4 per cent in 2024, in country-wise distribution, it has greater implications.

ILO’s 2022 report highlighted the surge in digital economy with an estimated 6.4 million added jobs by 2030 for youths. In a likely scenario, such jobs will seek advanced levels of technical proficiency from the youths and centre around urban areas, shading an almost null for rural areas. In India, 29.1 per cent of youths with a graduate degree are unemployed (2024 reports) as opposed to 3.4 per cent unemployed youths who do not have a formal education – a significant nine times gap. On the other hand, young women with a graduate degree have a higher unemployment rate at 34.5 per cent than young men at 26.4 per cent even with same levels of qualifications.

The India Employment Report 2024 also notes that women constitute a significantly higher rate in the youth NEET category (48.4 per cent) than men (9.8 per cent). Most of the women cater to the out-of-labour force category and continue to be marginalized in labor income share. The overall trend of unemployment in India is higher among youths aged 25–29 at 39.1 per cent.

The youth NEET problem for India correlates to the inconsistency in higher education ratios. Although the educational profiles of youths are on a steady rise, a significant 42 per cent of youths record less than a secondary level of education. It makes the scenario grimmer with less educated youths not being able to absorb new skills to match technological advancements. The promises of the New Education Policy to focus more on vocational as well as technical education are brighter on paper than in implementation as the nation continues to struggle with a widening urban-rural divide and gender gap.

There is a concerning trend of skills mismatch among youths seeking employment on top of labor market segmentation and regional differences. With AI and automation taking charge, aligning only with traditional domains or streams of education may not sail the ship longer, as evident from the demand-skill gap. Youths with less practical knowledge on a core area may be less eligible for a job that has AI advantage. The labor market segmentation across social groups and gender makes it harder for the youths to get through the job market. The India

Employment Report 2024 affirms that the underdeveloped states in the eastern, northern and central regions lag behind the southern and western states in terms of decent employment conditions for youth workers. This puts the needle on the northeastern states as well where geographical oddities and technological challenges aggravate the job prospects for the youths. Even with the current trend of entrepreneurship growth in the northeastern states, the failing digital infrastructures and transport woes pull the pace of growth to a great extent.

Concentrated actions to upskill youths as per the demands of the evolving economy are the need of the hour. Efforts are to be expedited industry level as well to increase their involvement in trainings and digital infrastructure development. Although many higher educational institutes, including the IITs, IIMs, and IISc, have introduced various industry-first upskilling courses for youths and professionals, the awareness and rural reach are not at par. For the northeastern states, reforms in the traditional streams of education are also paramount as the regions grapple with challenges graver than most other states.