India has a unique jobs problem. That we are battling high unemployment and even have one of the world's steepest youth unemployment rates is well known. What's not in the spotlight though is that there's a large pool of youth that are neither seeking employment, nor pursuing education, nor in training, otherwise called as NEET (Not in Education, Employment, or Training).

Of the 371 million-odd youth, a staggering 103.4 million, or, one in every three youngsters fall under this category as on 2022, according to the India Employment Report 2024 -- a joint report by the International Labour Organization (ILO) and the Institute for Human Development -- released in March.

But what's not so neat about this is that, a significant number may never even enter the job market. And therein lies the crux of India's unemployment story.

Unless we address this, we may not be able to exploit our demographic advantage. India may well have the world's highest youth population, but their share in total population is already declining, and the ILO believes that a decade from now is India's last window of opportunity to get its act together.

Women and youth dominate

Of the 103.4 million in the NEET category, women account for a lion's share at 84.9 million, while men comprise 18.5 million. The women in the NEET category are almost five times more than their males counterparts at 48.4% and 9.8% and account for about 95% of the total in 2022. Among age groups, the rate for not in employment, education or training was much higher among youth aged 25–29 (39.1 per cent) and 20–24 (26.3 per cent) when compared to the younger cohort, aged 15–19 (12.1 per cent).

The majority of women under NEET fall into the out-of-labour force category as most of them engage in domestic duties, which also explains the low female Labour Force Participation Rate (LFPR). On the other hand, men in NEET fall into the unemployed category. Consequently, 17.9% of youth NEET were unemployed, and 82.1% were outside the labour force in 2022.

Historically, India ranks among the countries with highest number of youth under NEET, and it's one of the key reasons for our low growth rate in total workforce. According to OECD, young people who are neither in employment nor in education or training are at risk of becoming socially excluded -- individuals with income below the poverty-line and lacking the skills to improve their economic situation.

Big opportunity, but then the educated aren't finding jobs

Now is the time for India to capitalize on its growth story, relative to its demographic advantage of an increasing working-age population. The country is at an inflexion point because youth, at 27% of the total population or 371 million, is expected to decline to 23% by 2036. Each year, around 7–8 million persons are added to the labour force whose productive utilization could lead to India reaping a demographic dividend.

According to ILO estimates, the share of working-age population increased from 59% in 2011 to 63% in 2021 and may remain stable in next 15 years. Worryingly though, youth LFPR has been falling from 54% in 2000 to 42% in 2022, with the decline sharper among 15-19 age group compared to those under 20-24 and 25-29 age brackets.

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