The other ‘NEET’ that India needs to address

Why in the News

Fresh Periodic Labour Force Survey (PLFS) data on the Usual Employment and Unemployment Rate shows nearly 40 percent of Indian graduates aged 25 are unemployed, alongside an estimated 9.2 crore Indian youth falling into the Not in Employment, Education or Training (NEET) category. The State of Working India 2026 report situates this alongside India’s demographic dividend, the working-age population bulge the country has counted on as a growth advantage. A youth cohort large enough to drive growth is instead showing a graduate unemployment rate high enough to raise doubts about whether that dividend is being converted into productive work.

What does the NEET measure capture that the unemployment rate does not?

1. NEET counts withdrawal, not just joblessness: The unemployment rate only counts people actively seeking work; NEET (Not in Employment, Education or Training) also captures young people who have stopped searching or never entered education or the labour force, a group the standard unemployment rate misses entirely.
2. 9.2 crore youth estimated in the NEET category: The State of Working India 2026 report’s estimate of 9.2 crore places the scale of youth disengagement well above what headline unemployment figures alone would suggest.
3. Graduate unemployment concentrated among the young: Nearly 40 percent of 25-year-old graduates are unemployed, a rate far higher than unemployment among the working-age population as a whole, showing that a degree has not translated into a job for this cohort at the pace the labour market absorbs less-educated job seekers.
4. Gender skew within the NEET population: Young women make up a disproportionate share of the NEET category, reflecting caregiving responsibilities and mobility constraints that keep them out of both education and paid work even when jobs exist locally.

Why does graduate unemployment run higher than overall unemployment?

1. Skill mismatch between degrees and job requirements: Employers report that a large share of graduates are not employable in the roles the formal sector is creating, because curricula have not kept pace with industry requirements.
2. Weak absorption capacity in manufacturing: Manufacturing’s share of GDP has stayed well below the level needed to absorb a growing pool of educated job seekers into formal, better-paid work, pushing graduates toward informal or underemployed roles instead.
3. Aspirational mismatch with available jobs: A graduate degree raises the reservation wage and the kind of work a job seeker will accept, so graduates wait longer for a suitable formal-sector opening rather than take the informal work a non-graduate would accept immediately.
4. Delayed labour market entry compounds the count: Prolonged job searches by graduates keep them in the unemployed count for longer than less-educated job seekers, who exit into informal work faster even at lower wages.

Conclusion

The NEET count of 9.2 crore and the near-40 percent graduate unemployment rate among 25-year-olds point to a mismatch between what India’s education system produces and what its labour market currently absorbs. Closing that gap over the remaining years of India’s demographic dividend, rather than after it starts to narrow, is the reform window the data points to.

Back2Basics: Periodic Labour Force Survey

1. Conducted by the National Sample Survey Office (NSSO) under the Ministry of Statistics and Programme Implementation, the principal source of employment and unemployment data in India.
2. Uses the Usual Status approach, based on a person’s activity over the preceding 365 days, alongside the Current Weekly Status approach for more recent snapshots.
3. Was redesigned to provide quarterly urban estimates in addition to the earlier annual survey, though rural high-frequency coverage remains thinner.
4. Feeds the official Unemployment Rate and Worker Population Ratio figures cited in Parliament and used for policy design.

Matching Previous Year Question

“[2023, GS3, 15 marks] Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements.”