There has been an alarming feature of labour market dynamics in developing countries. There is a substantial size of youth population in the age bracket of 15-24, who are not acquiring human capital through education and training for their future and also are not engaged in any job. A measure that adequately captures this phenomenon is called 'Not in Employment, Education or Training' (NEET) as a percentage of the population of the reference age bracket.
Being not involved in employment or any other kind of skill development initiatives not only possesses a waste of potential youth resources, it also bears adverse consequences on the economy and the society as a whole. Being NEET, the youth population suffers from skill atrophy, which leads them to further long-term unemployment and underemployment. It also induces them to crimes, and mental and physical health issues. A high NEET rate among females can have a trans-generational impact over the next of generation of females and their decisions regarding employment and education.
Latest available data (from ILOSTAT and different labour force surveys) between 2008 and 2015 of the NEET rates for 123 countries for the age group of 15-24, suggests that majority of the top 25 countries (in terms of lowest NEET rates) are from the OECD (the Organisation for Economic Co-operation and Development) countries or from the East and Southeast Asian countries. The South Asian countries stand at the bottom of the ranking with very high NEET rates. Most of the South Asian countries have NEET rates well above 20 per cent mark. In 2013, Bangladesh had a NEET rate of 20.2 per cent. The NEET rate of Nepal in 2008 was 23.4 per cent. In 2012, the NEET rate of India was 27.5 per cent. In 2014, Sri Lanka had a NEET rate of 27.7 per cent. In 2015, the corresponding figure for Pakistan was 30.4 per cent. Finally, in 2010, the Maldives had a NEET rate of 56.4 per cent. Among the Southeast Asian countries, in 2015 Malaysia had a very low NEET rate of only 1.2 per cent. Apart from Myanmar (18.6 per cent), the Philippines (22.7 per cent) and Indonesia (24.8 per cent), all other Southeast Asian countries have a NEET rate of around or less than 12 per cent.
A gender disparity is quite evident in the NEET rate almost everywhere as the world average of NEET rate for females (21.2 per cent) has been found as 1.5 times higher than that of males (14 per cent). However, this gender disparity in the NEET rate is one of the highest in South Asia with the only exception of Nepal where the female NEET rate is 24.4 per cent compared to the male NEET rate of 22.2 per cent. The disparity is highest in Pakistan where the female NEET rate (53.6 per cent) is 7.2 times higher than the male NEET rate (7.4 per cent), which is followed by India (female 49.3 per cent and male 8 per cent), Bangladesh (female 30.7 per cent and male 8.8 per cent), the Maldives (female 77.4 per cent and male 32.9 per cent), and Sri Lanka (female 37.3 per cent and male 17.5 per cent). In contrast, the disparity in the NEET rates between males and females remain in proximity for the Southeast Asian countries. The ratio of female to male NEET rates remains below 2.3 for all of the Southeast Asian countries with Indonesia scoring highest female NEET rates (about 31.4 per cent). As a whole, South Asia's average female NEET rate stands at an alarmingly high rate of 45.5 per cent compared to Southeast Asia's 18.8 per cent. Nevertheless, the average male NEET rate in South Asia (16 per cent) is at par with those of Southeast Asia's (14.8 per cent) and the rest of the world (14 per cent), which depicts that NEET in South Asia is quite persistently a female phenomenon.
WHY DOES NEET OCCUR? Empirical studies have shown that although poor educational achievement is a major factor for entering NEET, factors like parental interest in girls' education, place of dwelling, disability, low household income, lower level of parental education, teenage motherhood, etc are the other notable impeding factors for the youth to be engaged in employment, education or training. In South Asia, being a female possesses a higher risk to be in NEET. Among other potential causes, the age-old traditions and strict religious beliefs, coupled with heavy female engagement in household chores, hinder women from entering the labour market or engage them to be in education and training as their age increases.
To explore the factors behind NEET in Bangladesh for the age group of 15-24, we have undertaken a micro-econometric analysis using the Labour Force Survey 2013 data. The dependent variable of the model is a dummy giving 1 if the individual is NEET and 0 otherwise. The explanatory variables of the model are the level of the education of the household-head, log of family income per month, female dummy, hours of work done in non-market activities per day (cooking, child rearing, etc.), dummy for dropout from school, physical disability dummy, etc. From the logit model estimation, we find that all the variables are statistically significant with expected signs. Results from average marginal effect suggest that being dropped out from school increases the probability to be in NEET by 19 percentage points compared to their counterparts. Also, being female increases the probability by 5 percentage points compared to males.
The level of education of the household-head also plays a crucial role as household-head with secondary education reduces the probability to be in NEET by 1.4 percentage points while a tertiary degree reduces it by 2.2 percentage points compared to the no-education category. The income of the household plays a significant and negative impact over being in NEET as a 10 per cent increase in the family income results in a decline in probability to be in NEET by 0.6 percentage points. Furthermore, an increase in work-hour in the household by an additional hour increases the chance to be in NEET by 6.7 percentage points. The regression also suggests that being physically disabled increases the probability to be in NEET by 44.4 percentage points compared to non-disabled persons.
A multifaceted initiative would be needed to address the challenges of NEET. Three broad set of measures should be taken. The first set of measures is related to education. Inappropriate and age-old curricula, mostly distant from labour market relevancies widely followed in South Asia, in fact, widens the skill mismatch. Furthermore, the Vocational Education and Training (VET) system in South Asia, both in terms of training facilities and curricula, is not well equipped to comply with the modern dynamic labour market demands. On top of that, the young generation is rarely encouraged to opt for a vocational education and training. Therefore, along with improvements in curricula and quality of education, it is also imperative to engage a wider share of the youth in vocational education and training. The second set of measures is related to employment.
One of the biggest challenges for South Asia is to ensure larger female participation in the labour market. For ensuring an enhanced participation of females in the active labour market, it is necessary to elevate the female education rate in South Asia. However, that will not be sufficient if adequate social, political and policy reformations are not coupled with it. Creating a social reform in favour of working females, ensuring safety at workplace and enhancing females' active participation in politics are the most crucial cornerstones yet to be set. The third set of measures are related to the facilitation of a swift transition of the youth from school to work through internships, traineeships, and apprenticeships which will further foster their productivity and future employability.
Thus, through identification of logistical and practical barriers to youth engagement in education or employment, it is possible to absorb the new young entrants to the labour force into productive employment. The experience of East and Southeast Asian countries show that the export-led industrialisation, driven by those countries' rapid incorporation in the global value chain mixed with prior investments in education and VETs, generated a virtuous cycle of rising supply and demand for human capital. If proper policies are not undertaken in due time, the demographic dividend could easily turn into a burden in near future in South Asia.
Dr. Selim Raihan is Professor, Department of Economics, University of Dhaka & Executive Director, SANEM.
Mahtab Uddin, Lecturer, Department of Economics, University of Dhaka.
