DAHL Blog

You may have heard of the new buzzword “NEET,” which stands for not in employment, education, or training.  This group of young individuals are not actively pursuing a career, nor attempting to develop employable skills. This growing trend has raised concerns about the future of the workforce and the factors that contribute to young adults opting out of traditional career paths. Dahl Consulting (DAHL) offers employment industry insights to keep our valued partners up-to-date with the latest news. In this article, you’ll discover more about the driving forces behind NEETs and what can be done to mitigate this troublesome trend.

Who are NEETs?

NEETs are defined as 15 to 24-year-olds not currently in employment, education, or training. A report conducted by the International Labour Organization (ILO), suggests that COVID-19 employment recovery has not been universal. In 2023, 21.7% of young people were considered NEETs. Of this group, two-thirds of them were women. Lower and middle-class individuals are also impacted more severely. The same study from the ILO found that even for young workers who are employed, many of them are not progressing in their careers due to a struggle to find advancement opportunities. Others are opting into the gig economy instead of a more traditional work setting. Because this group represents a large portion of the workforce population, understanding and addressing this category of people is crucial to avoid larger impacts on the broader issue of labor market disengagement.

Why are young people “opting out” of the workforce?

Several factors are contributing to the increasing number of NEETs choosing to stay outside of the workforce. These include economic challenges, mental health struggles, and a shifting job market. Let’s dive deeper into these factors:

What are the influencing factors for NEETs?

Economic Challenges and Barriers Economic instability and the rising cost of living have made it harder for young people to secure stable jobs. In a Moneywise analysis of Bureau of Labor Statistics, Federal Housing Agency, and Redfin data, in the past 5 years, 97% of job salaries have not kept up with inflation, and it is likely that this trend will continue. This is discouraging especially for entry-level positions that offer wages that are insufficient to cover basic needs, leading young adults to either delay entering the workforce or pursue alternative paths like temporary work or gig jobs. Financial barriers also exist for training and education. The cost of these resources is often cost-prohibitive for a large portion of young people. College tuition inflation, for example, has averaged an increase of 3.63% each year for the past decade. Even more shockingly, after adjusting for inflation, college tuition has increased by nearly 200% since 1963. With wages not increasing to match this rate of inflation, many young people are not able to afford college or secondary education, especially if they are financially supporting themselves in this investment. Job Market Challenges The modern job market is highly competitive, especially for young adults. There are limited opportunities for entry-level positions, leaving those entering the workforce for the first time at a loss. In fact, in May 2024, the unemployment rate for young workers (age 20-24) hit an all-time high since August of 2021. High unemployment rates coupled with falling labor force participation are unique to this age group compared to others. This also points to signs of moderation in the broader labor market. Issues with Entry-Level Opportunities The lack of sufficient entry-level positions forces many young adults into prolonged job searches or alternative career paths, perpetuating the NEET trend. A recent survey by Intelligent, an online magazine about student life, found that nearly 40% of employers avoid hiring recent graduates. Additionally, employers increasingly expect candidates to have multiple years of experience, leaving many young people in a catch-22 situation where they cannot gain experience because they cannot get hired. This trend of  “experience inflation ” is making it harder for young workers to find jobs in which they are qualified. A large majority (80%) of workers agree that entry-level jobs should not require more than two years of experience, and requiring more than this leads to high levels of frustration for entry-level job seekers. At the same time, this can make it harder for employers to fill open entry-level jobs, so this creates problems for companies and job seekers alike. Mental Health Concerns Mental health issues, including anxiety, depression, and burnout, have been rising among young adults. For Gen Z and younger millennials, many are inundated by stress that is exacerbated by financial pressure and isolation. The expectation to perform academically, secure a well-paying job, and navigate the uncertainties of adulthood has left many feeling overwhelmed, contributing to their decision to avoid the workforce. The perception that young workers are “just lazy” is harmful and fails to account for the alarming mental health decline that has been occurring for this age group. In a recent survey of NEETs, a quarter of respondents cited mental health as the reason they were unable to work, with 21% stating that their mental health suffered more in the previous year. Shifting Preferences: Gig Jobs, Temp Jobs, and Self-Employment Many young people are opting for gig work, temporary jobs, or self-employment instead of traditional nine-to-five positions. The flexibility and independence that these options offer are appealing, but this also means that there are fewer young people involved in the “traditional” workforce that may offer more stability. This trend is especially notable for Gen Z, who are choosing to not participate in a corporate nine-to-five but are instead embracing freelance work. This does not mean that they are not doing “real work” either, many are building personal portfolios and seeking jobs in specialized areas that pique their interest. This may include technical writing, programming, and more.

What do predictions say about NEETs, and what can be done?

Trends indicate that the NEET population is growing worldwide and shows no sign of reversing in the near future. The impact of economic instability, coupled with the pressures of modern society, has led many young people to remain disengaged from the workforce for extended periods. This disengagement not only affects the individuals themselves but also has broader economic and social consequences. However, just because this trend is projected to continue growing does not mean that all hope is lost. Here are a few ways that employers can create positive progress for young people’s participation in the workforce:

What can employers do to help NEETs?

• Hire for internships and entry-level positions: As previously mentioned, entry-level jobs requiring 2 or fewer years of experience are hard to come by in the current market. Offering these positions creates an opportunity to grow your workforce and attract talent with high potential.
• Offer benefits for mental health: Recent surveys have found that young workers value and utilize mental health benefits more than older, more experienced workers. Connecting with the next generation of workers by providing benefits that they care about is key to mitigating the NEET trend.
• Embrace flexible work arrangements: Offering flexible work arrangements, whether it be offering hybrid/remote work or flex hours is one of the best ways to draw young talent to your organization. Not only does this have the potential to engage NEETs who have opted for self-employment or gig work, but it also is an attractive differentiator in comparison to your competitors.
• Provide career pathing and growth opportunities: While entry-level roles obviously offer less compensation, providing a track for career progression can give hope to young, disengaged workers who are concerned about financial well-being in the long term. The idea that they will have the opportunity to earn more if they perform well can help to remove pessimism or misconceptions about entering the workforce.
• Partner with a staffing agency: Partnering with a staffing agency can help you to identify promising and driven young workers for your entry-level positions. Staffing firms can identify candidates’ transferable skills, traits, and career goals to create a great match that aligns with your company’s culture and preferences.

By understanding the reasons behind the rise of NEETs and implementing practical solutions, we can begin to reverse this concerning trend and create a more inclusive, supportive workforce for the future. Whether you’re looking to find work or hire talent, DAHL can help. Not only do we offer insights into the latest trends, but we also offer comprehensive employment solutions. Get connected with one of our experts today to get started!