The future is now: Central America's growing NEET challenge

29 of June 2023
Mauren esquivel

With an alarming 24.45% of the young population in Central America identified as NINI, or young people who neither study nor work, the region jeopardizes its future. This figure is higher than the world average of 22.23% and the average of OECD countries that have 11.12% of the young population in this condition.

July 2023

Jaime García, Project Director of the CLACDS/INCAE Social Progress Index

In a world that is advancing at the speed of the fourth industrial revolution, where digital technology promises a disruptive social and economic future; The region faces an urgent challenge that, if not addressed urgently, could limit its ability to generate prosperity. This challenge is the growing percentage of youth without employment, education or training, known as the NEET group.

To fully understand the severity of this problem, let's go to the numbers that the International Labor Organization publishes. In the Northern Triangle, in Guatemala, the percentage of young people who neither study nor work increased from 24.67% in 2011 to an alarming 31.66% in 2022. The same as Honduras, which has maintained a constant increase in its rates, jumping from 26.53% in 2011 to 31.96% in 2022. Only El Salvador saw its NEET percentage reduced from 28.93% in 2011 to 26.74% in 2022; and although it shows a downward trend in the last year, it still maintains levels above the Latin American average.

In the rest of the region, the phenomenon has remained stable and below the Latin American average. Costa Rica, although with a period of fluctuation, is at 20.16% in 2022. Panama has had a slight reduction in the percentage of young people who neither study nor work, going from 20.08% in 2011 to 18.74% in 2022 Although both countries show a growing trend as a result of the pandemic crisis. In the case of Nicaragua, there is not enough data to analyze.

The magnitude of these data becomes clearer when we compare them with more prosperous economies. For example, North America registered a share of 17.93% in 2022, while the OECD average stood at 11.12%. This comparison serves to emphasize the critical need for action in the region. Particularly if we consider the negative effects associated with a young population that does not produce or educate itself.

A substantial group of young people neither in school nor in work implies untapped potential that could otherwise be contributing to innovation and productivity. A high NEET rate generates significant economic losses in terms of contributions to the Gross Domestic Product (GDP) and higher social assistance expenses for a poorer population.

Figure 1. Young people who neither study nor work as a percentage of the total number of young people (15 to 24 years).

Source: International Labor Organization, ILOSTAT.

In terms of well-being, people in the NEET category often face mental and physical health problems due to unemployment and lack of educational engagement. Also, socially, social unrest is magnified; as high levels of widespread frustration and disillusionment foster feelings of marginalization, increasing the risk of social instability.

But despite the bleak scenario, the good news is that it's not an insurmountable challenge. Of course, comprehensive policies are required that cover education, employment, social protection and, above all, inclusion. Addressing the various challenges and barriers faced by women, indigenous communities and other marginalized groups that often make up a large part of the NEET population.

And like any complex problem, multisectoral alliances are required, where the private sector and the education sector can prioritize the development and implementation of vocational training programs, solid career guidance services, and flexible educational opportunities that align with the needs of the labor market. ; and that facilitate the transition from education to employment.

The future is now and the challenge is no less, because in a world that is advancing towards a tomorrow of Artificial Intelligence and exponential technologies, the correct human capital will be the key to attracting investment, increasing consumption, improving productivity; in short, generate sustained economic growth. In this sense, it must be clear that it will not be possible to aspire to a prosperous, modern region with high levels of social progress, if young people are not prepared for that future.