Fiscal austerity under the neoliberal paradigm has worsened youth unemployment worldwide. Critically examine, and suggest lessons for India's demographic dividend.

Global youth unemployment (ages 15–24) rose to 12.4% in 2025, about 67 million young people. One in five young people is now NEET (not in employment, education or training) [1]. Fiscal austerity, a core neoliberal tool, has clearly hurt young job-seekers. Calling it the sole cause, however, overstates the case.

How austerity has worsened youth unemployment

• Job losses from cuts: IMF economists found that a fiscal consolidation of 1% of GDP raises long-term unemployment by about 0.6 percentage points [2].
• Last in, first out: new entrants have the weakest job protection. Hiring freezes in schools and public services therefore hit the young first.
• Weak demand: falling real wages reduce consumption and investment, which shrinks openings for fresh graduates.
• Wider exclusion: the NEET rate for young women (27.4%) is more than double that for young men (13.1%) [1].

Limits of the claim

• Same model, better years: youth unemployment hit a two-decade low of 12.3% in 2023 under the same policy model [1].
• Regional drivers: the worst rates are in the Arab States (26.2%) and Northern Africa (22.6%) [1]. There, conflict and demographics matter as much as fiscal policy.
• Necessity: the IMF accepts that some debt-stressed economies had little choice once markets stopped lending to them [2].

Lessons for India's demographic dividend

• Measure exclusion, not just joblessness: PLFS puts youth (15–29) unemployment at 9.9% in 2025, and 13.6% in urban areas [3]. Yet India's youth NEET rate was 24.7% in 2024, among the highest in the G20 [4]. MoSPI should publish NEET alongside unemployment.
• Smart consolidation: India should meet its FRBM deficit targets without cutting education and skilling budgets.
• Fix skill mismatch: educated youth face the highest unemployment [5]. Skill India and the NEP 2020 vocational tracks should be aligned with manufacturing jobs.
• Fund guarantees fully: Europe's Youth Guarantee was well designed but had a €7.3 billion funding gap [6]. Schemes like the PM Internship Scheme need assured budgets.

In sum, austerity has worsened youth distress, but alongside regional, demographic and skill factors. India's lesson is not to abandon fiscal prudence but to make it youth-friendly. Protecting human capital will let the demographic dividend deliver SDG 8's promise of decent work for all.