ONE in six young people will be out of work within five years, a new report is set to predict, as experts warn “it’s less a lost generation and more a betrayed one”.
The number of 16 to 24-year-olds out of work, education or training (NEET) is set to rise to 1.25 million by 2031 unless “urgent” action is taken, a major review set to be released this morning will warn.
The education, health and welfare systems are “no longer fit for purpose” in preparing young people for adult life, said its author, former minister Alan Milburn.
“We are at risk of a lost generation” and the “first rung of the career ladder has thinned” and that for “too many young people it is now simply out of reach”, Milburn is set to say in a speech later.
He is set to say: “That places them in a hopeless catch-22 where employers ask for work experience but the opportunities for young people to gain it have narrowed or gone.”
Latest figures show the unemployment rate for 16 to 24-year-olds is 16.2%, the highest since 2014, and more than three times the rate of 5% for the wider population.
Experts said businesses are cutting back their staff, especially young people, and that is showing in the figures. AI means there is less entry-level jobs and Labour need to find a solution.
We risk losing a generation of talent
Lukas Kaminskis, CEO of edtech platform Turing College, said: “The rise in young people falling out of work and education should be treated as a skills emergency, not simply a labour market issue. We’re seeing a growing disconnect between what traditional education pathways provide and what employers increasingly need – particularly in fast-growing, digital-first sectors where practical, job-ready skills matter as much as qualifications.
“At the same time, many young people are understandably disengaged from conventional routes that feel expensive, slow-moving or disconnected from real employment outcomes. What’s needed is a stronger focus on flexible, skills-based learning models that allow people to build relevant capabilities quickly, gain hands-on experience and see a clearer line between education and employment.
“The challenge for policymakers and employers is not just creating jobs, but rebuilding confidence that there are accessible pathways into meaningful careers. If we fail to close the gap between education and employability, we risk losing a generation of talent at exactly the moment the UK economy needs digital and analytical skills most.”
Kate Underwood, Founder & Chief People Strategist at Southampton-based Kate Underwood HR and Training, said this is a huge issue.
She added: “Behind every statistic in this report is a teenager checking their phone for a job reply that isn’t coming. A ‘lost generation’ isn’t just a soundbite; it’s someone’s child, sitting at the kitchen table, slowly losing belief in themselves.
“I get it from both sides. Small business owners would love to take a chance on young talent, but between NI hikes, rising wages and shrinking margins, they’re barely keeping the lights on. You can’t hand-hold a 17-year-old through their first job when you’re doing payroll at midnight. And we keep asking young people to gain experience that nobody will give them. It’s the cruellest catch-22 going.
“This is where charities like Safe New Futures step in, doing the unglamorous, patient work of helping young people find their feet when school, the system, and sometimes home have all let them down. They shouldn’t be filling a gap this big alone, but thank god they’re filling it at all.”
Government policy has clearly stacked the deck against young people
Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, blamed Labour.
He added: “Government policy has clearly stacked the deck against young people. With employer national insurance and increased minimum wage, employers are hiring less as demonstrated by falling vacancy numbers.
“Where companies do look to hire – young inexperienced staff are no longer the cost saving chance worth taking when older experienced workers can be had for similar cost. It’s less a lost generation and more a betrayed one.”
Colette Mason, AI Ethics Consultant at London-based Clever Clogs AI, said the recruitment process is “broken and punitive” due to the use of AI.
She added: “Yet again we have another report from the government and no change. The recruitment process isn’t just broken, it’s broken and punitive. Cover letters go into AI screening tools that score keywords, not people. AI interviewers have replaced humans. There’s no callback, just an assumption you’ve been tossed in the sin bin. What an unfair soul crushing mincing machine they have to battle against.
“Every entry level hire costs more before they’ve done a day’s work. The tax maths snuffs out their traditional roles. It is no surprise that this month US graduates booed wealthy CEOs extolling AI and telling them to ’embrace the disruption’.
“Governments globally will need to tax the companies deploying AI that eliminates entry level roles. Use the revenue to subsidise junior hires in small businesses, the ones who’d train someone if they could afford to. This is now a problem the tech industry created and its CEOs drive relentlessly. The job-slaying rhetoric must stop and compassion begin.”
The recruitment process isn’t just broken, it’s broken and punitive
Katrina Young, AI & Digital Transformation Strategist at KYC Digital, said AI is absorbing jobs.
She added: “The warning is serious, but the deeper issue is structural. The entry-level work young people once used to gain experience is increasingly being automated or absorbed by AI tooling. The catch-22 Milburn describes is no longer temporary. Inside organisations, firms deploy AI to handle the routine tasks that used to be a junior’s first job.
“Short-term efficiency may improve, but the training ground disappears with it. You cannot build a senior workforce if you quietly remove the rung people climbed to get there. The real risk is not youth unemployment alone. It is a future capability gap, where experienced workers retire with too few trained successors behind them.
“The fix is not more work-experience schemes after the fact. It is rebuilding entry-level roles around human-plus-AI work, where juniors learn through supervision, validation and operational oversight rather than competing directly with automation.”
Rob Mansfield, Independent Financial Advisor at Tonbridge-based Rootes Wealth Management, said the government needs to solve this.
He added: “It’s always been difficult to get started as companies look for experience to reduce the risk of hiring someone unsuitable but with increased payroll taxes and the allure of AI being able to automate some entry level jobs, it’s only set to get harder.
“The government should look at ways of reducing the cost of employing people and giving them a chance to shine. Taxing employment then using some of that money to fund job schemes feels like a circular waste.”
An overhaul is desperately needed
Debbie Porter, Managing Director at Bakewell-based Destination Digital Marketing, said an overhaul is needed.
She added: “As the mother of a high-IQ, SEN child who is a NEET, I would say that an overhaul is desperately needed. He has been snookered into this position by the Education system. My son has dyscalculia, which means he has a fundamental inability to understand numbers, yet grade 4 in GCSE maths remains a mandatory bar for his ‘first steps’ progression in life.
“It is a bar over which he will never be able to climb. The mandatory requirement to stay in education post-16 has been torturous. Further education requires a mandatory GCSE maths pass, meaning most courses wouldn’t accept him, closing down his options. Apprenticeships require mandatory maths to gain the qualification, and many jobs advertise with mandatory maths GCSE passes too.
“If he had a physical disability, he wouldn’t be required to perform a task that his disability made impossible. We would say that was cruel. And as a barrier to entry, we might also say that it’s a contravention of the Equality Act 2010.”
