Britain risks creating a “lost generation” of young people unless urgent action is taken to tackle rising youth worklessness, according to a major government commissioned review.
The report, led by former health secretary Alan Milburn, warns the number of 16 to 24 year olds not in education, employment or training, known as Neets, could rise by almost a third to 1.25 million by 2031, up from 957,000 today.
Official figures already show around one in eight young people are classed as Neet, but the review predicts that could increase to one in six within the next five years.
Mr Milburn is due to publish the findings of his review on Thursday, arguing that Britain’s education, health and welfare systems are failing to prepare young people for work and adult life.
In extracts released ahead of publication, he says the crisis is “not a failure of young people” but “a failure of a system stuck in the past”. He warns too many young people are being pushed towards long term benefit dependency rather than employment or training.
The report also highlights growing concerns about the state of the labour market for younger workers. Youth unemployment has risen to 16.2 per cent, its highest level in more than a decade and more than three times the wider unemployment rate.
Mr Milburn is expected to say “the first rung of the career ladder has thinned”, with fewer opportunities for young people to gain the experience employers increasingly demand.
Business groups and employers have warned that rising employment costs are making recruitment more difficult, particularly for entry level positions traditionally filled by younger workers.
Labour’s increases to employer National Insurance contributions and the national minimum wage have added to business costs at a time when many firms are already facing weak economic growth and falling demand.
Retail and hospitality businesses, which have historically provided many first jobs for young people, say they are under growing pressure. Vacancies across the hospitality sector have fallen significantly in recent years, while employers report greater competition for fewer available roles.
Some business leaders argue higher staffing costs could discourage firms from expanding recruitment or taking on inexperienced workers who require additional training and support.
The review also raises concerns about growing welfare spending. According to the findings, around £25 is spent on benefits for young people for every £1 invested in employment support programmes.
Pat McFadden, the Work and Pensions Secretary who commissioned the review, said the findings highlighted the scale of the challenge facing the Government. He said ministers were already taking steps to expand apprenticeships and encourage businesses to hire younger workers, but acknowledged “more needs to be done”.
Rain Newton-Smith, chief executive of the Confederation of British Industry, described the findings as “a tragic waste of potential”, while Stuart Machin, chief executive of Marks & Spencer, said entry level jobs had long helped young people build confidence and workplace skills.
A final report later this year is expected to set out recommendations aimed at reducing youth worklessness and improving pathways into employment and training.
