Britain is slipping down the global league table for youth employment amid a dramatic rise in worklessness that is putting a generation’s future at risk, research has warned.
Sounding the alarm over a worsening youth jobs crisis, the report from the accountancy firm PwC said Britain’s economy was missing out on £26bn a year because of sharp regional divisions in youth joblessness.
In its annual youth employment index, it said the UK was falling behind other advanced economies amid a deterioration in the youth jobs rate to a 10-year low while other comparable nations were making progress.
Out of the 38 nations in the Organisation for Economic Co-operation and Development (OECD), it said the UK had dropped four places from a year earlier to 27, losing ground to countries including Mexico, France and Estonia.
Ministers are growing increasingly alarmed over the youth jobs market as the number of 16- to 24-year-olds who are not in education, employment or training (Neet) has climbed to almost a million.
Labour has announced plans to tackle the crisis through a raft of policy measures, including a “youth guarantee” of a six-month paid work placement for every eligible 18- to 21-year-old who has been on universal credit and looking for work for 18 months.
Pat McFadden, the work and pensions secretary, announced on Sunday that 350,000 new training or workplace opportunities would be offered to young people on universal credit, but added there would be “sanctions” for claimants who did not engage.
However, business leaders have said that tax rises, a higher minimum wage, and the government’s employment rights bill is driving up the cost of hiring young people – putting them at risk of being priced out of work.
Clare Lombardelli, a deputy Bank of England governor, said this week she was increasingly worried about the outlook. “There is striking data about what is going on with young people,” she told MPs on the Commons Treasury committee on Tuesday. “I am afraid it is not a rosy picture for the UK.”
Official figures show youth unemployment has increased from 14.8% a year ago to 15.3%, the highest level outside the Covid pandemic since 2015, and more than three times the headline jobless rate for people over the age of 16. Long-term youth joblessness is also at a decade high.
Guardian analysis last month showed almost half of all jobs that have been lost from company payrolls since Labour came to power are from those under the age of 25.
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PwC said that reversing the trend could boost the economy. If the UK regions with the highest Neet rates were able to narrow the gap with Northern Ireland, which at 9% has the lowest rate, it estimated this could add £13bn to UK GDP. Closing the gap entirely would add up to £26bn.
It said London and Scotland had the most to gain, reflecting the large number of young people classified as Neet in these areas, where as many as 15% and 16% of all 16- to 24-year-olds are neither working or learning.
Marco Amitrano, the senior partner at PwC UK, said: “A generation’s future is at risk – as is the UK’s productivity and prosperity. Given the UK’s sliding performance on youth employment, a serious gear-change is needed.”
The government was approached for comment.