Why the youth jobs crisis is really a skills mismatch

According to the latest ONS labour market data, youth unemployment has hit 14.7%. That means one in seven young people looking for work can’t find it – the highest rate in over a decade – and more than one in five unemployed young people aged 16-24 have now been out of work for over a year. Each of those figures is a young person trying to get a foothold in a job market that has arguably never been harder to enter.

Vacancies across the UK have fallen to 705,000, their lowest level outside the pandemic for eleven years, so it could be assumed there are just less roles available. But with young people struggling to find work and employers saying they can’t find the skills they need, there’s clearly a disconnect.

AI is changing the rules, not removing the jobs

AI often gets blamed for entry-level work drying up, but there’s a different truth behind that. AI isn’t removing the need for young workers altogether, but it is changing what employees are expected to do from day one.

The routine tasks that used to give a school leaver or new apprentice an easy way into a role, such as pulling reports together, summarising documents and entering data, are increasingly automated. What’s left needs good judgement, communication and the ability to work alongside the technology.

So, a first job is harder to get at a time when young people are least equipped to get one. An employer who once hired for potential and trained on the job now wants people who can contribute from week one. In a tight market, caution wins and young people lose out as they compete for roles designed around experience that they haven’t had the chance to build.

Where you live still decides your chances

The headline figures from the ONS hide a sharp divide between regions. London has the highest unemployment rate in the UK at 7.3%, and it has held that position all year. This is likely driven by fierce competition rather than the capital lacking jobs, as applicants from across the country are chasing the same roles.

But jobs exist outside of London too. Many employers are continuing to invest in regional teams and local hiring, keeping skills and opportunity spread across the UK rather than concentrated in one city. This is better for young people and for the businesses that depend on them.

A national skills strategy that treats the whole country as one job market will always miss out on talent. Training that helps a young person in one region may be the completely wrong training in another. FE providers understand their local economies better than any central body can. They know which firms are hiring, which sectors are growing, and what skills their local labour market actually values.

The real cost of leaving a generation waiting

The danger in all of this is a rising number of young people not in education, employment or training (NEET). Falling under NEET isn’t a short-term setback. The evidence is clear; a long spell out of work early in life drags down earnings, confidence and job prospects for years afterwards.

That’s why acting early beats fixing things later. Good careers advice, real work experience, and apprenticeships that are genuinely open to young people are what keeps them motivated to work while times are hard. They aren’t a cost to cut when budgets tighten. They’re often the only thing standing between a temporary slump and long-term damage to a generation’s job prospects.

What needs to happen now

Three things would make a real difference, and they can be acted on now:

For employers:

Employers shouldn’t stop their investment into young people. Pulling back on early-career recruitment feels safe, but it builds a skills shortage that will be far more expensive to fix when demand returns. A graduate hired and trained now costs less than a mid-career specialist recruited in two years’ time, when all competitors are placed in a saturated field. The businesses that keep training people through economic troughs, for example via structured entry routes, apprenticeships, and partnerships with local providers, are the ones that are successfully building for the future.

For education providers:

Providers should design training around the skills that AI is making more valuable, such as better judgement, communication and the ability to work alongside automated tools.

For policymakers:

They should make sure changes from the Milburn Review and the Youth Guarantee reach the colleges, education providers and organisations doing the work on the ground. That means funding that closely follows what is needed by the youth and giving FE providers the authority to provide for the employers they actually work with.

This crisis isn’t about machines taking jobs or young people who won’t try. It’s a gap between the skills young people leave education with and the skills employers now need. That gap can be closed. But only if employers and policymakers stop cutting early-career investment and start treating it as the foundation for young people getting onto the job ladder.

By Jeanette Wheeler, Chief People Officer, MHR