Britain risks creating a “lost generation” of young people unless ministers act swiftly to halt the rising number of under-25s drifting out of education, employment, and training, business leaders have warned.
The British Chambers of Commerce (BCC) raised concerns on Sunday over the growing number of 16- to 24-year-olds classified as NEETs (Not in Education, Employment or Training), which now approaches one million, despite the urgent need to build a future workforce as the population ages.
While the Office for National Statistics’ labour market survey — the source of much of this data — is acknowledged as imprecise, tax record-based figures similarly show youth employment has been disproportionately impacted in recent months amid rising labour costs and ongoing economic uncertainty.
New figures set to be published by job site Adzuna on Monday indicate that graduate vacancies fell to a two-year low in March, despite wider signs of recovery in the job market following the employer tax increases introduced in Chancellor Rachel Reeves’ October Budget.
Shevaun Haviland, Director-General of the BCC, said members of Generation Z — those born between 1997 and 2012 — now face steeper barriers to employment and shrinking opportunities as job vacancies fall.
A new BCC report highlights that a quarter of NEETs actually want to work but are prevented from doing so due to mental health challenges. Haviland warned: “The longer we allow this pool of talent to drift from the workplace, the harder it will be to reconnect them. Without decisive action, an entire generation risks being severed from society.”
Businesses also fear they could bear the cost burden of hiring, training, and supporting young workers, especially amid proposed workers’ rights reforms that would make dismissals more difficult.
The government has announced welfare reforms aimed at improving back-to-work support, including major changes to disability benefits.
Sir Charlie Mayfield, former Chair of John Lewis, has been tasked with developing strategies to help businesses and government better support ill and disabled people in work, with policy proposals expected this autumn.
Mayfield previously reported that many employers still find it cheaper to replace ill staff rather than invest in retention.
The BCC stressed that if firms are to play their part, the government must avoid adding further costs, risks, and regulatory barriers through new employment legislation.
The business group, representing thousands of small and medium-sized enterprises, called for greater investment in mental health support, adult education, and a more collaborative approach from government departments.
Additionally, the BCC urged ministers to protect local authority skills funding from pressures on social care budgets, provide subsidies for employers offering placements to NEETs with limited qualifications, and introduce tax incentives for firms offering workplace health services.
It also recommended new obligations for larger companies to publicly report on health initiatives, alongside greater flexibility for young employees and better training for line managers to prevent dropouts.
Responding, the Department for Work and Pensions insisted ministers were “determined that no young person gets left behind”, pointing to expanded mental health services, reformed jobcentres, and a Youth Guarantee promising a job, training, or apprenticeship for every 18- to 21-year-old.
However, the BCC report questioned the long-term funding and implementation of this Youth Guarantee, noting uncertainty around the sustainability of the initial eight “trailblazer” areas.
