Business leaders have cautioned that without swift intervention from ministers, the UK may face the challenge of a “lost generation” as young individuals potentially drift away from the workforce. The British Chambers of Commerce (BCC) expressed concern about official data indicating that nearly one million people aged 16 to 24 are not engaged in education, employment, or training (NEET), despite the necessity of nurturing new talent as the country’s population ages.
The statistics, derived from the Office for National Statistics’ labor market survey, are considered unreliable. Nonetheless, alternative data from tax records suggests that youth employment has been significantly impacted recently, due to rising labor costs and increasing economic uncertainty affecting hiring processes.
Adzuna, a job search website, is set to release new figures on Monday showing that job openings for new graduates fell to a two-year low in March. This occurred even as overall hiring began to recover from the decline following employer tax increases announced in Chancellor Rachel Reeves’ October Budget.
Shevaun Haviland, Director-General of the BCC, highlighted that Generation Z—defined as those born between 1997 and 2012—is facing higher entry barriers into the workforce and diminishing opportunities as job vacancies decrease. A BCC report published on Sunday cited evidence that 25% of those classified as NEET wish to work but are hindered by mental health issues.
Haviland emphasized, “The longer this pool of talent drifts away from the workplace, the more challenging it becomes for them to engage. Without comprehensive action, an entire generation risks being disconnected from society.”
Businesses have expressed concerns about being tasked with the costs of hiring, training, and supporting young employees, whom they view as high-risk, while having to adapt to upcoming changes in workers’ rights that could complicate the dismissal of new hires.
The government aims to assist young people with mental health challenges in entering the workforce through welfare reforms announced last month, which include significant reductions in disability benefits and expanded back-to-work support.
Ministers have appointed Sir Charlie Mayfield, former head of retailer John Lewis, to explore how businesses and the government can help ill and disabled individuals secure and retain employment. In a report, Mayfield noted that it might currently be more cost-effective for employers to replace sick workers than invest in their retention.
The BCC stated that for businesses to contribute effectively, the government should avoid adding costs, risks, and restrictions through workers’ rights reforms currently under parliamentary review. Representing numerous smaller businesses, the group urged increased government spending on mental health support, further education, and a cooperative approach from Whitehall departments.
They also called for measures to ensure social care pressures do not impact local authorities’ skills budgets and suggested subsidies for employers hiring NEET young people with limited qualifications.
The BCC recommends tax incentives for employers offering workplace health services, along with a requirement for larger companies to publicly report on health provisions. Employers should offer flexible work arrangements and train managers to support young people at risk of disengagement.
The Department for Work and Pensions has confirmed its commitment to ensuring that no young person is left behind, by expanding mental health support, overhauling job centers, and guaranteeing apprenticeships or job support for all 18- to 21-year-olds. However, the BCC’s report noted uncertainty regarding the delivery of this Youth Guarantee and whether funding for eight initial “trailblazer” areas will be sustained throughout the parliamentary term.
