Experts warn the UK risks creating a “lost generation” as disappearing entry-level jobs, worsening mental health and AI disruption leave more than one million young people outside work or education.
Britain is at risk of creating a “lost generation” as more than one million young people are now locked out of work, education or training (NEET), according to a major new review. Experts are warning that the collapse of entry-level jobs, worsening mental health and shrinking economic opportunity could leave long-term scars on both the UK economy and an entire generation’s future.
The latest Office for National Statistics figures show that 1,012,000 people aged 16 to 24 were classified as NEET – not in education, employment or training – between January and March 2026. That’s up from 957,000 in the previous quarter and the highest level in 12 years. Young people now account for 13.5% of the age group.
The scale of the crisis has triggered alarm across business, politics, education, trade unions and the charity sector, with former Cabinet minister Alan Milburn warning Britain is now confronting a “generational fault line”. The findings are revealed in the independent Young People and Work: Interim Report, published on Thursday and led by Milburn. The review examines the sharp rise in young people who are not in education, employment or training (NEET) and the growing barriers preventing many from entering stable work.
Without urgent intervention, Milburn’s review warns the number of young people who are NEET could rise from one in eight to one in six within five years. That is equivalent to 1.25 million young people disconnected from work and education.
The report estimates the crisis already costs the UK economy £125 billion annually through lost productivity, reduced tax revenues, increased welfare spending and long-term economic inactivity. Experts warn the crisis is particularly severe in parts of the UK already struggling with weak local economies, declining industries and long-term underinvestment.
RISING YOUTH INACTIVITY
While youth inactivity has risen across several advanced economies since the pandemic, the review notes that Britain entered this period with unusually low participation in education among 18 to 24-year-olds compared with many OECD countries. Economists warn that prolonged youth inactivity can have lifelong effects on earnings, health and employment prospects. It can also weaken economic growth, increase pressure on welfare systems and deepen labour shortages across key sectors of the economy.
But beyond the economic cost, there’s a growing sense among many young people that the traditional promises of work, stability and upward mobility are breaking down. The findings come amid wider concerns about a collapse in entry-level opportunities, worsening youth mental health and growing numbers of young Britons considering leaving the country altogether in search of better opportunities abroad.
A recent report revealed that record numbers of younger Britons are leaving the UK amid declining career prospects, shrinking entry-level job opportunities and worsening economic pessimism. In fact, findings from a Trades Union Congress report revealed that one in five young people had already been unemployed for more than a year. The TUC also warned that prolonged joblessness among younger workers risked becoming entrenched across parts of the country, and urged the Government to expand the Jobs Expansion Scheme.
SYSTEMIC BREAKDOWN IN SUPPORT FOR YOUNG PEOPLE
Milburn’s review argues the crisis is not simply the result of a weak labour market or post-pandemic disruption. Instead, it paints a picture of a systemic breakdown spanning schools, healthcare, welfare, skills, employment support and the labour market itself.
“The evidence points to something harder to stomach than any single failure,” said Alan Milburn, Independent Reviewer on Young People and Work. “Our schools, our health system, our welfare state, our labour market, the institutions we built to carry young people from childhood into adult life, are no longer fit for purpose, and the country has known this for some time.”
The review highlights how the UK’s jobs boom largely bypassed younger workers. Britain has lost 1.6 million low and medium-skilled jobs, while hospitality vacancies – historically a key route into employment for young people – have halved in just four years. Apprenticeship starts among young people have also fallen by 35 per cent over the past decade.
Milburn said Britain’s entry-level labour market has been hollowed out. “The first rung of the career ladder has thinned,” he said. “For too many young people it is now simply out of reach… That places them in a hopeless Catch-22 where employers ask for work experience but the opportunities for young people to gain it have narrowed or gone.”
AI IMPACT ON ENTRY-LEVEL JOBS
The warning lands as fears grow that artificial intelligence is accelerating the disappearance of junior jobs. Fair Play Talks previously revealed that one in five companies had already stopped hiring entry-level workers because of AI. This is fuelling concerns that younger workers are increasingly competing for a shrinking pool of opportunities. Economists and recruiters are increasingly warning that AI could disproportionately impact younger workers because many of the tasks now being automated – administration, junior analysis, customer support and entry-level digital work – have traditionally served as gateway roles for graduates and first-time employees.
GEN Z LOSING FAITH IN THE SYSTEM
For many Gen Z workers, the crisis increasingly feels less like a temporary downturn and more like a closing door. Across social media, graduate forums and job platforms, young people share accounts of applying for hundreds of jobs without response, struggling to gain experience because employers increasingly demand it upfront, and feeling trapped between rising living costs and shrinking opportunities.
Many say they feel they did “everything right” – stayed in education, gained qualifications and followed conventional career advice – only to enter a labour market where entry-level roles are disappearing, housing costs are soaring and economic stability feels increasingly out of reach.
Rising rents and house prices have also left many younger workers financially dependent on their parents and families for longer. Some economists are warning that delayed financial independence is compounding the wider crisis of confidence among under-25s. “We’re seeing students lose confidence much earlier,” said one Birmingham sixth-form careers adviser. “Many no longer believe qualifications alone guarantee opportunity.”
For many young Britons, the traditional promise of hard work leading to stability and opportunity no longer holds. Across TikTok, Reddit and LinkedIn, younger workers increasingly speak about burnout, hopelessness and the feeling that adulthood itself has become financially inaccessible.
For a generation that came of age during austerity, the pandemic, a cost-of-living crisis and now the rise of AI-driven disruption, the NEET crisis is increasingly being viewed not simply as a labour market problem, but as part of a wider collapse in economic confidence among young people.
INCREASING BARRIERS TO WORK FOR YOUNG PEOPLE
One of the review’s clearest conclusions is that Britain’s youth inactivity crisis cannot simply be blamed on young people themselves. The report found that 84% of NEET young people surveyed want a job or training opportunity, directly challenging narratives portraying Gen Z as unwilling to work.
“This is not a failure of young people,” Milburn said. “It is a failure of a system stuck in the past. Whether it is education or health or welfare, that system fails to enable their participation in the labour market. Instead, all too often it ends up putting young people on a path to a life not in jobs but on benefits.”
Debbie Abrahams MP, Chair of the House of Commons Work and Pensions Committee, also rejected stereotypes surrounding younger generations. “We agree that this is not the so-called ‘snowflake’ generation that too many have referred to,” she said. “But the urgency must be recognised. We cannot see the lives of so many young people be blighted in this way.”
Abrahams said young people who had spoken to her committee consistently demonstrated “a real desire to work, to succeed” but faced barriers “that aren’t properly understood by the DWP”. Trade unions have also argued the crisis reflects years of insecure work, austerity and underinvestment rather than any sudden shift in younger generations’ attitudes toward employment.
YOUNG PEOPLE UNFAIRLY SCAPEGOATED
Paul Nowak, General Secretary of the Trades Union Congress (TUC), described the findings as “a damning indictment of a decade of inaction”. “Milburn confirms this crisis has been years in the making – not a product of changes in recent years,” he said. “It has been created by a toxic mix of austerity, apprenticeship failure, exploding levels of insecure work and a stagnant economy blighted by stark regional inequalities.”
Nowak also rejected narratives portraying younger people as unwilling to work. “But young people have been unfairly scapegoated by those offering lazy assumptions about a generation unwilling to work,” he said. “If you really want to tackle the NEET crisis, you have to start by delivering pathways for young people into good quality jobs and apprenticeships.”
The union movement has increasingly warned that long-term youth unemployment risks creating lasting economic “scarring”, where younger workers face reduced earnings, poorer health outcomes and weaker career progression for years after periods of inactivity.
WORSENING MENTAL HEALTH CRISIS
Separate research from the Institute for Fiscal Studies, commissioned by The King’s Trust and supported by the King Charles III Charitable Fund, suggests the sharp rise in NEET levels cannot be explained by any single factor such as minimum wage increases, employer National Insurance changes or AI alone. Instead, the research points toward worsening health – particularly mental health – as a major emerging factor.
Jonathan Townsend, UK Chief Executive of The King’s Trust, warned the findings should concern “anyone who cares about young people’s futures”. “Too many young people are already out of work, education, or training, and this analysis suggests we cannot simply assume the problem will correct itself as economic conditions improve,” he said. “We urgently need to understand what is pulling more young people away from work and education, including the role of mental health, while also making sure young people have the right routes to keep learning, build skills, and move confidently and boldly into work.”
Brian Dow, Chief Executive of Mental Health UK, described the report as “an unflinching and profound system-level diagnosis”.“This should be a turning point,” he said. “We’re ready to work with government to be part of the solutions that will create meaningful change for young people, their families and society as a whole.”
WHOLE GENERATION LOCKED OUT OF WORK
Business groups say the crisis now poses a serious threat to Britain’s future growth prospects. Shevaun Haviland, Director General of the British Chambers of Commerce, warned the findings “must be a wake-up call for policymakers”. “Unless urgent comprehensive action is taken a whole generation is at risk of being cut loose from society. And economic growth will be hampered,” she said.
Rain Newton-Smith, Chief Executive of the Confederation of British Industry, described the crisis as “a tragic waste of potential”.“Young people should be looking to the future with confidence. But too many are being locked out of work,” she said. “Business has a central role in giving young people a better deal.”
Helen Dickinson, Chief Executive of the British Retail Consortium, warned that rising costs and regulation were making it harder for businesses to create entry-level opportunities. “The first rung of the career ladder may have thinned, but retail continues to provide opportunities for over three-quarters of a million people under 25,” she said. “Yet, it has never been more difficult to hire than today.”
Stuart Machin, Chief Executive of Marks & Spencer, said the crisis reflected fears he regularly hears from staff and customers. “The findings are shocking but not surprising,” he said. “A Saturday job in retail changed my life, built my confidence and gave me the skills to build a fulfilling career. We have a chance to provide a similar path to every young person.”
YOUNG DISABLED PEOPLE FACING ADDITIONAL BARRIERS
The review also highlighted how disabled young people are disproportionately affected by Britain’s employment crisis. Jon Sparkes OBE, Chief Executive of Mencap, said young people with learning disabilities continue to face “too many barriers and too few opportunities”.
James Watson-O’Neill, Chief Executive of disability charity Sense, said systems and workplaces were still failing disabled people. “Disabled people should not be forced to fit around systems that were never built for them,” he said. “It is the responsibility of government, employers and public services to create environments where disabled people can thrive, contribute and live with dignity.”
WHAT BRITAIN NEEDS TO DO NOW
The Milburn Review makes clear that Britain cannot simply wait for economic growth alone to solve the youth inactivity crisis. Experts across business, education, trade unions, mental health and employment support argue the country now needs a coordinated national response to rebuild pathways into work for younger generations.
One immediate priority is rebuilding entry-level opportunities. Over the past decade, Britain has steadily lost many of the traditional “first rung” jobs that once gave young people work experience, confidence and financial independence. Apprenticeship starts among young people have fallen sharply, while sectors such as retail and hospitality – historically major employers of under-25s – have shed hundreds of thousands of jobs.
Business groups argue the government must now reduce the cost and risk of hiring younger workers, particularly as many employers face rising labour costs and economic uncertainty. Trade unions have also called for stronger workers’ rights, better quality jobs and greater investment in Further Education and apprenticeships.
Paul Nowak, General Secretary of the TUC, said the government’s proposed Jobs Guarantee was “an important start”, but argued ministers should go further by expanding places and increasing support for training. “Young people need good secure jobs with decent prospects,” he said. “But too often, they’re stuck in insecure, low-paid work which leaves them at greater risk of dropping out of the workforce due to ill-health.”
YOUNG PEOPLE DESERVE A FAIR WAGE
He also warned against cutting pay protections for younger workers. “Young people pay the same bills as everyone else and deserve a fair wage for their work,” Nowak said. “Cutting the minimum wage for young workers is not the way to get – or retain – them in the jobs market.”
Shevaun Haviland, Director General of the British Chambers of Commerce, said earlier and better careers education, expanded training routes and stronger local partnerships between businesses and educators would all be essential. “An ambitious approach is needed between health, education, the welfare system, and employers,” she said. “Solutions need to be locally rooted but nationally joined up.”
The review also raises urgent questions about whether Britain’s education system is preparing young people for a rapidly changing labour market. David Hughes, Chief Executive of the Association of Colleges, said countries that have successfully reduced NEET levels invested far more heavily in technical education and vocational routes. “In countries that have successfully reduced NEET numbers, young people are offered more time in college doing technical education and better access to supportive apprenticeships,” he said.
Mental health support is also emerging as one of the most critical areas requiring investment. The Institute for Fiscal Studies and The King’s Trust said further research is urgently needed into the relationship between deteriorating youth mental health and economic inactivity, particularly as growing numbers of young people report anxiety, burnout and long-term health challenges that affect their ability to work.
BUSINESSES PLAY A CENTRAL ROLE IN PROVIDING YOUNG WORKERS BETTER OPPORTUNITIES
At the same time, employers are increasingly being urged to rethink how they recruit and support younger workers. Artificial intelligence, automated recruitment systems and rising experience requirements are all contributing to concerns that many younger candidates are being filtered out before they even enter the workforce.
Rain Newton-Smith, Chief Executive of the Confederation of British Industry, said businesses must play a central role in rebuilding opportunity. “Business has a central role in giving young people a better deal,” she said.
There are also growing calls for the government to rethink how welfare and employment support operate together. The Milburn Review found that for every £1 spent supporting young people into employment, around £25 is spent on benefits.
Critics argue Britain has created a fragmented system where healthcare, welfare, education and employment support often operate separately, leaving vulnerable young people trapped between institutions rather than guided into work.
WHAT EMPLOYERS AND EDUCATION PROVIDERS MUST DO NOW
Experts say reversing Britain’s youth inactivity crisis will require far earlier intervention — long before young people become disconnected from work or education altogether. One major criticism raised throughout the Milburn Review is that too many young people leave school without meaningful exposure to the workplace, practical skills or clear career pathways.
Business groups and education leaders argue schools need to place far greater emphasis on employability, vocational learning and real-world work experience alongside academic attainment. For many young people, the disappearance of Saturday jobs, work placements and entry-level opportunities means they are reaching adulthood without ever having had exposure to professional environments or developed workplace confidence.
Alan Milburn warned that Britain’s “first rung” problem is now becoming systemic. “The first rung of the career ladder has thinned,” he said. “For too many young people it is now simply out of reach.”
BETTER ACCESS TO TECHNICAL EDUCATION AND APPRENTICESHIPS
Education leaders say schools and colleges must now work much more closely with local employers to create clearer transitions into employment. David Hughes, Chief Executive of the Association of Colleges, said countries that have successfully reduced NEET levels typically provide stronger technical education pathways and more employer engagement.
“We need stronger leadership nationally and locally to agree a coherent approach that ensures the system better meets the needs of every young person,” he said. “In countries that have successfully reduced NEET numbers, young people are offered more time in college doing technical education and better access to supportive apprenticeships.”
There are also growing calls for schools to improve careers advice earlier, particularly for pupils who may not follow traditional university routes. Many employers say young people are leaving education without understanding where jobs exist, what skills are needed or how to access opportunities in sectors facing labour shortages.
The British Chambers of Commerce said earlier and better careers education must now become a national priority. At the same time, employers are increasingly being challenged to rethink recruitment practices that unintentionally lock younger workers out. Many entry-level roles now demand previous experience, while automated hiring systems and AI-driven recruitment filters can disadvantage younger applicants with limited work histories.
Some employers are also being urged to move away from degree inflation, where jobs that historically did not require university qualifications now routinely demand them.
TIME TO RESTORE OPPORTUNITY FOR YOUNGER WORKERS
Rain Newton-Smith, Chief Executive of the Confederation of British Industry, said businesses have a “central role” in restoring opportunity for younger generations. Retail leaders have also warned that rising employment costs risk reducing opportunities for younger workers even further. Helen Dickinson, Chief Executive of the British Retail Consortium, said retail remains one of the UK’s largest employers of under-25s but warned that “increasing costs and regulations make it harder than ever to take on new staff.”
Some employers are now being encouraged to expand paid internships, apprenticeships, mentoring schemes and flexible entry routes to help younger workers gain their first experience. Mental health support inside schools and workplaces is also increasingly viewed as essential.
Researchers involved in the review said deteriorating youth mental health may be playing a significant role in rising inactivity levels, with some young people struggling to navigate education, employment and benefits systems simultaneously.
For many experts, rebuilding confidence may now be just as important as rebuilding jobs. The concern is not simply that young people are out of work, but that growing numbers are losing faith that the system works for them at all.
BRITAIN’S BROKEN PROMISE
At the heart of the review is a warning that Britain’s long-standing social contract – the belief that each generation would enjoy greater opportunity than the last – is beginning to collapse. “Across the country, parents and grandparents are gripped by a deep fear about what the future holds for today’s young people,” Milburn said. “For decades, Britain’s unwritten social contract has been that each generation would do better than the last. That promise is being broken.”
UK Prime Minister Keir Starmer has described the findings as “sobering”, while Milburn himself warned the crisis is “more than an economic crisis – it is a moral one.” For many younger Britons, the fear is no longer simply unemployment, but the growing belief that the system itself no longer offers a realistic pathway to stability, independence or progress.
If that confidence continues to collapse, Britain may not simply be facing a temporary labour market crisis, but a generational rupture that reshapes the country for decades to come.
Read the full review here.
Related reading
Young Britons leaving the UK in record numbers
One in five companies stop hiring entry-level workers because of AI
One in five young people unemployed for over a year, confirms TUC
Sign up for our newsletter
