Britain’s youth employment crisis could deepen as rising business costs squeeze entry-level jobs, apprenticeships and training opportunities, the CBI has warned. More than one million 16–24-year-olds are already outside education, employment or training – yet 84% of NEET young people surveyed for a government review say they want to work, study or train.
Britain risks locking even more young people out of the labour market unless businesses are given greater confidence to create jobs, apprenticeships and training opportunities, according to a major new report from the Confederation of British Industry (CBI). The warning comes as the latest official figures show 1.012 million young people aged 16 to 24 were not in education, employment or training (NEET) between January and March 2026 – the first time the figure has exceeded one million since 2013.
That represents 13.5% of all UK 16–24-year-olds, according to the Office for National Statistics (ONS), up from 12.5% a year earlier. The number increased by 89,000 year-on-year and 55,000 in just three months. Of the total, around 400,000 young people were unemployed and NEET, while another 613,000 were economically inactive and NEET.
The new CBI report, Opportunity in Every Postcode: Ensuring Young People Have Options, Wherever They Live, argues that Britain’s youth employment crisis cannot be addressed solely by improving young people’s employability. Businesses also need the economic conditions and confidence to actually create opportunities for them.
KEY FINDINGS
Key findings show that:
- 1.012 million 16–24-year-olds were NEET in early 2026 – 13.5% of the age group.
- 84% of NEET young people surveyed for the government’s independent Young People and Work review said they want a job, education or training.
- Around seven in eight young people are already working, studying or training, or actively trying to find work, according to the CBI.
- 36% of businesses affected by National Living Wage increases said they were reducing employment to offset costs, more than double the 15% recorded previously.
- 31% said they were cutting investment, up from 13% in 2024.
- 69% of employers surveyed identified the previous employer National Insurance Contributions (NICs) increase as one of the biggest labour-cost threats to UK competitiveness.
- The CBI is calling for action on employment costs, skills funding, apprenticeships, work experience and regulations it believes are increasing the risk attached to hiring.
YOUNG PEOPLE WANT TO WORK
One of the most important conclusions emerging from the latest evidence challenges the idea that Britain’s youth employment problem is primarily being caused by young people unwilling to work. The CBI estimates that of the UK’s approximately 7.5 million 16–24-year-olds, around seven in eight are either working; in education or training and progressing towards work; or actively applying for jobs but struggling to find them.
Among the 613,000 young people identified as NEET and economically inactive, the organisation argues many face genuine barriers that have discouraged them from applying for jobs or engaging with training opportunities. That conclusion is strongly supported by the government’s independent Young People and Work interim report, led by former Cabinet minister Alan Milburn.
Its survey of young people who are NEET found that 84% want to find a job, education or training. The review explicitly rejects the portrayal of younger generations as uninterested in employment.
“This is a whole system failure. And the price is paid by a generation of young people,” wrote Milburn. “I do not accept the caricature of a generation that is not interested in employment.”
The CBI reaches a similar conclusion. The key problem, it argues, is not persuading young people about the value of employment, but creating the conditions in which businesses can offer them opportunities.
ONE MILLION YOUNG PEOPLE OUTSIDE WORK AND EDUCATION
The scale of the challenge has increased significantly. According to the latest ONS figures available, the number of NEET young people increased from 923,000 in January–March 2025 to 1.012 million during the same period this year.
The government’s independent review has warned that the situation could deteriorate much further without intervention. Its modelling suggests the NEET rate could eventually exceed 16%, leaving more than 1.25 million young people outside education, employment or training within five years. It estimates that almost one million NEET young people already carry a cumulative annual economic, fiscal and social cost of approximately £125 billion. The consequences for individuals can also last decades.
Among 24-year-olds who are NEET, 45% have never had a job, according to the review, which estimates that the resulting employment “scarring” could cost an individual as much as £300,000 in lifetime earnings, even if they eventually enter the workforce. Fair Play Talks previously examined these warnings in our report on Britain’s emerging “lost generation”, with one million young people locked out of work and education as entry-level opportunities disappear.
WHY IS UK YOUTH UNEMPLOYMENT RISING?
There is no single explanation. Evidence from the CBI, ONS and government’s independent youth employment review points to an interconnected combination of weaker job creation, declining entry-level opportunities, health and disability-related barriers, falling apprenticeship participation, skills gaps, regional inequality and employers becoming more cautious about recruitment as their costs rise.
The Milburn review describes this as a “crisis of opportunity”. It argues that Britain’s youth share of the labour market has declined even as overall employment expanded, while entry-level positions have become both scarcer and more demanding.
Apprenticeship starts among younger people have also declined by more than 40% over the past decade. And recruitment itself has changed. Online applications, automated screening, assessments and AI-enabled recruitment increasingly stand between applicants and employers, creating a very different route into work from the informal Saturday jobs and first employment opportunities available to previous generations. For young people with little previous experience, that can create an additional barrier.
ENTRY-LEVEL JOBS ARE DISAPPEARING
Young people are particularly exposed to weak job creation because they depend more heavily on advertised vacancies to enter the labour market. The CBI points out that UK vacancies have continued falling from their post-pandemic peak, while sectors traditionally responsible for recruiting large numbers of younger workers, particularly retail and hospitality, have experienced limited vacancy growth.
Competition for available entry-level positions could intensify further as school leavers and graduates enter the labour market. That compounds an existing long-term unemployment problem. As Fair Play Talks previously reported, one in five unemployed young people has already been out of work for more than a year, with the number of long-term unemployed 18–24-year-olds more than doubling over three years.
There are signs that some young Britons are also looking elsewhere for opportunity. Separate research has found record numbers of young Britons leaving the UK as youth unemployment rises and entry-level opportunities decline.
BUSINESS COSTS ARE SQUEEZING RECRUITMENT
The distinctive argument made by the new CBI report is that the youth employment crisis is not simply a skills or employability problem. It is also a business growth and job-creation problem.
Businesses told the organisation that higher employer National Insurance Contributions, National Living Wage increases, energy costs, taxation, borrowing costs and uncertainty surrounding employment regulation are squeezing recruitment, training and investment budgets.
The CBI’s Employment Trends Survey with Pertemps Network Group illustrates the pressure. Among affected businesses responding to increases in the National Living Wage:
- 47% said they were raising prices.
- 36% said they were reducing employment, more than double the 15% previously recorded.
- 31% said they were cutting investment, compared with 13% in 2024.
Separate CBI research cited in the report found 64% of surveyed businesses said rising costs since 2019 had significantly or very significantly contributed to both reduced hiring and delayed or cancelled investment decisions. Labour costs have also become a growing concern. Some 69% of respondents identified the previous year’s increase in employer NICs as one of the labour costs posing the greatest threat to UK labour-market competitiveness.
The CBI calculates that employer NICs cost businesses £123.1 billion in 2025/26 – 27.6% more than the previous year – and accounted for 35.7% of the total business tax burden.
WHEN YOUNG PEOPLE LOSE OUT, SO DO BUSINESSES
Rain Newton-Smith, Chief Executive of the CBI, described tackling youth unemployment as both an economic and social imperative. “The consequences of this tragic waste of potential are deeply personal, but they also go beyond the individual; when young people lose out, so do businesses, government and the wider economy,” she said. “Without a coherent plan to tackle youth unemployment, we risk weakening the social contract that binds firms, workers and communities together.”
Newton-Smith argues that government should stop treating economic growth and youth employment as separate challenges. “The same challenges that are holding back growth are hurting young people and their ability to enter the labour market,” she added. “When young people’s potential is wasted, we all lose.”
WHAT DOES THE CBI WANT GOVERNMENT TO DO?
The CBI’s latest report proposes action across three broad areas.
1. Reduce costs holding back jobs and training
The CBI wants the government to reduce employer NICs, tackle business energy costs and reform business rates. Its argument is that reducing businesses’ overall cost base would create more financial headroom for recruitment, apprenticeships, training and investment.
2. Give employers more confidence to hire young people
The organisation also wants policymakers to reconsider measures it believes could increase the risk attached to recruitment. Among its recommendations is adopting a 52-week reference period and a “low hours” threshold of no more than eight hours under guaranteed-hours rules.
The CBI argues this would help protect seasonal and flexible jobs frequently used by younger people to enter employment. It also wants any future removal of the youth minimum wage rate made conditional on a significant reduction in the NEET rate.
These proposals form part of a wider political debate over how government can balance stronger employment rights and pay protections with employers’ concerns about the cost and risk of creating jobs.
The causes of youth inactivity are considerably broader than employment costs alone, however. Both the CBI and Milburn review acknowledge that health, disability, education, skills, welfare, local opportunity and wider economic conditions all contribute to the crisis.
3. Remove barriers to training and work experience
The CBI wants more support for employers providing work experience, a common framework for skills devolution, more predictable multi-year funding for skills and employability programmes, and further reform of the Growth and Skills Levy. The organisation argues these changes could unlock more apprenticeship opportunities and make it easier for businesses and training providers to invest for the longer term.
APPRENTICESHIPS AND WORK EXPERIENCE MATTER
The focus on apprenticeships is particularly significant. The government’s independent review found that apprenticeship starts among younger people have declined by more than 40%, weakening another traditional bridge between education and employment.
The CBI’s discussions with employers also identified several characteristics common to successful youth employment programmes. These included strong relationships between businesses, colleges, universities, independent training providers, local authorities and charities; personalised and wraparound support; flexible funding; and workforce strategies that deliberately invest in younger people’s potential.
The findings reinforce a wider argument that Britain’s youth employment and skills crises cannot be solved separately.
Fair Play Talks recently reported on the TUC’s Skills 2050 Project, which brings employers, unions, colleges and skills experts together to develop a long-term strategy for Britain’s workforce. That initiative also highlighted a 40% fall in apprenticeship starts among 16–24-year-olds over the past decade, equivalent to more than 113,000 fewer starts than in 2015/16.
AI ADDS ANOTHER CHALLENGE FOR ENTRY-LEVEL WORKERS
Artificial intelligence adds another dimension to the problem. The CBI says AI is likely to shape young people’s careers across the labour market, yet many are leaving education without clear evidence that they can use AI “effectively, responsibly and critically”.
It proposes creating a UK AI Literacy Standard, establishing a common baseline for AI knowledge, skills and responsible behaviours across education and training. That could include understanding data privacy, cybersecurity, governance and the responsible use of AI-generated outputs. The proposal makes sense in a labour market where employers increasingly value AI capability. But it also exposes a potential contradiction.
Companies want young people to enter employment with AI skills while AI itself is beginning to change or eliminate some of the junior tasks through which previous generations gained workplace experience. Research previously highlighted by Fair Play Talks found one in five companies surveyed had already stopped hiring entry-level employees because of AI.
If businesses automate large numbers of junior roles without creating alternative routes into their organisations, the implications could extend far beyond today’s youth unemployment figures. Where will tomorrow’s experienced managers, specialists and leaders come from if businesses stop recruiting and developing today’s beginners?
WHO GETS THE FIRST OPPORTUNITY?
The CBI deliberately calls its report Opportunity in Every Postcode. That matters because access to work is not evenly distributed. Young people who lack family connections, professional networks, transport, financial resources or access to paid work experience can find it particularly difficult to obtain their first opportunity.
Young people with disabilities and Special Educational Needs and Disabilities (SEND) can face additional barriers. The CBI says employers involved in its research expressed a strong desire to support young people who require more targeted assistance, including those with SEND.
Successful initiatives frequently combined employment opportunities with personalised or wraparound support rather than assuming every young person faced the same barriers. The issue therefore extends beyond how many jobs Britain creates. It is also about who can access those jobs.
As Fair Play Talks highlighted on Social Mobility Day 2026, Britain’s widening opportunity gap should be a wake-up call for employers. A young person’s postcode, family income, disability, education or lack of professional connections should not determine whether they get their first chance at work.
WHAT EMPLOYERS SHOULD DO NOW
Government policy will play an important role in determining how many jobs are created. But businesses do not have to wait for policy reform to examine whether their own recruitment and workforce strategies are inadvertently making it harder for young people to enter employment.
Create genuine entry-level jobs
Employers should examine whether restructuring, automation or demands for previous experience are eliminating the first rung of their career ladder. An entry-level job that demands several years of previous experience is not genuinely entry level.
Recruit for potential, not previous opportunity
Young applicants inevitably have shorter CVs. Skills-based recruitment, realistic job specifications and assessment of aptitude, transferable skills and potential can help organisations reach talented people who have simply not yet been given an opportunity to prove themselves.
Expand paid work experience and apprenticeships
Work experience can provide the bridge between education and sustained employment, particularly for young people without family or professional networks. Employers can work with schools, colleges, universities, charities and training providers to establish clearer paid pathways into their sectors.
Check whether AI is closing entry routes
Businesses should examine not only which tasks AI can automate, but what removing those tasks means for workforce development. They should also assess whether AI-enabled recruitment systems or automated screening tools unintentionally disadvantage applicants with limited employment histories. AI literacy should become part of workforce development – but not at the cost of eliminating opportunities to acquire judgement, confidence and workplace experience.
Support young people to stay and progress
Getting someone through the door is only the beginning. Young people facing disability, health conditions, low confidence or prolonged periods outside employment may benefit from better onboarding, mentoring, reasonable adjustments, wellbeing support and clearly defined development opportunities. The CBI’s own research suggests successful youth employment programmes frequently combine access to jobs with personalised support.
WHY THIS MATTERS FOR RESPONSIBLE BUSINESS
Britain’s youth employment debate is too often framed as a choice between asking young people to become more employable and asking businesses to create more jobs. The evidence increasingly suggests that distinction is too simplistic.
Young people need relevant skills, meaningful work experience, appropriate health support and preparation for a labour market being transformed by AI. But those interventions achieve little if there are not enough accessible jobs for them to move into.
Businesses also need an economic environment in which they can afford to invest and recruit. But responsible employers should simultaneously ask whether their own recruitment practices, experience requirements, automation strategies and workforce planning are making the first step into employment unnecessarily difficult.
TIME TO GIVE YOUNG PEOPLE A CHANCE
The long-term stakes for business are substantial. Reducing entry-level recruitment today risks creating a shortage of experienced employees tomorrow. It could deepen social mobility inequalities, exacerbate existing skills shortages and ultimately leave employers competing for experienced workers they failed to develop themselves.
The question facing Britain is therefore not simply whether young people want to work. Increasingly, the evidence suggests they do. The more urgent question is whether government, employers and educators can rebuild enough routes into good work to give them their first chance. Because without the first job, there can be no second job – and today’s shortage of entry-level opportunities risks becoming tomorrow’s shortage of experienced workers.
Read the CBI report: Opportunity in Every Postcode here.
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