Youth Employment 2025 Outlook

Our new Youth Employment 2025 Outlook report identifies major barriers preventing young people from entering or re-entering the labour market, and highlights a marked rise in long-term youth unemployment.  

Our latest analysis finds that more than one in three (37%) unemployed young people have now been out of work for over six months – up 124% over the past three years.   

The findings come just a month after the Government signaled its intent to eradicate long-term youth unemployment, and at a time when nearly one million young people remain NEET – a figure that has risen by a third since the pandemic.  

The report proposes that the UK adopt a ‘North Star’ goal, to match the OECD leader, the Netherlands, which has a NEET rate of just 3.6% compared with 12.8% in the UK. Achieving this could increase the number of young people earning or learning by 567,000, and deliver £86 billion in long term economic gains.   

Currently in the UK, nearly one in five unemployed young people have been out of work for at least a year.  Over half of young people who are NEET report having a disability, with poor mental health being the leading cause, as recognised in yesterday’s Keep Britain Working Review. Meanwhile, apprenticeship opportunities have declined sharply too, with places down by 30% since 2016.  

Examining international models for reducing youth unemployment and inactivity, Youth Futures Foundation found the UK consistently lags behind other OECD countries, with ten out of 30 European countries, including Germany, Denmark and Norway, having consistently lower NEET rates.    

Lessons the UK could explore from the Netherlands – where the NEET rate has remained under 5% since 2015 – include a coordinated regional approach to youth employment and strengthening the apprenticeship system.   

 The Youth Employment 2025 Outlook identifies four priority areas for action:   

• NEET prevention: Act early to identify and support young people at risk of becoming NEET by addressing barriers to GCSE achievement and offering additional targeted financial support through schools and colleges.   

• Expand Youth Guarantee with a wage subsidy scheme: Ensure every young person aged 16–24 has access to further learning, a job, or an apprenticeship within six months of leaving education or work. To incentivise hiring, introduce a permanent wage subsidy scheme that expands when youth unemployment rises.  

• Apprenticeships and skills: Strengthen the UK’s apprenticeships and skills system by creating an Apprenticeship Guarantee to ensure a Level 2 or 3 place for every qualified 16-24 year old that prioritises non-graduates. Introduce grants to incentivise SMEs to hire young apprentices, and reduce financial barriers for young people through interest-free loans.  

• Mental health support: Develop a strategy focusing on key factors contributing to declining youth mental health, and increase provision in children and youth services as a protective measure. Bolster specialist employment support models, like Individual Placement and Support, to provide intensive, effective support for young people with health barriers to secure and maintain employment.