A stark new report today warns that Britain is sleepwalking into a “lost generation” of young people locked out of the labour market. The study, published by the Resolution Foundation, calls for an emergency national skills levy on employers to halt the erosion of job prospects for under-25s.
The report paints a grim picture: youth unemployment has crept above 12 per cent, the highest in the G7. Pay for young workers has stagnated for a decade, with real terms earnings still below 2008 levels. The crisis is worst in the North and Midlands, where one in five young people are not in education, employment or training.
“This is not a blip. It is a structural failure of our economy,” said Hannah Slater, the report’s lead author. She pointed to a collapse in employer training: since 2005, the number of apprenticeships has halved, while many firms have slashed entry-level jobs. “Young people are being shut out,” she said. “They are the ones paying the price for a tax system that rewards shareholder payouts over people.”
The report’s central demand is a national skills levy: a mandatory charge on large employers, ring-fenced for training and apprenticeships. Similar schemes operate in France and Germany, where youth unemployment is far lower. The levy would raise up to £3 billion a year, the report estimates.
The call has already won backing from unions. The TUC’s general secretary, Marie Toms, said: “For years, bosses have pocketed record profits while ignoring the next generation. A skills levy is a no-brainer. It is about fairness and investing in our future.”
But business groups are pushing back. The Confederation of British Industry warned the levy would be “another tax on job creation at a time when firms are struggling with rising costs.” Kate Driscoll, director of skills policy at the CBI, said: “Businesses want to invest in young people, but they need flexibility, not a one-size-fits-all charge.”
The government is in a tight spot. Employment minister Rachel Reeves said today that ministers are “actively considering the proposal”. But with the Budget looming and pressure from Tory backbenchers to cut red tape, action is far from guaranteed.
For Sarah Jenkins, Economy and Labour Reporter, the report is a damning indictment of a system that has prioritised low-wage flexibility over genuine skill building. In my hometown of Stockport, boarded-up high streets stand alongside shiny call centres paying minimum wage for zero-hour contracts. Young people tell me they feel written off.
The Resolution Foundation warns the cost of inaction will be huge: lost tax revenue, higher benefit bills and a generation scarred by long spells out of work. The price of a skills levy, by contrast, is small.
The question is whether this government has the backbone to take on business and act before another cohort is cast aside.
