Many young Londoners are leaving education with excellent results but are then finding it difficult to find work, a new report is warning.
The study by Centre for London highlighted increasing challenges in getting a job in the capital which is threatening to get worse with the impact of artificial intelligence and Andy Burnham’s devolution revolution which will see thousands, if not tens of thousands, of posts moved out of Whitehall.
Unemployment rates in the capital
London already has the highest unemployment rate in the country, at 6.5% in the three months to June. For young Londoners, aged 16 to 24, unemployment was at 19.6%, the highest for 11 years outside the Covid pandemic.
Business chiefs partly blame the jobs crisis on the £20 billion hike in National Insurance for employers imposed by former Chancellor Rachel Reeves which particularly hit sectors which employ large numbers of people on low incomes including hospitality and retail.
Education performance versus job prospects
The new research, published ahead of the latest figures on Neets (people not in education, employment or training), outlined how in 2025, just 41.3% of Londoners aged 16-35 were in work, compared with 51.5% across England.
This jobs gap exists despite London outperforming other parts of the country on school attainment. In the same year, 70.4% of young Londoners achieved a GCSE or similar level 2 qualification by age 16, compared with 61.1% in Greater Manchester, 62.7% across the Oxford-Cambridge region and 57.6% in the West Midlands.
But, while 80% of London school leavers found a further education course, employment or an apprenticeship for at least six months in 2022/23, only 17% moved into a sustained apprenticeship or employment. The equivalent figures were 25% in Greater Manchester, 23% in the West Midlands and 30% across Oxford-Cambridge, the study added.
Decline in job adverts
It stressed that the capital’s labour market has become more difficult for young people seeking work. Online job adverts in London fell from more than 273,000 at their peak in May 2022 to just under 98,000 in February 2026, a drop of 64%.
The decline was significantly larger than falls in Greater Manchester where adverts were down by 53%, West Midland by 55% and the Oxford-Cambridge region by 56%.
Four factors hitting London’s labour market
The report highlighted four factors which were particularly hitting London’s labour market:
- Many posts still available to Londoners are in professional and higher-skilled occupations, where entry requirements can be more difficult for young people. Employers are now receiving an average of 86 applications for every graduate vacancy.
- Sectors, such as hospitality, retail and wholesale, that have traditionally provided many young people with their first jobs are struggling, failing to recover fully from the Covid pandemic and hit by tax rises and other rising costs.
- Nearly half of London workers are in jobs where AI could automate some tasks, according to a study by City Hall, compared with 38% across the UK, with around 313,000 Londoners in the highest-exposure group.
- London has fewer apprenticeship opportunities. In 2023/24 there was about one apprenticeship start for every 11 businesses in the capital, compared to one in six in the West Midlands and one in five in the North West.
Rob Anderson, research director at Centre for London, said: “Despite performing well in education, too many young Londoners are finding that the step from the classroom to the workplace is becoming harder to make.
“In a city where the cost of living continues to place pressure on Londoners of all ages, securing stable, well-paid work is more important than ever.
“We cannot accept a situation where young people do everything that is asked of them, achieve strong results, and still struggle to find their place in the labour market.”
Government response
More than 90,000 young people are expected to be helped into work in the next three years by the Government’s Jobs Guarantee scheme, which is offering a direct route into work for all 18 to 24-year-olds who have been claiming Universal Credit and looking for work for 18 months.
Work and Pensions Secretary Pat McFadden said latest figures showed that 88% of graduates are in good employment or in further education five years after they graduate, which he stressed was above the EU average.
“But there is, in recent terms, I think, some international evidence that life is becoming tougher for some graduates getting jobs, not just here but in the United States as well,” he told Times Radio.
“So there's an international issue here, which I think we have to be very alive to.”
