Graduate Dreams Deferred as Youth Joblessness Soars
Young people across Britain are facing the toughest job market in a decade, with youth unemployment surging to 15.3% for 16 to 24-year-olds. This represents the highest level since the peak of the COVID-19 pandemic in autumn 2020, creating what experts describe as a perfect storm of economic challenges for recent graduates.
The Economic Squeeze Hitting Young Workers Hardest
The UK's struggling economy forms the backdrop to this crisis. With persistent inflation, high borrowing costs and weak consumer demand, employers are becoming increasingly reluctant to hire. Sanjay Raja, Chief UK Economist at Deutsche Bank, explains the brutal reality: "The higher up you go, the bigger the opportunity cost to replace workers who firms have put more investment and training into, and who are more difficult to replace."
This economic vulnerability means entry-level positions, typically filled by younger workers, are seen as the most expendable during uncertain times.
Tax Changes and Wage Pressures Deter Hiring
Chancellor Rachel Reeves's £25 billion increase in employer National Insurance Contributions last autumn has significantly impacted youth employment. The dual approach of raising the headline rate from 13.8% to 15% while cutting the earnings threshold from £9,100 to £5,000 has particularly affected part-time roles in retail and hospitality - sectors that traditionally employ younger workers.
Compounding this, the government's increase in the minimum wage for 18 to 21-year-olds by 16.3% to £10 per hour, as part of Labour's pledge to eliminate age-based pay discrimination, has raised concerns that young people are being priced out of the job market.
Technology and Pandemic Scars Reshape Opportunities
Artificial intelligence and automation are transforming the employment landscape, with entry-level positions handling routine tasks being particularly vulnerable. "You're in the perfect space where doing menial tasks – spreadsheets, etc – is being disrupted," notes Raja, highlighting how technological advancement disproportionately affects young job seekers.
The pandemic's legacy continues to haunt this generation, with lockdowns disrupting critical educational years and contributing to a sharp rise in mental health issues among young people. More than a quarter of those not in education, employment or training now report health-related barriers - double the figure from 2005.
As Ben Harrison, Director of the Work Foundation thinktank, observes: "All of those factors taken together, it's not necessarily too surprising you've seen this rise in mental health issues since the mid 2010s." The combination of economic pressure, technological change and lasting pandemic effects has created one of the most challenging environments for young job seekers in modern memory.
