Young Britons are now more likely to be jobless than their European peers for the first time on record, with youth unemployment rising to 16.1 per cent in the final three months of 2024 as businesses grapple with the consequences of rising costs and new regulations, reports BritPanorama.
This marks the highest youth unemployment level since 2014, fuelling warnings about the emergence of a jobless generation. Many businesses, particularly in the retail and hospitality sectors, are hesitant to hire younger workers due to the increased financial burden of rising wages and National Insurance contributions.
The youth unemployment rate now exceeds the EU average of 14.9 per cent, a significant shift as it is the first instance since records began in 2000 where Britain has outpaced the continent. Analysis from the Resolution Foundation highlights the escalating crisis and its implications for the future workforce.
Business leaders and economists express concern that the upcoming workers’ rights legislation may exacerbate hiring challenges, instilling further trepidation among employers. This sentiment is echoed by Labour’s welfare czar Alan Milburn, who noted that 45 per cent of 24-year-olds not in education, employment, or training have never held a job, warning this trend could leave a generation “on the scrap heap.”
Tory Shadow Business Secretary Andrew Griffith attributed the unemployment figures to what he described as the “zombie government” of Labour, citing the detrimental effects of their policies on the job market. Griffith stated, “Labour’s jobs tax, economic uncertainty and their red tape Employment Rights Bill are holding back hiring, creating a jobless generation.”
Overall unemployment in the UK has also seen a rise to 5.2 per cent, the highest since early 2021, with notable increases noted since 2022, where the rate has escalated by nearly a full percentage point in just twelve months. This rise coincides with Chancellor Rachel Reeves’s introduction of a £25 billion increase in employer National Insurance contributions and substantial minimum wage hikes.
Sectors heavily impacted by rising employment costs, such as retail and wholesale, have collectively shed 65,000 jobs since January of last year. Since mid-2024, the number of young employees aged 34 and under has decreased by 242,000, contrasting with a rise of 71,000 in employment for those aged 35 and above, revealing a deepening generational divide within the UK labour market.
As the minimum wage for young workers surged by 16.3 per cent to £10 an hour in April 2025, economists interpret the narrowing wage gap between youth and adult pay, along with heightened employer NICs, as deterrents to employing inexperienced individuals. Louise Murphy, senior economist at the Resolution Foundation, emphasized an urgent need to address the UK’s youth unemployment crisis, forecasting potential further increases in 2026.
Martin Beck, chief economist at WPI Strategy, noted that rising labour costs are weighing heavily on entry-level hiring decisions, compounded by firms reassessing the viability of junior roles amidst advancements in artificial intelligence. Recent data shows a cooling in wage growth, with pay excluding bonuses rising by 4.2 per cent in the three months to December, down from 4.5 per cent previously, indicating a softer labour market.
The current data adds pressure on the Labour government to address the worrying trends in youth employment, with Milburn articulating a pressing need for change to avert an “existential” crisis. Warned of a “downward escalator” leading to long-term dependency on benefits, he reminded the party of its election pledge to effect meaningful change.
There is an urgency for decisive action to avert an escalating crisis where young people face diminished prospects in an evolving job market, highlighting the challenges and complexities confronting the UK’s employment landscape.
