‘A era’s future is in danger’: PwC warns on sharp deterioration in youth unemployment

A sharp deterioration in youth unemployment has put ‘a generation’s future at risk’, a stark report claims.

Three million young people are out of work as joblessness has increased, a study by accountants PwC says.

And there are ‘early signs’ that the rise of artificial intelligence (AI) could be affecting some sectors – with graduates at the ‘sharp end’.

The downturn has sent the UK sliding down PwC’s youth employment index, the biggest fall among the G7 group of advanced nations.

It comes after warnings that rising taxes and a surge in the minimum wage for young people will worsen the crisis.

PwC said rolling back youth unemployment in Britain’s worst-performing areas could spark a £26billion economic boost.

Out of work: Three million young people are now out of the labour force after bearing the brunt of a recent rise in joblessness, the study from accountants by PwC found

Marco Amitrano, PwC senior partner, said: ‘A generation’s future is at risk, as is productivity and prosperity. Given the UK’s sliding performance on youth employment, a serious gear-change is needed.’

He said the Budget delivered ‘greater stability’ on tax but added: ‘We also need a tangible programme for growth that business can get behind.’

Official figures show nearly a million people aged 16 to 24 are classed as not in employment, education or training.

PwC’s measure of economically inactive people, which is different, has risen a third to 3m in the past two decades.

Two-thirds are students, while 270,000 are inactive due to sickness. Others have caring or family responsibilities or are not seeking work. Youth unemployment stands at 15 per cent, up from 11 per cent three years ago.

Jake Finney, an economist at PwC, said: ‘The UK youth jobs market has deteriorated sharply, the steepest decline in the G7. 

‘Young people account for over half the rise in unemployment since mid-2022, despite making up under a fifth of the working-age population. Young workers have inevitably felt the squeeze.

‘They are concentrated in entry -level roles, leaving them more exposed than colleagues with longer tenure.’

He said it was ‘too soon’ to gauge AI’s effect, but noted that in the information and communication sector, youth employment has fallen by a fifth over the past year.

‘Graduates may be at the sharp end of this,’ he said. ‘In 2025, more than 1m graduates could enter a market that is changing rapidly, with many moving into industries characterised by high AI adoption.’