Youth unemployment has reached unprecedented levels, placing significant pressure on a generation grappling with economic instability and an evolving job market. Concurrently, employers face the dual challenge of tightening recruitment budgets and the accelerating influence of Artificial Intelligence (AI) reshaping entry-level roles. This complex landscape raises a critical question: how can Human Resources (HR) departments proactively address these challenges and mitigate the long-term impacts of joblessness on young people?
The Oxford Elevate Forum: A Catalyst for Dialogue
The urgency of this issue was a central theme at a recent one-day forum hosted by Oxford Elevate, the executive education platform of the University of Oxford’s Department of Economics. This pivotal event convened a diverse group of business leaders, esteemed researchers, and experienced HR practitioners to delve into the realities of today’s increasingly multigenerational workforce. A primary focus was the examination of how profound structural shifts in the global economy are fundamentally reshaping career paths for Gen Z, the youngest demographic cohort to enter the labour market. Discussions explored a range of critical economic forces impacting Gen Z’s work experience, from persistent intergenerational inequality to the profound and lasting effects of youth unemployment on individuals and society. The forum underscored the necessity for collaborative strategies to navigate this intricate economic transition, emphasizing that the future of work for Gen Z is not merely an HR challenge but a societal imperative.
A Crisis Unfolding: Record Joblessness and Its Profound Implications
The severity of the youth employment situation in the United Kingdom has been starkly highlighted by recent data. Former MP Alan Milburn, who is currently leading the "Young People and Work review" – a comprehensive report expected this summer – has described the jobs outlook for young people as "an existential risk" for the UK economy. His assessment underscores the potential for widespread societal and economic disruption if the issue is not addressed with urgency and strategic foresight.
Echoing Milburn’s concerns, the latest unemployment figures released by the Office for National Statistics (ONS) paint a sobering picture. The data confirms youth joblessness is at a record high, with almost one in six individuals aged between 16 and 24 currently out of work. This alarming statistic signifies a significant downturn, as this rate has, for the first time, surpassed the average across the European Union and is even higher than the levels observed during the height of the COVID-19 pandemic. In real terms, this means hundreds of thousands of young people are actively seeking but unable to find work, leading to a substantial drain on potential human capital and economic productivity. This trend indicates a deep-seated structural problem rather than a transient blip.
The consequences of being "NEET" – Not in Education, Employment, or Training – extend far beyond immediate economic statistics. A groundbreaking new report from the UCL Centre for Longitudinal Studies has illuminated the devastating long-term consequences of youth unemployment. By examining a cohort of individuals now aged 51, the research reveals that those who were "persistently NEET" between the ages of 16 and 24 were an astonishing six times more likely to be out of work in midlife. More broadly, sustained periods of joblessness during formative years were found to have profound negative impacts on individuals’ long-term employment prospects, financial stability, and critically, their physical and mental health well-being. This research strongly suggests that the early experiences of Gen Z in the labour market could cast a long shadow over their entire adult lives, leading to a generation struggling with systemic disadvantage, reduced earning potential, and heightened health risks.
Navigating the "Perfect Storm": Employer Perspectives and Economic Pressures
From the employer’s vantage point, the current economic climate presents what Paul Johnson, former director of the Institute for Fiscal Studies and now Provost of Queen’s College, Oxford, describes as a "vicious circle." Businesses are contending with a confluence of factors that make hiring, particularly of younger, less experienced individuals, increasingly challenging. These factors include managing higher employment costs, which have been exacerbated by inflationary pressures and rising living wages, and the unexpected broader economic impacts stemming from global geopolitical events, such as the conflict in the Middle East, which can ripple through supply chains, energy costs, and consumer confidence, leading to increased business caution.
Johnson also points to increased regulatory burdens, specifically referencing the Employment Rights Act. While intended to protect workers, new legislation and heightened compliance requirements can introduce a degree of caution among employers, particularly smaller businesses, regarding recruitment and workforce expansion. He acknowledges that while businesses typically adapt to new regulatory landscapes over time, the current environment is unique. "There are trade-offs, and it depends on how you want to take risks with employee levels, and the level of regulation," Johnson explains. "That typically tends to work its way out once people get used to the new level of regulation. The problem now might be that there is no flexibility because of the high floor on wages, and there is a danger that this becomes a perfect storm." This "perfect storm" scenario suggests a confluence of high operating costs, regulatory inflexibility, and economic uncertainty, all conspiring to dampen employer appetite for taking on new, potentially riskier hires, thus exacerbating the youth unemployment challenge.
Despite these challenges, Johnson emphasizes the intrinsic value of work for young people, particularly in fostering a sense of identity and purpose. He stresses that employers have a vested interest in providing a supportive and engaging environment. "It’s important to young people to have an employer that values them, that gives them progression and sense to their work," he states. "It’s in the interest of employers to give them that sense of belonging so young people can get more out of work." This highlights a strategic imperative for businesses: investing in the well-being and development of young employees is not merely altruistic but crucial for enhancing economic productivity and securing future talent pipelines in a competitive global market.
Gen Z’s Rising Insecurity: Mental Health and Precarious Employment
The economic precarity facing Gen Z is inextricably linked to a concerning rise in mental health challenges, as detailed by Mathias Fjællegaard Jensen, an applied microeconomist affiliated with the Department of Economics at Oxford. Jensen’s ongoing research draws upon extensive datasets, including the UK Millennium Cohort Study – which tracks approximately 19,000 individuals born between 2000 and 2002 – to analyze mental wellbeing trends. Complementing this, he utilizes comprehensive Danish population-wide data to further elucidate the complex interplay between employment status and mental health conditions.
Jensen’s findings paint a stark picture: mental health pressures are significantly more pronounced for Gen Z compared to previous generations. Young people consistently report higher instances of feeling stressed, overwhelmed, and unable to cope. This trend has demonstrably worsened in the UK in recent years, with particularly acute rates observed among young women. This escalating mental health crisis within Gen Z is not merely a social issue but has profound implications for their ability to engage with the workforce and contribute to the economy, potentially leading to reduced productivity, increased absenteeism, and higher turnover rates.
A key contributing factor to this rising insecurity, Jensen argues, is the changing structure of employment itself. While work traditionally offered financial stability, this certainty is increasingly elusive for many young people. "Working gives you financial stability," Jensen notes, "But increasingly its structure does not provide the same stability – young people are often more likely to be on fixed-term or zero-hours contracts, which don’t give that same sense of security as they can’t predict their income. This lack of stability is likely to affect their mental health." This contractual insecurity makes long-term financial planning, such as saving for a deposit or managing student loan repayments, incredibly difficult, contributing to chronic anxiety and a pervasive sense of vulnerability.
Moreover, the burden of financial insecurity disproportionately affects young people from lower-income families. Jensen explains, "In the UK, young people are worried about the cost of living and the whole economic backdrop. They can be partly shielded from these worries if they can get financial help from their families." This highlights a growing intergenerational wealth divide, where those without familial safety nets are left more vulnerable to economic shocks and mental health deterioration. His research further indicates that the mental health impact is not solely tied to outright unemployment; merely moving in and out of different employment situations can also significantly erode mental well-being. "Our research indicates that mental health improves when you go into employment, then worsens when you’re unemployed," he adds. "And if you move from one employer with higher mental health scores to one where these are lower, your mental health appears to follow that trajectory." This suggests that the quality and stability of employment are as crucial as employment itself for Gen Z’s overall well-being, demanding a holistic approach to workforce management.
Whose Responsibility? Employers as a Safety Net and Strategic Partners
The question of who bears the responsibility for safeguarding Generation Z from the enduring impacts of youth joblessness is multifaceted. Mathias Fjællegaard Jensen posits two compelling arguments for employer involvement. "One is that employers have a responsibility to look after the people they hire – that’s not new," he states, emphasizing a long-standing ethical obligation inherent in the employer-employee relationship. The second argument is more pragmatic and strategically vital: "with an ageing population, firms need to recruit and retain young people, and our research suggests that workplaces really do affect their employees’ mental health, and in turn will influence their productivity, and whether they stick around and remain in work." This underscores that investing in young talent is not merely corporate social responsibility but a critical business imperative for long-term sustainability and competitiveness in a demographic shift where younger generations will form the backbone of the future workforce.
Pioneering Solutions: The Amey Model and Industry Best Practices
Infrastructure company Amey stands out as a proactive example of an employer taking comprehensive steps to support young people entering the workforce. The company offers a diverse range of programmes designed to bridge the gap between education and employment, including vital work experience opportunities for care leavers, structured T Level placements (technical qualifications equivalent to A-levels, combining classroom learning with industry experience), and robust apprenticeship schemes that provide practical skills and accredited qualifications.
Significantly, Amey has recently expanded its early careers support to encompass all employees under the age of 25, moving beyond formal schemes. Jon Hornagold, Amey’s Apprenticeship Manager, explains this inclusive approach: "Anyone who’s coming in, we need to make sure they’re supported and not at risk of becoming a Neet statistic. So we bring everyone into the fold." This commitment ensures a wider safety net and provides crucial foundational support. Beyond workplace training, young employees at Amey receive practical life skills support, including financial literacy education – a vital skill for a generation burdened by cost-of-living concerns and student debt – and resources for managing mental health challenges. To further boost confidence and professional development, they are actively encouraged to participate in public speaking opportunities and represent the company at recruitment fairs, fostering essential communication, teamwork, and networking skills.
Hornagold advocates for a collective industry-wide effort, noting a shift in foundational experience for young people. "Young people used to have more access to Saturday jobs where they would get into the habit of turning up early, engaging with people," he observes. "Now, as employers, we see people who have not had that, and they have a different expectation of what they think they have to give." This highlights a need for employers to provide the foundational soft skills and work ethic development that informal roles once offered, integrating them into structured early career programmes.
Amey’s investment in youth employment programmes yields impressive retention rates that extend beyond its early careers cohorts. Initiatives such as buddy schemes and mentoring programmes are not limited to young starters but also support other groups, including women returning after career breaks and individuals recovering from long-term sick leave, demonstrating a holistic approach to employee well-being. "Placement students often come back as graduates, and our T Level placements are like a 45-day job interview. We’ve invested time in people and they’ve grown in confidence," Hornagold proudly states. Furthermore, Amey extends its impact beyond its immediate workforce by transferring a portion of its apprenticeship levy funds to smaller employers within its supply chain and local community, fostering a broader ecosystem of support for young talent and strengthening regional economic resilience.
Government Intervention and Broader Support Mechanisms
While Amey’s comprehensive approach serves as a commendable model, it is recognized that not every employer possesses the scale, resources, or financial capacity to implement such extensive programmes. Acknowledging this disparity, recent government announcements, such as the Youth Jobs Grant, aim to incentivize smaller employers to take on young people and actively combat the NEET trend. This grant, offering financial incentives like a £3,000 payment for eligible hires, seeks to lower the perceived risk and cost for smaller businesses to invest in youth talent, potentially encouraging them to offer entry-level positions they might otherwise forgo.
However, financial incentives alone are insufficient, according to Rebecca Drew, Managing Director of Vistage, a leading peer mentorship organization. Drew emphasizes that for these initiatives to be truly effective, employers must establish the appropriate infrastructure and support systems to not only attract but also retain young people in the workforce. "While financial incentives like the £3,000 payment are helpful, employers themselves have a crucial role to play in both attracting Gen Z into the workplace and ensuring they remain there," she explains. "Businesses must do the work to allow new arrivals to achieve an actual career and protect their mental wellbeing in a tough job market where many are facing pressures from many angles, such as paying back student loans and the high cost of living."
Drew advocates for simple, relatively low-cost interventions that can significantly bolster support for young employees. These include implementing buddy systems or formal mentoring arrangements that pair junior employees with senior staff, fostering a sense of connection, guidance, and a clearer career progression path. Crucially, she also highlights the importance of offering younger staff "safe spaces" for honest conversations about their concerns, whether professional, financial, or personal, ensuring psychological safety within the workplace. Amey, for example, has established multiple affinity groups, allowing young people to find peer support and a sense of belonging within the organization, validating Drew’s recommendations and demonstrating their practical application.
Reframing the Future: AI, New Roles, and the Value of Young Talent
Beyond the immediate challenges, a strategic reorientation is vital. Rather than solely focusing on the perceived risks and costs associated with hiring young people, hiring managers are encouraged to shift their perspective and recognize the immense benefits of attracting this new generation of talent. Rebecca Drew emphasizes this positive outlook: "Hiring younger people gives leaders access to fresh cultural perspectives and insight into shifting customer expectations, and those who treat Gen Z hires as genuine contributors are far more likely to see meaningful returns." She adds that Gen Z are often digital natives, "the first to pick up new software or channels and can quickly identify how those capabilities can be applied to client work," making them invaluable assets in an increasingly technology-driven economy where digital fluency is paramount.
This perspective is particularly relevant in the context of Artificial Intelligence. Recruiter Su
