Employers offer Chancellor fixes for youth worklessness

Employers are calling for tax breaks, wage subsidies and a major rethink of training to tackle the barriers stopping young people from getting hired, according to new research by the Recruitment and Employment Confederation (REC).

The findings, released ahead of next month’s Autumn Budget, come as REC’s recent JobsOutlook shows rising business confidence but continued hesitation to invest or hire amid economic and technological uncertainty.

Today’s survey of 233 employers was conducted by Whitestone Insight for REC, in consultation with the Institute for Employment Studies (IES).

Kate Shoesmith, REC Deputy Chief Executive, said:

“There is a wide range of pressures on employers, as today’s survey results make very clear. Uncertainty in the economy and high employment costs are holding back hiring - issues the Chancellor can absolutely address in next month’s Budget.

“The government’s Youth Guarantee is a good start. We know from experience that such schemes work best for businesses when designed with young people, not when work is imposed on them, and when the full costs of supporting new labour market entrants is factored into plans. Employers want more action from government on the Growth and Skills Levy; it has to be flexible enough to deliver for the people who most need support. And putting pragmatism into the Employment Rights Bill, so it doesn’t ultimately cost jobs, will require far more discussion with businesses.”

Becci Newton, IES Director of Public Policy Research, said:

“The survey results show support for government plans, such as the changes to the Apprenticeship Levy that will enable funding for short, accredited courses to boost skills. But employers indicate they need more to provide the join-up needed to see better employment options for young people.

“Financial incentives are clearly a consideration, but also notable is the call for sustained support for young people, so less short-termism in funding schemes. To build the bridge for transitioning young people into work, extending or re-engineering the sector-based work academy (work trial) approach could succeed. The more employers that can provide opportunities for work experience and encounters for younger age groups, the more prepared young people will be for the start of their working lives.”

Employers were asked for the main barriers to increasing hiring across the workforce:

• Uncertainty in the economy and geopolitics - 37%
• High employment costs, e.g. Employers' NI contributions, minimum wage rises - 33%
• Lack of candidates with the right skills/ qualifications - 26%
• We don't have enough financial headroom to grow our workforce - 24%
• Concerns about the impact of the Employment Rights Bill, e.g. new rules for workers on zero-hour contracts, new "day 1" rights - 23%

Employers adopting a wait and see approach to hiring this year has impacted on youth employment. This is a concern because in June to August 2025, there were 655,000 young people aged 16 to 24 unemployed. And most recent ONS data shows nearly a million young people (16–24-year-olds) not in education, employment or training (NEET).

Employers were asked what they consider the most effective way in which the government could support them to hire young people who are long-term unemployed and not in education or training:

• Financial incentives like wage subsidies or tax credits - 36%
• Short, funded work trials with the option for the employer to keep on candidates – 29%
• Sustained funding for programmes designed to help young people – 26%
• Pre-employment training focusing on workplace expectations, essential skills, digital skills, literacy and/or numeracy – 26%
• Government support for young people with nonwork related barriers, e.g. transport, childcare or mental health – 22%
• Enabling short, accredited courses that boost technical and vocational skills to be funded by the Apprenticeship Levy – 22%
• Government-funded mentoring and guidance available for 16–24-year-olds starting their careers – 20%
• Local bodies (for example, regional Mayors) working to codesign interventions supporting young people into work with local employers and organisations -16%

The employers surveyed were of different sizes across the UK.

Notes to editors

1.     JobsOutlook: Chancellor should use the Budget to build momentum in job market as employers’ confidence strengthens, suggests the REC, September 2025