Employers need incentives if mass unemployment of young people is to be avoided, said The Institute of Student Employers (ISE).
It raised concerns about the number of young people who will miss out on career opportunities as the economy recovers post-coronavirus.
In its plan for government, the ISE recommended ways to help employers hire and support young people and make sure the labour market continues to function.
These include cutting national insurance contributions for all staff under 24 years’ old; securing opportunities in education, apprenticeships and work placements for young people who have been unemployed for six months or more; and bringing more flexibility to company spending of the apprenticeship levy.
ISE chief executive Stephen Isherwood said: “The labour market is breaking down. There is a looming youth unemployment crisis and employers are already facing pressure to slow down or stop entry-level recruitment and slash training costs.
“These decisions will disproportionately impact young people.”
In May, an ISE report found that UK firms on average will cut entry level recruitment by around a quarter (23%) this year due to challenges related to the pandemic.
For 2021, 60% of firms are currently sure of their recruitment plans and 15% are anticipating a fall in recruitment.
The University Partnerships Programme (UPP) also voiced its concerns around the youth labour market by recommending the launch of a ‘civic army’ to provide work placements for 75,000 young people across the country.
Both organisations recommend government cover the costs of ‘ off-the-job’ study time for all new apprentices under 24-years-old to help support their development.
Isherwood said: “Employers need support to invest in entry-level talent to recruit and develop young people. The public purse should be used to provide opportunities for young people rather than leaving them to languish unskilled, out of work and left behind.”
Deborah McCormack, ISE chair and head of talent for Pinsent Mason, said no single measure will prevent a loss of talent from the younger generation. “We need a pragmatic package of support from government to help employers and educators enable our early talent, future-proofing the UK economy.” ISE’s recommendations followed the government’s launch of an ‘Office for Talent’ to attract global academic expertise as part of its coronavirus economic recovery plan.