Youth unemployment in the UK has reached its highest level since the Covid-19 pandemic, with a jobless rate of 15.3% among those aged 16 to 24, the highest in a decade when excluding the peak during the autumn of 2020. This rise in unemployment is attributed to several interrelated factors impacting the UK jobs market.
The economy’s underperformance is a significant factor, influenced by persistent inflation, high borrowing costs, and weak consumer demand. These economic conditions are discouraging employers from expanding their workforce. Entry-level positions tend to be the first to be affected during economic downturns, as employers often view younger workers, who typically lack experience, as more expendable.
Additionally, recent tax increases, specifically a rise in employer National Insurance contributions, have reportedly contributed to higher unemployment rates. The increase in the NIC rate from 13.8% to 15% and a decrease in the earnings threshold have raised employment costs, notably impacting sectors like retail and hospitality that typically employ younger individuals.
The government’s recent adjustments to the minimum wage have also raised concerns among employers. While the national living wage has increased significantly, employers argue that this could lead to reduced hiring opportunities for young people.
Further complicating the situation is the accelerated adoption of artificial intelligence and automation, which poses a threat to entry-level job availability. Sectors such as retail and hospitality are increasingly turning to technology to perform tasks traditionally done by young workers.
Moreover, the long-term effects of the Covid pandemic have disrupted education and increased mental health issues among the youth. Many young individuals face challenges transitioning into the workforce, with a noted rise in mental health struggles among those not engaged in education, employment, or training.
Finally, ongoing economic and social pressures, including rising living costs and stagnant wage growth, have created an environment in which young people find it increasingly difficult to secure stable employment.
Source: https://www.theguardian.com/society/2025/nov/15/ai-covid-and-taxes-what-is-behind-steep-rise-in-youth-unemployment