The disappearing first rung of work
Britain is increasingly at risk of creating a generation locked out of the first rung of economic life. That is the underlying warning contained within Alan Milburn’s latest review into youth unemployment, which found that almost one million young people are already not in education, employment or training, with that figure projected to rise sharply over the next five years without intervention. By 2031, the report warns, one in six young people could fall into this category. New figures released alongside the review show the number has now officially risen above one million for the first time in more than 12 years.
The headline figure is alarming enough. But the deeper issue is what it reveals about the changing structure of the economy and the growing gap between what young people are told about work and what they increasingly experience in practice. The popular narrative surrounding youth unemployment often defaults to cultural explanations. Young people are portrayed as unwilling to work, overly dependent on welfare, lacking resilience or expecting too much too quickly. Milburn’s review directly challenges that framing. Survey evidence found that the overwhelming majority of young people outside work or education actually want employment or training opportunities. As Milburn himself argued, this is “not a shortage of effort but a shortage of opportunity.”
Many are already doing what they are supposed to do. They are applying repeatedly for jobs, acquiring qualifications, rewriting CVs and searching constantly for opportunities. The report includes examples of young people submitting hundreds of applications while receiving little or no response from employers. This matters because economies rely heavily on what might be called “first rung” jobs. Retail, hospitality, administration and other entry-level roles have historically allowed young people to gain experience, build confidence, develop social networks and enter working life. Increasingly, however, these sectors are under pressure from a combination of economic stagnation, rising operating costs and technological change.
The UK economy has steadily lost large numbers of low and medium-skilled jobs over the past two decades, while growth has concentrated increasingly in higher-skilled sectors. At the same time, vacancies in hospitality and retail – industries which traditionally absorbed large numbers of young workers – have fallen sharply in recent years. Milburn described this as not a short-term downturn but as a “long-term structural problem”, with young people on the frontline of economic change.
Into this already difficult labour market enters the rapid acceleration of artificial intelligence and automation technologies. This week, the chief executive of Standard Chartered faced criticism after describing plans to replace “lower-value human capital” as part of the bank’s adoption of AI technologies. The wording caused outrage, but the underlying logic is becoming increasingly familiar across multiple sectors. Businesses are investing heavily in technologies designed explicitly to reduce labour costs and automate administrative or junior tasks previously carried out by people.
Research already suggests this is beginning to reshape hiring patterns. Graduate vacancies have reportedly declined significantly in sectors most exposed to AI adoption, while firms increasingly describe automation as a route to greater efficiency and lower staffing requirements.
From the perspective of large corporations, this may appear economically rational. AI promises productivity gains, reduced cost and faster workflows. But from the perspective of young people attempting to enter the labour market, the message increasingly appears to be that even the most basic pathways into employment are narrowing.
This creates a much wider social and political problem than unemployment statistics alone can capture. Work is not simply a source of income. Entry-level employment has traditionally functioned as a mechanism through which people gain independence, develop confidence, acquire practical skills and feel integrated into society. If growing numbers of young people feel locked out of that process entirely, the consequences are likely to extend far beyond economics.
It also exposes a growing contradiction with political discourse. Governments continue to emphasise aspiration, personal responsibility and the importance of hard work while presiding over an economy in which many young people can no longer reliably translate effort into opportunity.
The old social contract – work hard, gain experience and gradually progress – increasingly appears unstable. This is particularly significant because younger generations are already experiencing economic life differently from many of their predecessors. Housing costs are substantially higher relative to income, secure employment is less common, and wealth accumulation increasingly depends on assets that many young people are unlikely to access for years, if at all.
Against that backdrop, being locked out of employment at the beginning of adult life can have long-lasting consequences. Periods spent unemployed while young are associated with lower lifetime earnings, poorer mental health outcomes and weaker long-term attachment to the labour market. Perhaps the most concerning aspect of the latest figures is that the rise is increasingly being driven by young people no longer actively looking for work at all. This suggests something deeper than a temporary downturn in the labour market. It points instead toward growing detachment from an economy which increasingly appears closed off to them.
When the first rung of work disappears, the danger is not simply economic inactivity. It’s the erosion of the belief that participation will be rewarded in the first place. A society cannot endlessly tell young people that opportunity exists while steadily removing the pathways through which it is accessed. The question now is not whether young people are willing to work. Increasingly, the question is whether the economy is still willing to make room for them.