1.25 Million Young People Out of Work by 2031: Data Reveals Which UK Sectors Face Biggest Recruitment Crisis

Young people not in work, training or education is estimated to be costing the UK £125bn a year, with the number of 16 to 24-year-olds not in education, employment or training (NEETs) set to reach 1.25 million by 2031, according to a report released on Thursday^[1].

The review, authored by former minister Alan Milburn, warns that "one in six 16 to 24-year-olds" will be out of work, education or training by 2031^[1]. This projection comes as official figures revealed more than one million young people were already classified as NEET - "the highest level in more than 12 years"^[1].

Analysis of the CompanyPulse company register^[2] shows 5,988,587 registered companies across the UK, with 5,551,947 currently active. Understanding which sectors traditionally employ young workers becomes critical as businesses face potential recruitment challenges.

Current Scale of the Youth Employment Crisis

According to Office for National Statistics (ONS) figures cited in the report, there were 1,012,000 young people classed as NEET between January and March 2026, representing 13.5% of all young people in the UK^[1]. The data reveals a concerning gender split: approximately 613,000 young people are classed as "economically inactive" - not looking or available to work - with more young women in this category than young men^[1].

Meanwhile, around 400,000 young people are classified as unemployed - actively seeking work but unable to find it - with more 16 to 24-year-old men than young women being jobless^[1].

The report estimates "the cumulative cost" to the UK of almost one million NEET young people at £125bn per year, including financial impacts of lost economic potential, as well as losses in tax revenue, increased health and benefits spending^[1]. This figure exceeds annual education spending in England.

Key Sectors in the UK Economy

Data from the CompanyPulse register reveals the distribution of UK companies across sectors that traditionally provide entry-level employment opportunities^[2]. The retail sector includes 202,476 companies engaged in "retail sale via mail order houses or via Internet", while the hospitality sector counts 83,402 "take-away food shops and mobile food stands"^[2].

Other significant sectors include 74,656 companies in "hairdressing and other beauty treatment" and 73,811 in "freight transport by road"^[2]. The technology sector, often viewed as offering opportunities for younger workers, includes 167,000 companies in "information technology consultancy activities" and 100,812 in "business and domestic software development"^[2].

The largest sector by company count is real estate, with 443,831 companies involved in "other letting and operating of own or leased real estate" and 274,111 in "buying and selling of own real estate"^[2]. However, these sectors typically employ fewer entry-level workers compared to retail and hospitality.

The 'Perfect Storm' Facing Young Workers

Alan Milburn described the situation as a "perfect storm" of challenges, stating that "the education, health and welfare systems are no longer fit for purpose in preparing young people for adult life"^[1]. He warned: "We are at risk of a lost generation"^[1].

In his interview with the BBC, Milburn noted that the first rung on the career ladder was "more out of reach" for this generation of young people, citing a "shortage of opportunity"^[1]. He described "a visceral feeling in the country...it's bordering on a fear in the country among parents and grandparents that this generation is going to be a lost generation"^[1].

Economic Context and Additional Pressures

The youth employment crisis comes at a time of broader economic challenges. Energy bills are set to rise by 13% in July, with a typical household facing an annual bill of £1,862 - an increase of £221 per year^[3]. This cost-of-living pressure may further impact young people's ability to accept lower-paid entry-level positions.

The CompanyPulse register^[2] shows 14,227 new company incorporations in the past seven days, indicating ongoing business creation. However, the distribution of these new companies and their capacity to provide entry-level employment opportunities remains a critical question as the UK faces this youth employment challenge.

Implications for UK Businesses

With 5,551,947 active companies in the UK^[2], the projected rise in NEETs to 1.25 million by 2031 represents both a challenge and an opportunity for businesses across different sectors. Companies in retail, hospitality, and service industries - traditionally significant employers of young people - may need to reassess their recruitment and training strategies.

The construction sector, with 116,093 companies in "development of building projects" and 99,752 in "construction of domestic buildings"^[2], has historically provided apprenticeships and entry-level opportunities. Similarly, the 224,707 companies engaged in "other business support service activities"^[2] often employ younger workers in administrative and support roles.

As the report notes, Work and Pensions Secretary Pat McFadden acknowledged the severity of the situation^[1], though the review released on Thursday does not include potential solutions to the crisis, with these expected to come "at a later date in a final report"^[1].

The data suggests that addressing the youth employment crisis will require coordinated action across the UK's diverse business landscape, from the 153,204 companies in "other service activities" to the growing technology sector^[2]. With the economic cost already reaching £125bn annually and projected to rise, the pressure on both government and business to find solutions continues to mount.