Recent fall in youth employment approaching the decline seen during COVID and 2008 financial crisis

19th May 2026

In the three years from December 2022 to December 2025, the share of 16- to 24-year-olds in payrolled employment fell by 4.3 percentage points (equivalent to 330,000 people) from 54.9% to 50.6%.

In comparison, the decline seen over the COVID-19 pandemic was 6.5 percentage points, while the fall in the 2008 financial crisis was 5.4 percentage points (relative to the pre-crisis trend).

The decline in youth employment in recent years is the primary factor in the highly publicised rise in the share of young people not in education, employment or training (NEET), which increased from 10.8% (760,000) in 2022 to 12.8% (960,000) at the end of 2025. Compared with other OECD countries, the UK has historically had high youth employment rates, but one of the lowest shares of 18- to 24-year-olds in education.

These are some of the findings of new IFS analysis, published ahead of the latest ONS labour market statistics released at 07:00 today and supported by The King’s Trust. The report uses administrative data to examine recent changes in labour market participation for young adults. It finds that:

Changes in employment have significantly differed by age. Among 22- to 24-year-olds – the substantial majority of whom have finished their studies – employment rates fell by 4.8 percentage points (to 66.1%) between 2022 and 2025. There was also a 7.3 percentage point decline among 16- and 17-year-olds, likely reflecting at least in part a fall in casual work alongside studies. The change for those aged 18–21 was more muted (a 1.1 percentage point decline).
The share of 18- to 24-year-olds claiming out-of-work benefits increased by 1.4 percentage points (equivalent to 84,000 people) between 2022 and 2025. Just over half of this rise was due to inactivity-related benefits where the claimant is not required to search for work. Nearly one in nine (10.9%; 640,000) 18- to 24-year-olds claimed an out-of-work benefit at the end of 2025.
The fall in labour market participation is widespread across regions and nations. Payrolled employment fell by at least 3 percentage points in 8 out of the 12 regions and nations, including by 4 percentage points in London. The share of 18- to 24-year-olds claiming out-of-work benefits increased across the board, though the composition of benefits varied, with inactivity-related benefits accounting for a larger share of the increase in Northern regions, Scotland and Wales.
These trends are unlikely to be purely driven by a cyclical downturn in the economy, which might be expected to eventually right itself on its own.

The NEET rate is higher than we would expect, given the historical relationship between NEET rates and adult (25–64) employment and unemployment.
Recent changes in youth and adult employment rates across regions are not very strongly correlated, unlike what one would expect in a cyclical downturn.
This suggests structural changes may be specifically affecting young people, perhaps including the rise of AI or worsening youth mental health. One widely discussed reform is the substantial recent rise in youth minimum wage rates. The data available do not allow us to confidently say one way or the other whether minimum wages have had a sizeable effect on employment, but our central estimates suggest that it is likely that other structural factors are playing a role.

Jed Michael, Research Economist at IFS and an author of this report, said:

‘The fall in youth employment across the UK is likely to be setting off alarm bells among ministers – not least because we know that unemployment early in one’s career can have lasting negative consequences. The job of the Milburn Review – set up to tackle the rise in NEETs – is made much harder by a lack of clarity as to what is driving the fall. While it does not seem to be down solely to a temporary cyclical downturn in the economy, more evidence is needed to understand the roles of minimum wages, youth mental health, AI and other factors. Without this evidence, expensive policies to reduce the NEET rate are shots in the dusk, if not the dark.’

Jonathan Townsend, UK Chief Executive of The King’s Trust, said:

‘These findings should concern anyone who cares about young people’s futures. Too many young people are already out of work, education, or training, and this analysis suggests we cannot simply assume the problem will correct itself as economic conditions improve.

‘This challenge is not impossible to fix. The message is that reversing the rise in young people out of work or education will take concerted action, a better understanding of what is driving it, and the right support, at the right time, for young people who need it most.

‘For an organisation with a vision of ending youth unemployment, that is a clear call to action. We urgently need to understand what is pulling more young people away from work and education, including the role of mental health, while also making sure young people have the right routes to keep learning, build skills, and move confidently and boldly into work.’

Founded in 1979 by His Majesty King Charles III, and inspired by the values of harmony and sustainability, King Charles III Charitable Fund’s mission is to transform lives and build sustainable communities. The Fund supports His Majesty’s charitable interests through its grant making programmes and incubating charitable projects and initiatives. We are committed to helping people and communities to change the world around them, creating lasting improvements to people’s lives and a sustainable future for all.

The King’s Trust believes that every young person should have the chance to succeed, no matter what their background or the challenges they are facing. We help those from disadvantaged communities and those facing the greatest adversity to develop the confidence and skills they need to find work.

Read the full IFS report HERE