Britain’s labour market is showing cracks, with almost one million young people aged sixteen to twenty-four currently not in education, employment or training (NEET) and hiring plans from employers freezing amid a four-year high in unemployment.

The fresh data underscore deepening structural issues and raise red flags for growth and productivity.

According to the latest figures, approximately nine hundred and forty-eight thousand young people, or about twelve point eight percent of that age group, were NEET in the UK during April to June two-thousand-twenty-five.

This marks an increase from earlier in the year and draws attention to the fact that youth inactivity is becoming entrenched.

Meanwhile the general unemployment rate has risen to around four point eight percent, up from four point one percent a year earlier.

Beneath these headline statistics lie two worrying dynamics: a sharp rise in youth unemployment and a surge in economic inactivity driven by ill-health and disability.

Between two-thousand-fifteen and two-thousand-twenty-four the number of working-age adults aged fifty to sixty-four reporting work-limiting health conditions rose by nine hundred thousand (thirty-two percent), and for those aged sixteen to thirty-four the increase was around one point two million (seventy-seven percent).

Many young people who are NEET—more than a quarter of them—cite disability or ill-health as the primary reason for their inactivity.

In response, the government is preparing the publication of the Keep Britain Working review, led by Sir Charlie Mayfield, which will outline recommendations for business and ministers on how to reduce worklessness among young people and those with health-related barriers.

Mayfield has stressed that addressing this issue is “absolutely huge” for both the individuals affected and for the economy’s productive capacity.

Business leaders, however, say their capacity to absorb more young people facing additional support needs is under strain.

They point to factors such as a recent rise in employer national insurance contributions of twenty-five billion pounds, elevated borrowing costs, and inflation-related wage pressures.

Sectors that traditionally serve as entry-points for young and less-experienced workers—such as retail, leisure and hospitality—are seeing the largest decline in vacancies as overall jobs demand softens.

Labour is gearing up for a youth-guarantee scheme ahead of the Chancellor’s next budget, promising investment in skills, training, apprenticeships and further education for young people not currently in work or learning.

Trade-union officials argue that without sufficient public investment this could leave those with disabilities and ill-health behind and call for reform of support programmes such as Access to Work and statutory sick pay.

The economic stakes are high.

Analyses suggest that if the UK were able to match the lowest NEET rate among Organisation for Economic Co-operation and Development (OECD) countries, the economy might benefit by as much as sixty-nine billion pounds in reduced benefit costs and increased productivity.

For employers, failing to engage this significant pool of young talent may mean a long-term erosion of labour supply and consumer demand.

Mayfield has stressed: “Investment in employee health and wellbeing should not be a burden — it should be increasingly necessary and highly returning.” Business cannot simply opt out, he said; the challenge is structuring workplaces and training systems so that more young people and those with health conditions get a genuine chance to contribute.

The real question now is how government and business will work together to create those conditions at scale and pace.