The review, led by former Labour health secretary Alan Milburn, found nearly 1 million 16- to 24-year-olds are not in education, employment or training, with the figure forecast to rise to more than 1.25m within five years without action.
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‘Economic risk’
It said youth disengagement had become a “strategic economic risk” for Britain, with the labour market no longer providing enough early entry opportunities for young people.
Responding to the report, UKHospitality chief executive Allen Simpson said: “This interim report is clear sighted analysis of how significantly increasing employment costs directly reduces job opportunities, particularly for young people.
“The rapid loss of around 100,000 hospitality jobs after the 2024 Budget and the increase to employer NICs was the canary in the coal mine and should have been recognised as such by the Government.
“The solution is to reduce the cost of employment for hospitality businesses. As the biggest youth employer and driver of social mobility, thousands of job opportunities can be unlocked as a result. The Government needs to make it economically beneficial to employ young people once again.”
The review highlighted hospitality, retail and social care as key sectors for youth employment, noting half of all youth payroll employment is concentrated across wholesale and retail, accommodation and food services, and health and social care.
However, it warned the “first rung” of the labour market had weakened, with fewer entry level roles, more demanding recruitment processes and a decline in early work experience.
Hospitality jobs fall
Hospitality vacancies have fallen by around half in four years, according to the report, while employers in sectors such as hospitality said rising wage costs had made hiring younger and less experienced workers more difficult.
The review also said increases to employer national insurance contributions and threshold changes announced in the October 2024 Budget had added to employment costs across age groups, with the impact felt in hospitality and retail.
It comes after recent ONS data showed hospitality shed almost 9,000 jobs in December, despite the festive period normally being a peak recruitment window.
Meanwhile, trade bodies have warned almost two thirds of hospitality businesses could be forced to cut jobs as wage, NICs and business rates increases take effect.
The findings come amid a wave of job cuts across the wider pub and brewing sector, with recent announcements including Greene King reportedly looking to cut around 100 roles, Molson Coors planning to close Sharp’s Brewery with 200 jobs at risk, and Whitbread confirming plans to exit its UK branded restaurant estate, putting thousands of roles at risk.
Heineken also announced plans to cut between 5,000 and 6,000 jobs globally, underlining the wider pressure facing beer and hospitality businesses as cost increases, weaker demand and changing consumer habits continue to reshape employment across the sector.
Simpson added hospitality could play a greater role in supporting young people into work if pre-employment training and skills pathways were properly backed.
“As Alan Milburn has said, there needs to be a shift towards getting more people work ready. We agree wholeheartedly, and already have in place supported pathways into work, like the Hospitality Skills Passport, which directly helps people who are out of work into hospitality jobs.
“Utilising this kind of pre employment training is critical, as well as delivering reform of the Apprenticeship Levy to allow employers to more effectively use their levy funds to support this work.”
