East Midlands NEETs (not in education, employment or training) could potentially add £1.2bn to the UK GDP if the rates reduced to the same as Northern Ireland and more young people joined the labour force, according to analysis from PwC into the annual youth employment rate (16–24-year-olds).
PwC UK’s Youth Employment Index tracks the progress of youth employment outcomes across the 38 OECD countries and regions in the UK. Analysis shows that the East Midlands performed poorly, with NEET levels increasing from 12% in 2023, to 15% last year. The region had one of the highest NEET levels in the UK, the same as London.
Northern Ireland is now the benchmark for reducing the share of young people who are NEET, with 9% of 16 to 24 years olds classed as NEET. Scotland with 16% is at the other end of the scale. PwC’s analysis indicates that getting more young people into employment under initiatives such as the government’s Youth Guarantee could boost GDP by between £13 and £26bn if regional disparities reduced to levels similar to those found in Northern Ireland.
UK youth jobs market
The UK’s youth jobs market performance has declined over the past year, dropping four places to 27th out of the 38 OECD economies. The Index presents a number of recent lows in UK youth employment metrics including: economic inactivity levels worst in a decade, one in eight now classed as NEET (not in education, employment or training), and the share of new graduates in ‘graduate jobs’ at a ten-year low.
The report finds that the three main drivers to the UK’s deteriorating performance are:
- Cyclical pressures: The overall UK labour market has cooled. UK youth unemployment is now almost three percentage points higher than the OECD average, suggesting young workers are disproportionately impacted by the softening jobs market relative to older workers. While adult workers have seen consistent employment growth since 2012, employment among young workers in 2025 remain below 2019 levels. The youth-to-adult unemployment ratio is now at its highest level on record and the highest in the OECD.
- Graduate employment lull: The overall share of recent graduates in ‘graduate jobs’ has fallen to its lowest level since 2014, indicating the labour market’s capacity to absorb new entrants is weakening. The number of graduates entering the jobs market continues to climb with 2024 marking the first year over one million students graduated from university.
- Rising economic inactivity: A growing share of young people are becoming economically inactive, driven by a larger pool of students and an increase in long-term sickness. Three-times as many young people are inactive due to long-term sickness than 2005, with one quarter (26%) of young people reporting common mental health conditions in 2024, compared to 19% in 2014.
Little indication of AI impacting youth employment
PwC’s most recent Hope and Fears survey found nearly a third of entry-level workers say they’re worried about AI’s impact on their future. Across all sectors, the Index found no direct impact of AI on youth employment, with weaker business sentiment and softer labour demand being the main drivers for higher youth unemployment.
However, analysing highly exposed sectors shows a potential impact emerging. The IT sector is the most exposed to AI adoption and typically has higher occupational churn, so could be an early indicator for wider trends. Youth employment in IT fell by one-fifth (20%) last year, in part due to a 14% fall in roles for new graduates, while adult employment has remained broadly stable. This could suggest that increased AI adoption has had some impact on entry-level roles at least in the short term. This trend, however, does not currently extend to other sectors.
Longer term, young people are optimistic about AI impact. PwC’s Hope and Fears survey found Gen Z workers feel more excited about how AI will affect their careers over the next three years compared to Gen X – expecting to see an increase across productivity (67% vs 39%), salary (47% vs 18%), and job security (48% vs 16%).
Alex Hudson, market senior partner, East Midlands, PwC UK, said: “The latest findings about youth unemployment are stark. They make it clear that the economic opportunity for the East Midlands is significant, but the journey to bringing people back into the workforce isn’t clear cut.
“The conversation on making sure that the region’s industries and businesses have access to a skilled workforce which is fit for the future has been prevalent in the East Midlands. With the rise of AI potentially transforming the workplace, tackling the issue of youth employment will be key to unlocking the right skills and economic growth for the region and so should be at the top of the agenda.”
