The Entry Level challenge and opportunities for recruiters

As parts of the job market show signs of stabilising this year, the number of young people disconnected from work, education, or training continues to climb — creating a serious blockage in the employment funnel that supplies future talent.

To combat rising youth disengagement, the Government has just launched a major £1 billion youth employment drive, designed to create 200,000 new jobs and apprenticeships.

Investment in this area of the labour market is something APSCo UK strongly welcomes. We have long lobbied for meaningful reform — particularly around the Growth & Skills Levy and increased Apprenticeship investment. In December, we updated members on the Government’s plans to expand youth apprenticeships, reflecting the very changes APSCo has long advocated for.

The Scale of the Problem: A Crisis at the Start of the Employment Funnel 

Nearly one in eight young people aged 16–24 — close to one million — are now not in education, employment, or training (NEET).

Over a quarter of these young people cite long‑term sickness or disability as the barrier keeping them out of the labour market, up from just 12% in 2013/14. In fact, since 2019, the number of economically inactive 16–34‑year‑olds with mental health conditions has risen by a staggering 76%. This marks a profound shift in the health and wellbeing landscape affecting early‑career workers.

This isn’t only a human challenge — it’s an economic one. Being out of work at a young age can lead to more than £1 million in lost lifetime earnings, according to the Keep Britain Working review. The Government has previously described the situation bluntly as a “crisis of opportunity”.

CV‑Library’s Q4 2025 Job Market analysis shows that those leaving payrolled employment are disproportionately in the 25–34 age group, which accounted for 76% of the decline in payrolled employees over the past year. Meanwhile, employment among older groups (35–49 and 65+) saw modest growth.

In 2025, unemployment rose to 5.1%, job vacancies dipped quarter‑on‑quarter, and payrolled jobs fell by 184,000 year‑on‑year. These pressures cascade: fewer entry‑level roles, rising early‑career attrition, and a youth demographic increasingly disengaged from the world of work. The employment funnel is narrowing sharply at the beginning — and stabilising later — leaving a widening gap between young workers and the labour market.

Government Response: A £1bn Employment Drive for the Next Generation  

This new Government programme responds directly to the 248,000 rise in young people not earning or learning between 2021–2024 and a 40% decline in apprenticeship starts over the last decade.

Key measures include:

• £3,000 Youth Jobs Grant for each 18–24‑year‑old hired after six months on UC, supporting 60,000 young people.
• Expansion of the Jobs Guarantee to ages 18–24, adding 35,000 more subsidised roles and bringing the total above 90,000 over three years.
• Launch of a new AI and automation practitioner apprenticeship to help workers and businesses harness artificial intelligence.
• £2,000 Apprenticeship Incentive for SMEs hiring 16–24‑year‑olds, part of reforms targeting 50,000 more apprenticeships.
• New foundation apprenticeships in hospitality and retail with employer support of up to £2,000 for each young entrant.

What This Means for Recruiters

1. Early‑career hiring is about to get cheaper — and more attractive

The new grants and incentives should reduce the cost of taking on young talent. This gives recruiters a strong value proposition when advising clients, especially SMEs who previously hesitated due to support needs and onboarding costs.

2. Surge in demand for entry‑level recruitment and skills matching

With up to 200,000 new jobs and apprenticeships coming online, employers will lean heavily on recruiters to identify job‑ready candidates and navigate subsidy requirements.

3. Apprenticeship reform creates sector‑specific opportunities

Sectors like hospitality, retail, engineering and construction already showed stronger hiring activity in late 2025. With foundation apprenticeships and levy reforms prioritising young workers, recruiters in these sectors will see increased demand for structured early‑career pathways.

4. Recruiters gain a critical role in rebuilding the broken funnel

Given the intense detachment of early‑career workers — contrasted with relative employment stability among older groups — the recruitment industry is uniquely positioned to bridge the gap. This could include mental‑health‑aware hiring, stronger candidate engagement, and building partnerships with training and support organisations.

ee and to the whole APSCo team for all their help - I would definitely recommend giving it a go. But not in our category!"

Interested in learning more about Apprenticeships? Head to our Apprenticeships page where we have more information.

Does this topic open opportunities for you have more consultative conversations with clients but your team needs some training on where to start? Speak to the APSCo Talent Development team for advice.