Why Has the NEET Rate Risen?

New analysis by the Institute for Fiscal Studies, commissioned by The King’s Trust and supported by King Charles III Charitable Fund, suggests the recent rise in young people who are not in education, employment, or training (NEET) is not simply a temporary jobs market problem.

The analysis also suggests the rise in youth inactivity cannot be explained away by any single factor, including youth minimum wage increases, employer National Insurance contributions, or the impact of AI.

Young people are often hit first when the jobs market weakens. But the IFS analysis suggests the current rise is not simply a case of young people being swept up in a wider jobs market slowdown. NEET rates are now higher than the wider jobs market would normally suggest, and recent falls in youth employment do not simply mirror what is happening among older workers.

The report also highlights the UK’s longstanding challenge on education participation. Before the pandemic, the share of 18 to 24-year-olds in education in the UK was lower than in any other European country, and the sixth lowest among OECD countries. Historically, high youth employment helped make up for this. But as youth employment has fallen, the UK’s low education participation rate risks leaving more young people outside both work and education.

The analysis examines several possible explanations that have featured prominently in public debate, including rising youth minimum wages, increases in employer National Insurance contributions, artificial intelligence, and deteriorating health among young people.

Key findings include:

There is no clear evidence that recent minimum wage increases have played a key role in reducing youth employment. Areas of the country more exposed to minimum wage increases in 2024 and 2025 have not experienced more negative youth employment trends.
The findings also provide some evidence that the increase in employer National Insurance contributions (NICs) is unlikely to have been a major factor. While larger falls in payrolled employment among 22 to 24-year-olds could appear consistent with employer NICs having an impact, the timing of the falls does not coincide with the announcement or introduction of the increase.
The analysis also considers whether the fall in payrolled employment among older young people could be linked to changes in graduate jobs, including the possible impact of AI. However, when comparing graduates and non-graduates, it does not find that the recent rise in NEET levels has had a disproportionate impact on graduates. The report notes that this does not rule out AI affecting graduate and non-graduate jobs equally, or different factors having offsetting effects.

The report points instead to the need for further investigation into deteriorating health among young people, particularly mental health, and how this may interact with the benefits system and employment support.