The figure represents a 46 per cent increase since 2019, raising fresh concerns about the state of the graduate labour market and the long-term prospects of young people. Of those graduates currently claiming benefits, around one in three say health problems prevent them from working. That amounts to about 240,000 people in 2025, up from 117,000 before the pandemic.
Government data also show that nearly 950,000 people are now classified as not in education, employment or training, commonly referred to as NEETs. The CSJ found that 80 per cent of benefit-claiming graduates under the age of 30 cited health-related reasons for being out of work.
Among 16 to 24-year-olds who are unemployed, educational attainment is often lower. Only 34 per cent hold qualifications at A-level or above, while 30 per cent have GCSE-level qualifications. A further 36 per cent either have qualifications below GCSE level or did not specify their qualification status.
Separate analysis by The Times has drawn attention to the modest earning power of some degree courses. Performing arts graduates from institutions such as the Conservatoire for Dance and Drama or the University of Wales Trinity Saint David were found, in some cases, to earn less than £20,000 five years after graduating. Psychology graduates from the University of Suffolk and the University of Bolton earned less than £21,000 over the same period.
In a report published in December, the CSJ urged the government to rethink its approach to higher education, arguing that the country should “stop churning out graduates and start training workers”.
The think tank’s findings suggest that apprenticeships, particularly at higher levels, often deliver better financial outcomes than university degrees. Five years after completion, the bottom quarter of graduates earned an average of £24,800, compared with £24,810 for level 2 apprentices and £28,260 for those who completed level 3 apprenticeships. Higher-level apprentices earned significantly more, averaging £37,300.
Similar trends have been identified by the Resolution Foundation, which found that while graduates earned around two and a half times the minimum wage two decades ago, by 2023 that premium had fallen to just 1.6 times.
The CSJ also highlighted stark differences in skills policy compared with other European countries. In the UK, three young people pursue university education for every one who enters vocational training. In the Netherlands, the ratio is two to one, while Germany operates on a roughly equal split.
The findings come amid political debate over welfare reform. Last year, Prime Minister Sir Keir Starmer described the benefits system as “broken” and said it was a moral imperative to prevent welfare from trapping people who are willing and able to work.
The government had planned to save £5 billion by tightening eligibility for personal independence payments and other health-related benefits. However, opposition from Labour backbenchers forced a delay, with ministers agreeing to review the changes before applying them to future claimants.
Official figures show that the number of people claiming personal independence payments rose by about 200,000 between January and October 2024, bringing the total to 3.9 million. The Department for Work and Pensions now forecasts that 8.7 million people will be claiming disability-related welfare by the early 2030s.
Former Labour cabinet minister Alan Milburn has warned of a “lost generation” of nearly one million young people aged between 16 and 24 who are not in work, education or training. Commissioned to review the issue, Milburn said successive governments had prioritised older generations over younger people, contributing to what he described as a moral, social and economic crisis.
A government spokesperson said ministers were determined to help young people back into work through a new jobs guarantee, expanded apprenticeships and £1.5 billion in investment aimed at ensuring more young people are earning or learning.
