The UK risks a “lost generation” of skills and talent because changes in the labour market are making it difficult for young people to get a good job, a new report has warned.

The Youth Employment Challenge, published today by the UK Commission for Employment and Skills (UKCES), has cautioned that the “death of the Saturday job”, a lack of opportunities and the increasing use of word-of-mouth recruitment are proving disadvantageous for young jobseekers.

In the face of a seven-year trend of rising youth unemployment, UKCES has called for every employer to draw up their own “youth policy” to help bring more young people into the workforce.

The report found that in the last two to three years, only a quarter of employers had recruited a young person directly from school or college education. Although employers reported that young recruits were usually well prepared for work, a lack of employment experience was their biggest criticism.

The report highlighted that the number of full-time learners (aged 16 to 17) who also have evening or weekend jobs has halved in the past 15 years – from four in ten in the late 1990s to two in ten at present.

Many of the jobs that young people do – such as in bars, restaurants and retail outlets – are in long-term decline, said UKCES. Wages for 16 and 17-year-olds also fell by 13 per cent between 2010 to 2011 – from £4.70 per hour to £4.10.

The study also found that word of mouth was the most common way for people to secure a job. Although popular with employers, such informal recruitment methods put young people without well-developed professional networks at a disadvantage.

“Only one in four employers recruit young people from education,” said Charlie Mayfield, chairman of the John Lewis Partnership and UKCES. “That simply has to change – we cannot afford to waste the skills and talents of a generation.”

He added that employers should be doing more for the young people in their community. “Small actions can make a big difference, and things like arranging work experience placements, giving talks to young people and offering work shadowing and mentoring are just some of the ways employers can help.”

Alongside today’s report, UKCES has also published a guide to help employers support young people into work, Grow your own: how young people can work for you. It recommends a range of activities for large and small companies, including offering apprenticeships, hosting work experience, visiting schools to give talks, hosting a workplace visit, offering staff placements to update their knowledge or mentoring a young person.

The suggestions mirror work being promoted by the CIPD in its Learning to Work campaign, and the UKCES report was welcomed by the institute.

CIPD skills adviser, Katerina Rüdiger, said: “We support the call for every employer to draw up their own youth policy to help bring more young people into the workforce, but this will be no mean feat and will only be achieved if we achieve a step change in the underlying culture that underpins recruitment and people management practices in the majority of organisations.”