Leading article: Lack of action on jobs risks a lost generation

It is no comfort that yesterday's labour market statistics were not quite as bad as expected. Overall unemployment still came in at nearly 2.6 million, the highest level for nearly two decades, while joblessness among young people hit an all-time peak with an appalling one in four of Britain's 18- to 24-year olds unable to find work. And the worst is far from over. As more public-sector spending cuts feed through, and the crisis in the eurozone continues to batter exports, unemployment is set to rise well into next year.

But of even greater concern than the grim statistics themselves is the Government's lacklustre response to them. There were some warm words from the Prime Minister yesterday, describing the figures as "very disappointing", acknowledging that "every job lost is a tragedy", and stressing that the Government "will do everything it can". He also listed steps taken so far – such as raising the school-leaving age and reforming the welfare system. But David Cameron not only overlooked the fact that the ever-rising unemployment level suggests such measures are of little immediate benefit. He also failed to offer anything new on an issue set to blight so many lives.

Mr Cameron makes a strong case that Britain's low interest rates should not be jeopardised by reining back on spending cuts designed to deal with the public deficit and pacify the bond markets. All well and good. It is also true that, at 8.1 per cent, Britain's unemployment rate is below that of both the US and much of Europe, and only slightly higher than Germany's. But to simply blame the eurozone crisis, while unemployment is soaring inexorably towards levels reminiscent of the socially divisive 1980s, is an abdication of governmental responsibility.

It is difficult to overstate the implications of a spike in youth unemployment. While the immediate impact is significant enough – both in lost productivity and spiralling welfare costs – the long -term effects are devastating. People forced into unemployment early in their working lives often never recover, in terms of earning capacity, skills, or, perhaps most importantly, general psychological well-being.

It is not as if there is nothing the Government can do. Admittedly it cannot create jobs directly without a massive – and ill-advised – expansion of the public sector. But the judicious use of planned infrastructure investments could make a real difference. Contractors bidding for work on large-scale schemes such as road upgrades or the roll-out of high-speed broadband might be required to invest in high-quality apprenticeship programmes, or take on and train unemployed youngsters. There is arguably even a case for a public housing investment programme, helping to address the looming housing crisis and to boost the struggling construction sector, while also creating job opportunities, particularly for young people.

There are also options on the supply side that deserve consideration. A structural review of the labour market would help find creative ways to boost flexibility using, for example, short-time working and job-share schemes. Apprenticeships and internships also need expansion and reform. Previous moves to boost apprenticeship numbers, while welcome, have not gone far enough. And existing schemes would benefit from a clampdown on the worrying number of companies using them as a source of cheap, or even free, labour and offering little or nothing in terms of training in return.

Without swift action, Britain risks a lost generation of youngsters, with all the social and economic implications that brings. It is simply not enough for the Prime Minister to repeat himself. Despite Mr Cameron's best efforts, his Government is starting to exhibit disquieting signs of complacency.

It is time to show some initiative.