Unemployment among 16 to 24 age group heads above one million barrier

Failure of large numbers of school leavers and graduates to find work will put government under intense scrutiny this week

Youth unemployment needs to be tackled urgently, said David Blanchflower, former member of the Bank of England?s monetary policy committee. Photograph: Luke Macgregor/Reuters

The government's record on youth unemployment will come under intense scrutiny this week amid fears that the number of jobless 16 to 24-year-olds will rise through the one-million barrier.

Economists believe the failure of large numbers of this year's school leavers and graduates to find work this summer will lead to a sharp jump in those under 25 without work when the data for August is released on Wednesday.

Hiring freezes have meant new entrants to the labour market have been badly hit by the recession and at 947,000, unemployment in the 16-24 age group is 300,000 higher than when Tony Blair came to power in 1997 pledging to combat the legacy of youth unemployment inherited from the Conservatives.

Professor David Blanchflower, a former member of the Bank of England's monetary policy committee and a labour market expert, said: "I think unemployment for the under-25s is certain to go through one million, if not this month then next."

The opposition has accused Labour of creating a new "lost generation" of young unemployed and the deepest recession since the second world war prompted Alistair Darling to announce a guarantee of a job, training or work placement for all 18 to 24-year-olds in this year's budget.

Blanchflower said that with youth unemployment making up more than a third of the 2.47m total, the government needed to step up its efforts. Urging an immediate increase in the school leaving age to 18, he added: "The government should do anything it can to stop young people being unemployed, including offering to pay them benefits while on internships."

Howard Archer, chief UK economist at IHS Global Insight, said: "A lot of young people who are unemployed now will still be unemployed next summer when the next group of graduates and school leavers will arrive."

The TUC expressed concern about rising youth unemployment but said it had doubts about unpaid work placements.

Brendan Barber, TUC general secretary, said: "The Future Jobs Fund will provide much needed help for 100,000 young people. Without this there is a real risk young people could be forced into a cycle of unpaid internships and work experience, which are no substitute for real jobs paying a decent wage."

John Philpott, chief economist of the Chartered Institute for Personnel and Development, said: "I would expect to see something of a jump this time."

He predicted that overall unemployment would continue rising well into 2010. "My feeling is that it will peak at around three million, which is a little bit better than we thought six months ago." However, he warned of the threat of a "job loss recovery", if growth is so weak that employers who have held onto staff through the recession are forced to lay them off.