More than one in six young people are out of work, raising fears of a “lost generation” of potential workers, as unemployment hit a 14-year high.

Official data showed yesterday that in the three months to June, the number of those under 25 and out of work had soared by 50,000, or 6 per cent, to 928,000 as school and college-leavers have been unable to find jobs. Some 722,000 of these are aged 18 to 24, while the remaining 206,000 are aged 16 to 17.

The jobless rate among the 18-24 age group, at about one in six, is closing in on the all-time high of 17.8 per cent set in March 1993, after the 1990s recession.

The increase in youth unemployment, as those with little or no job experience lose out to older workers in increasingly competitive appointment processes, has added to concern about a “lost generation”.

Times Archive 1980 Unemployment reaches new postwar record

The total of unemployed is growing at the rate of 25,000 a week. Mrs Thatcher said there was no instant solution

• Where 7.000 young people chase seven jobs, 1981

• When unemployment is a way of life, 1981

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Even McDonald’s — a brand synonymous with today’s youth — appeared to snub its main customer base with a new campaign to boost the recruitment of older staff. According to a Lancaster University study commissioned by the company, customer satisfaction was 20 per cent higher in those branches employing workers over 60. At present, 1,000 of McDonald’s 75,000 workers in Britain are over 60.

David Fairhurst, the chain’s chief people officer in the UK and the Irish Republic, said: “It’s the blend of youth and experience that makes the difference. What they bring is a wealth of experience and confidence in speaking to customers.”

The rise in youth unemployment is a sign of worse to come, according to Martina Milburn, chief executive of The Prince’s Trust charity. She said: “This is just the start of a long and downward spiral, which all too often leads to crime, homelessness or worse. Only by stopping young people falling out of the system can we rescue this lost potential and save the economy billions each year.”

Brendan Barber, General Secretary of the TUC, said that the figures showed the desperate need for more help for the young. “With over one in six young people out of work, unemployment is at crisis level. The Government must do more to get people back into work, otherwise we risk losing another generation of young people to mass unemployment.”

Howard Archer, the chief UK and European economist at IHS Global Insight, said that when the job market did bounce back, some time in the second half of next year, many of these people would find themselves competing for work with more recent graduates and school leavers who might be viewed more favourably.

Even Britain’s best-qualified graduates are struggling to find work as the downturn becomes worse. Oliver Courtney, an Oxford graduate about to complete a master’s degree at another university, told Dow Jones that he had been sending out applications for the past year and secured just two interviews.

“Every student, no matter how qualified, is in the same boat — there’s going to be a real sense of despair unless things start to pick up,” he said.

The youth employment figures formed part of what economists described as a “ghastly” set of employment data, which showed that the unemployment total had hit a 14-year high of 2.44 million and that the proportion of people out of work had reached a 13-year high of 7.8 per cent as the number employed fell by a record 271,000.

Young people were granted some hope yesterday as Morrisons, Britain’s fourth-largest supermarket, said that it would employ an extra 2,000 workers this year, having already surpassed the 5,000 jobs that it had said it would create this year.

As job losses have mounted during the recession, supermarkets have been among the biggest recruiters. Morrisons said yesterday that a third of the new jobs would be filled by recruits aged 18 to 24.

The jobs include vacancies for butchers, bakers and fishmongers as well as checkout operators. Morrisons trains staff through its own food academy and is aiming to have trained 100,000 workers to NVQ Level 2 by spring 2011.

Age Concern said yesterday that young people were not the only ones to be affected disproportionately by rising unemployment. An analysis of yesterday’s employment figures by the charity revealed that the number of people aged 50 and over who were out of work had increased by 55 per cent over the past year, while those claiming jobseeker’s allowance had jumped by 84 per cent over the same period.

Andrew Harrop, head of public policy at Age Concern and Help the Aged, said: “Today’s unemployed older worker is tomorrow's poor pensioner. With only a one in five chance of being in work two years later, scores of baby boomers are being shut out of the job market at a time when they need to work and save for their retirement more than ever.”

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