Twenty years ago, if someone left school without formal qualifications, they could still find work.
But with the need for new and more skills, such people will continue to be marginalised, says the report by the Basic Skills Agency.
Even in 1996 one- third of young people were leaving full-time education at 16. Young men were likely to experience much more unemployment, and to gain casual low-skilled jobs with little training and low wages. Young women tended to give up work and stay at home.
The report suggests that young people are not responding to the messages being sent. The proportion of those leaving school at 16 with no qualification dropped from 62 per cent of those in their sixties to 29 per cent of those in their twenties, but rose to 37 per cent of 16 to 19-year-olds.
"Literacy, Leaving School and Jobs" is available from the BSA, tel 0870 600 2400.