New figures reveal 13 per cent of young people aged 16 to 18 are failing to continue their education or get work. Some 14,600 of the age group were not in education, training or employment in 2003-4, up from 13,100 (11 per cent) the previous year, according to the statistics.
The levels have remained high for several years, despite rising employment and declining poverty levels in Wales.
But new schemes aimed at tackling social problems that could act as barriers to learning - such as substance misuse, sexual health problems and bullying - are planned, according to the Assembly government.
A task force is also investigating why so many young people in Welsh communities are out of work. Steps taken recently to help buck the trend include giving specific grant money to local authorities through the Cymorth scheme.
The new 14-19 curriculum, which comes into force in September, will also mean greater choice of qualifications, with the added bonus of one-to-one help for pupils with personal problems.
Speaking at CAYAC's (formerly the Secondary Heads Association Cymru) annual conference in Llandrindod Wells last month, Wales's minister for education and lifelong learning, Jane Davidson, said underachievement by a minority of school-leavers was a major problem.
She said: "While we are seeing improvements in lifestyle in Wales, there remain significant challenges.
"The proportion with few or no GCSEs in Wales is much higher than elsewhere. At the bottom end, we have too many pupils not getting qualifications which has dragged us below every region in England. "At five or more A*-C grade GCSEs we are doing OK. But in the most deprived environments we are not doing enough to ensure those pupils have the best kind of opportunity."
She added: "As a country with more people from more disadvantaged communities, we cannot be seen to fail those who have multiple disadvantage."
The number of 15-year-olds leaving full-time education with no recognised qualification in 2005 was 1,050, down 30 on the 2004 total of 1,080.
The numbers have fallen by more than a fifth since 1999, from 1,322. But the Assembly government set a target of a 25 per cent reduction by 2004.
Current trends suggest an even more ambitious goal of 60 per cent by 2007 is unachievable.
Problems of educational failure and drop-out are concentrated in the post-industrial and economically deprived south Wales valleys and the cities of Cardiff, Swansea, Newport and Wrexham.
Schools say they are working hard to overcome low levels of previous attainment, together with low expectations of how well youngsters can do.
But critics say more needs to be done to challenge both schools and local communities to provide better opportunities for their young people.
However, Rhys Williams, communications, campaigns and political officer for the National Union of Teachers Cymru, said tackling low aspiration was a huge task.
He said: "In regions such as Blaenau Gwent it will be difficult to change a culture of failure, which is epitomised by the loss of heavy industry and whole generations of jobs.
"Aspirations must be raised. But it is a hard task if young people's dads, mums, sisters and brothers have only known life on the dole queue."
Dr Heledd Hayes, education officer at the NUT Cymru, said employers should take responsibility in ensuring young people were not "let go too easily"
and provide basic skills training. The latest statistics confirm that Wales continues to lag behind England when it comes to NEETs (not in education, training or employment).
While 13 per cent of Welsh 16 to 18-year-olds were not in education, employment or training in 2003-4, the equivalent figure in England was one in 10 .
An Assembly spokesperson said the figures were "disappointing".