During that period the incidence of long-term unemployment increased by 6.5 per cent to 17.6 per cent and school drop-out rates for 20-24 year olds increased by 3.5 per cent to 23.1 per cent between 2001 and 2011.

German tips

"If we're going to boast the employment and skills of younger workers in Australia we need to draw lessons from the likes of Germany," Mr Thorpe said.

The research showed a positive correlation between the Young Workers Index and average country mathematics scores .

"With 75 per cent of the fastest growing occupations requiring STEM skills, improving STEM education – mathematics in particular – and shifting our workforce into STEM, will be essential if we're to effectively leverage young workers," Mr Thorpe said.

The increasing pool of underemployed young workers is costing the economy billions. iStock photo

Mr Thorpe said Prime Minister Malcolm Turnbull's recent roundtable discussion at Western Sydney University on ways to drive more collaboration between industry and academia was "a great step forward".

The Foundation for Young Australian's annual report found that despite young people staying in education longer, they are still not getting the enterprising skills they need to get a job.


Wasted potential

It's taking an average of 4.7 years once they finish full time education to find full time work and FYA's chief executive Jan Owen said 25 per cent of tertiary graduates are unemployed or underemployed.

"In 2008, 84 per cent of university graduates were in full time work four months after leaving university. Today that figure has dropped to 65 per cent," Ms Owen said.

With 75 per cent of the fastest growing occupations requiring STEM skills, improving STEM education – mathematics in particular – is essential, says PwC Australia partner Jeremy Thorpe. John Woudstra

"Between 60 to 70 per cent of young people at university or TAFE are getting HECs debt for jobs that wont exist in 10 years. This is a terrible waste of the potential our young people have to drive our economy forward and create a better future for our nation."

Ms Owen said there was a significant mis-match in education and training to actual work.

"While 75 per cent of the jobs of the future will involve STEM, 35 per cent of 15 year olds are not proficient in science, 42 per cent are not proficient in maths, and 35 per cent are not proficient in technology. The story is no better when it comes to digital literacy. Around 90 per cent of jobs of the future will require digital literacy, yet 35 per cent of 15 year olds are not digitally literate. We need to think what industries will be next."

Ms Owen said there needed to be a change to school core curriculum so it was a "real life dress rehearsal" and skills such as financial literacy were taught with the report showing 30 per cent of 15 year olds are not financially literate and 35 per cent are not good at problem solving.