England is the only country in the developed world where the generation approaching retirement is more literate and numerate than the youngest adults, according to the first skills survey by the Organisation for Economic Co-operation and Development.

In a stark assessment of the success and failure of the 720-million-strong adult workforce across the wealthier economies, the economic thinktank warns that in England, adults aged 55 to 65 perform better than 16- to 24-year-olds at foundation levels of literacy and numeracy. The survey did not include people from Scotland or Wales.

The OECD study also finds that a quarter of adults in England have the maths skills of a 10-year-old. About 8.5 million adults, 24.1% of the population, have such basic levels of numeracy that they can manage only one-step tasks in arithmetic, sorting numbers or reading graphs. This is worse than the average in the developed world, where an average of 19% of people were found to have a similarly poor skill base.

When the results within age groups are compared across participating countries, older adults in England score higher in literacy and numeracy than the average among their peers, while younger adults show some of the lowest scores for their age group.

Out of 24 nations, young adults in England (aged 16-24) rank 22nd for literacy and 21st for numeracy. England is behind Estonia, Australia, Poland and Slovakia in both areas.

This compares unfavourably with the adult population as a whole: English adults aged 16-65 rank 11th for literacy and 17th for numeracy.

The OECD cautions that the "talent pool of highly skilled adults in England and Northern Ireland is likely to shrink relative to that of other countries".

The minister for skills and enterprise, Matthew Hancock, said: "This shocking report shows England has some of the least literate and numerate young adults in the developed world. These are Labour's children, educated under a Labour government and force-fed a diet of dumbing down and low expectations."

Labour hit back, saying that while in government it "drove up standards in maths and English across our schools, evident in the huge improvements we saw in GCSE results between 1997 and 2010".

Tristram Hunt, the shadow education secretary, said: "Of course, more needs to be done and that is why a future Labour government would ensure all young people study maths and English to 18, and would overturn David Cameron's decision to allow unqualified teachers to teach in our classrooms on a permanent basis … we see in David Cameron an out-of-touch prime minister who cannot be trusted on school standards."

Last week Cameron called for young people under the age of 25 to be stripped of benefits so that they could "earn or learn" their way through life.

The government blamed the last administration, saying that the young people covered by the survey "were educated almost entirely under the last Labour government – for example, someone aged 18 when they took the OECD tests would have started school aged five in 1998 and finished compulsory education aged 16 in 2009".

In the survey, the first of its kind, 166,000 people in 22 OECD member countries, as well as Russia and Cyprus, sat through two hours of intense questioning about their skills and background.

The report, launched on Tuesday in Paris, shows that there appears to be a distinct hollowing out of the workforce across the rich world, with jobs requiring highly educated workers rising by around a fifth and those needing a medium or low skills base dropping by about 10% each.

England is among a handful of nations where social background determines reading skills. Along with Germany, Italy, Poland and the United States, the children of parents with low levels of education in England have "significantly lower proficiency than those whose parents have higher levels of education".

The OECD also warns that when looking at information technology, which it says is key to reshaping the workplace in the developed world, only 42.4% of 16- to 24-year-olds in England and Northern Ireland are proficient to the extent that they can handle unexpected outcomes. This compares with the average of 50.7%.

Young adults in England and Northern Ireland scored 21 points lower than those in South Korea, the best-performing country. Although the US has a reputation as the IT centre of the world, the survey found that its youngsters were the worst for basic technology proficiency, scoring 4.8 points below young adult Britons.

"The implication for England and Northern Ireland is that the stock of skills available to them is bound to decline over the next decades unless significant action is taken to improve skills proficiency among young people," the OECD said.

These changes have already had major implications for the global talent pool. Britain used to provide 8% of the best-educated workers but today provides only 4%.

By comparison, South Korea, which was not on the map two generations ago, now provides 6% of the highly skilled pool of young talent.

What is clear is the rise of a very different form of training and education in east Asia, designed to rapidly lift people out of poverty. Nowhere is this more obvious than in Japan, where secondary-school leavers achieve a higher literacy level than English graduates.

At a fringe meeting at the Tory party conference, Hancock told delegates that Japan's model of vocational training was something that the government was "looking at very closely. People talk about Germany and its progress in making sure non-university graduates are skilled up for the workplace. But the real success is Japan."

Andreas Schleicher, the OECD's deputy director for education and skills, said Japan was good at developing skills but its "education system works in silos and productivity growth is so-so. Compare this to the UK and US, where they are no longer good at developing talent but very good at extracting value from the best workers.

"It is a question of which problem do you wish to have? In Japan they need to fix labour markets and make them more responsive to skills. In the UK it is a much harder problem to fix, which is creating a training programme."

Literacy for people aged 16-24

1 Finland

2 Japan

3 South Korea

4 Netherlands

5 Estonia

6 Australia

7 Sweden

8 Poland

9 Czech Republic

10 Germany

11 Austria

12 Slovak Republic

13 Denmark

14 France

15 Canada

16 Norway

17 Ireland

18 Spain

19 England/N Ireland

20 United States

21 Italy

22 Cyprus

Literacy for all adults

1 Japan

2 Finland

3 Netherlands

4 Sweden

5 Australia

6 Norway

7 Estonia

8 Slovak Republic

9 Flanders (Belgium)

10 Canada

11 Czech Republic

12 Denmark

13 South Korea

14 England/N Ireland

15 Germany

16 United States

17 Austria

18 Poland

19 Ireland

20 France

21 Spain

22 Italy

Numeracy for people aged 16-24

1 Netherlands

2 Finland

3 Japan

4 Flanders (Belgium)

5 South Korea

6 Austria

7 Estonia

8 Sweden

9 Czech Republic

10 Slovak Republic

11 Germany

12 Denmark

13 Norway

14 Australia

15 Poland

16 Canada

17 Cyprus

18 Northern Ireland

19 France

20 Ireland

21 England

22 Spain

23 Italy

24 United States

Numeracy for all adults

1 Japan

2 Finland

3 Sweden

4 Netherlands

5 Norway

6 Denmark

7 Slovak Republic

8 Flanders (Belgium)

9 Czech Republic

10 Austria

11 Germany

12 Estonia

13 Australia

14 Canada

15 South Korea

16 England/N Ireland

17 Poland

18 France

19 Ireland

20 United States

21 Italy

22 Spain