Australia's peak business body wants to expand the work for the dole scheme, allowing the private sector to use young unemployed workers who would be paid for from the public purse as a way of addressing youth unemployment.

Youth joblessness has risen to 14.2 per cent, according to figures from the Australian Bureau of Statistics, the highest rate since 1998 and more than double the proportion of people aged over 25 seeking work.

Chief executive of the Australian Chamber of Commerce and Industry Kate Carnell wants the government to expand the work for the dole program. Credit:Alex Ellinghausen

Chief executive of the Australian Chamber of Commerce and Industry Kate Carnell described the increase in unemployment for people aged 15-24 as "the most concerning issue confronting business in this country."

"We think there's a very real chance that unless the youth unemployment issue is addressed – and it will need to be addressed quite aggressively – that we will end up with a generation of young people on the fringes of the economy," she said.