Banking Insights: Virtual Work Experience

Youth Jobs Crisis Hits Banking Entry

The UK's labour market has weakened markedly in recent months. Unemployment overall reached 5.2% in the latest quarter, the highest in nearly five years, but the impact falls hardest on young people. For those aged 16-24, the rate stands at 16.1%, a level not seen since before the pandemic and now above the European Union average. This rise has been linked to successive increases in the minimum wage for younger workers, which employers cite as raising the cost of entry-level hires at a time of fragile business confidence and subdued growth.

In banking and financial services, the effects compound existing challenges. The sector has long grappled with skills gaps, particularly in digital capabilities, data, AI, and cybersecurity, even as overall hiring for junior roles contracts. Lloyds Banking Group, one of the UK's largest banks with over 60,000 employees and serving 30 million customers, has maintained a significant apprenticeship and work experience pipeline, recently welcoming hundreds of new apprentices and offering virtual programmes to build early skills and awareness of industry roles.

Government reforms add urgency. The shift from the Apprenticeship Levy to the Growth and Skills Levy, with elements like modular 'units' launching in April 2026 and full funding for under-25s in SMEs, aims to address shortages and boost participation. Additional funding promises 50,000 more apprenticeships for young people. Yet trade-offs remain: levy changes reduce flexibility for larger employers, with top-ups ending and expiry periods shortening, potentially constraining big banks' ability to scale programmes amid tighter budgets.

Non-obvious tensions emerge between short-term caution and long-term needs. Employers hesitant to hire amid higher payroll costs and economic uncertainty risk deepening future shortages, as delayed entry into work can scar earnings and progression for years. For banks, virtual work experience offers a low-cost way to scout and prepare talent without immediate hiring commitments, but it cannot fully substitute for real placements or address structural barriers like the NEET (not in education, employment, or training) figure approaching one million young people.