The best and brightest were then asked to set up their own businesses. The end result? The number of small firms operating in the city has since doubled.

"That's certainly one way of encouraging entrepreneurialism," says David Arkless, president of corporate affairs at Manpower, the company that helped the Shanghai authorities with their project.

"The mayor of Shanghai said he wanted to see the city grow, but it had a problem. The problem was lots of people and not enough of the right people with the right skills."

The chances of the UK ever adopting such a blunt tool to encourage start-ups are slim, but youth unemployment in the UK is rising fast and experts agree that a radical approach is needed.

Official labour market figures released last week revealed that the number of 18 to 24-year olds out of work climbed to 737,000 in the quarter to October, meaning nearly a fifth of young people are jobless. Of those, 198,000 had been unemployed for 12 months or more.

The figures serve as a bitter pre-Christmas blow to the Government, with David Cameron last week admitting he was "concerned" about the rise in unemployment.

But earlier this year, the Department for Work and Pensions (DWP) scrapped specific funding programmes for young people – such as the Future Jobs Fund, which guaranteed the long-term unemployed access to work experience, training or a job.

It is replacing all job schemes with a single Work Programme, but the details over what this means for young people are still to emerge. "There is uncertainty over what funding young people will get. We're waiting with bated breath," Arkless says.

Employers are worried that the private sector will not be given enough help from the Government to create jobs.

According to Tristan Wilkinson, public sector director for Europe, the Middle East and Africa at technology giant Intel, the state must do more to help small and medium sized enterprises (SMEs).

"If you look at where most of the jobs are created, it's in the small business sector. The Government's role could be to facilitate programmes that make it easier for small businesses to encourage internships and so on.

Maybe it could look at how to incentivise entrepreneurships through tax breaks."

Tax incentives to hire young people are a popular idea with many employers. The DWP says the £1bn Future Jobs Fund budget has been directed towards helping companies provide apprenticeships for young people.

But organisations are still unclear about what support is readily available. Wilkinson says: "The regulatory environment is very complex. If I was starting a business today it would be quite an intimidating prospect."

Julia Weston, talent development manager at John Lewis, agrees. "The thing I find most complicated is understanding the different bodies involved, who you need to talk to and what they can do to help you," she says.

The retailer hopes to introduce apprenticeships, but Weston admits: "It's complex. That's probably why we're taking some time to understand which route is the best for us."

However, Jon Butterworth, operations director at National Grid, says employers should take the ultimate responsibility for giving young people the opportunities to succeed in their future careers – regardless of Government subsidies.

"We have a duty as businesses to make young people feel enlightened and passionate about work," he says.

He adds that employers should "stop complaining" about the standard of teenagers' education and build better relationships with them, through schools or websites, to get them interested in the world of work.

"There's no point companies saying they can't get the right people with the right skills if they don't put the effort in," he says.

Last year, Business in the Community (BITC), a network of employers chaired by outgoing Marks & Spencer chairman Sir Stuart Rose, launched a campaign to encourage companies to offer work experience to young people.

A number of businesses signed up, including National Grid, BAE Systems and Whitbread.

Sarah Gibb, BITC's director of skills, says companies are beginning to grasp the commercial advantage of supporting under-25s.

"If businesses have a problem with an ageing workforce or future skills gaps they need to be able to recruit young, employable people," she says.

Where big companies can make a real difference, according to Gibb, is through their supply chain. Transport for London has already used its procurement power to award contracts to firms that can demonstrate they are helping young people learn basic skills.

BITC is also developing a scheme which matches employers with local schools for a period of three years, identifying how those organisations can inspire young people through work experience and mentoring.

But business chiefs are calling on the Government to play its part in educating and inspiring schoolchildren about the different careers on offer. There's no point throwing extra money at apprenticeships if the majority of young people dismiss them as being "second-rate" to a degree course, Gibb says.

According to Christine Hodgson, chief executive of consulting firm Capgemini: "Apprenticeships still have the connotation of plumbers or carpenters. The Government must look at how to rebrand them so they appeal more widely."

Encouraging young people to embark on training or career paths that are actually aligned to employers' needs will require a cultural shift, Hodgson says.

The previous Labour government's push to get half of all school leavers to go on to higher education was "demoralising" for those who wanted to succeed in business, she says. "There will always be a demand for degrees but it's not just about graduates."

The Coalition could be about to change the bias towards higher education. Earlier this month Lord Freud, the welfare reform minister, suggested the rise in tuition fees was partly to make young people think twice about rushing into expensive courses that bore no relevance to the world of work.

His words got the thumbs-up from employers. "You don't need a degree to get ahead," says Weston.

Article from The Telegraph