More than a million young people are now unemployed, the highest number since the Conservatives were last in power, government figures to be published this week are expected to reveal.

The figures have been swollen by the number of graduates and school-leavers who have failed to find work after joining the jobs market this summer. Unemployment rose by 80,000 to reach 2.51 million in the three months to July, 77,000 of whom were 18- to-24-year-olds, lifting the youth joblessness total to 973,000.

But new figures taking into account the last three months are expected to be the worst since comparable statistics were first recorded in the early 1990s.

Howard Archer of consultancy IHS Global Insight said this week's figures were likely to show a 90,000 increase, pushing the total number of people out of work on the government's preferred measure to 2.6 million – above its previous peak and the highest level in 17 years – and pushing the number of unemployed young people above 1 million. It is already known that the number of people claiming jobseeker's allowance in August rose by 20,300. Archer said: "The worry is that, having shown impressive resilience earlier this year, the labour market is increasingly buckling under serious pressure from weak economic activity."

Some experts expect the number out of work to increase further over the next three months and into next year. Madhur Jha, a global economist at HSBC, said: "We expect unemployment to continue to rise over the latter months of 2011 and the first half of 2012. We believe that the fundamental trend for the UK labour market has been one of renewed weakness."

The unemployment figures are likely to increase pressure on the chancellor, George Osborne, to go beyond the credit-easing measures announced in his speech at the Tory conference in Manchester last week. He spoke of plans to make it easier for small businesses to gain credit, but has so far refused to invest more in a growth strategy.

Rachel Reeves, who was appointed the new shadow chief secretary to the Treasury in Ed Miliband's reshuffle, last night called for renewed urgency from the government.

Reeves said: "Youth unemployment is at its highest level since 1992 and yet the government refuses to look at a plan B for jobs and growth. The problem will get worse rather than better until the government thinks again and it is families, and people leaving school, college and university who are paying the price."

The figures come as the Observer reveals growing concerns among graduates that they are being forced into providing their labour for free through internships and work experience programmes as employers exploit the huge and growing pool of unemployed young people desperate for a way into the jobs market. A campaign headed by the website Graduate Fog reveals how employers, including clothes retailer Urban Outfitters, are advertising unpaid internships lasting up to nine months.

Ben Lyons, of Intern Aware, a group campaigning for young people to be paid fairly, said the problem of corporations exploiting young people through unpaid internships was escalating. "Corporations are finding it easier than ever to exploit desperation and aspiration to get labour for free," he said. "It is wrong for people to have to work for free, and it is wrong that the only people who can do this work are those with savings or sources of money of their own. It is wrong and it is stupid because employers are restricting the market of people from which they choose their employees. Things need to change."

Article from The Guardian