With almost a million fewer 16-25 year-olds in the workplace by 2020, tomorrow's young people are going to find themselves in a prime bargaining position with companies looking for fresh blood as the demographic crunch puts the squeeze on talent.
Declining birth rates and longer periods in learning will mean that young people aged 16-25 will comprise just 11 per cent of the workforce in 2020, compared to 16 per cent today - a plunge of nearly one million.
This shortage will lead to younger employees demanding better pay and remuneration packages as well as direct access to more senior posts, according to a new report by vocational training organisation the City and Guilds of London Institute.
But at the same time, adults will be working for longer as pension pressures mount, restricting the number of senior posts available.
As a result, bosses within young or specialist industries will have to radically rethink how they recruit and retain fresh talent, with the social and cultural practices of companies playing a crucial role in influencing the career choices of young people.
Employment choices will be based on the reputation of a company and whether an organisation's values fits in with their own, the report argues.
"The UK faces a demographic timebomb which is now starting to impact on UK businesses," said Chris Humphries, director-general, City & Guilds.
"Over half of British companies have experienced sustained difficulty in recruiting young, skilled staff in the last few years. As young talent becomes scarcer, employers will need to radically rethink their recruitment and management strategies, focusing on empowerment and respect of young workers.
"Managing such a newly empowered workforce will inevitably present an unexpected management challenge," he added.
Britain's soaring living costs will also have a significant impact, with the high cost of housing leading to young people requiring high salaries to get on the property ladder.
The report predicts that remuneration packages will inevitably have to include housing support as employers compete to attract young staff.
But recruiting young talent will not be the only challenge for employers – retention will be a further test. Previous research by City & Guilds identified that the average British employee starting work in 20 years' time will have had several career changes, undertaking 19 different jobs during their working lifetime.
Training and development will, therefore, be a key motivator for this ambitious group and a necessary investment for forward-thinking bosses.
Although the British workforce is set to grow over the next 20 years, the proportion of older workers is set to grow much faster. City & Guilds predicts that over the next two decades, more than one in five (22 per cent) people will be working well into their 60s. As the pace of technological and organisational change accelerates, it is critical that investment in training for older workers keeps pace.
Chris Humphries added: "The workforce will be a very different place in years to come, with growing numbers of older people, and increasing competition for young staff.
"All companies need fresh talent to survive and prosper, but the skills and experience of older staff will also be crucial to the success of many businesses. UK Plc will need to balance the demands of both groups and investing in ongoing training programmes will become even more vital."