RIP the Saturday job.

This week's report from the UK Commission for Employment and Skills (UKCES) contains a shocking statistic. The number of under-18s doing Saturday jobs has halved since the mid-1990s from four in 10 to two in 10. The latest figures show 260,000 teenagers doing such jobs, down from 435,000 in 1997. The report predicts that things are about to get a lot worse, largely because of structural changes in the labour market. In particular, the few new jobs are coming overwhelmingly from small companies, which set more store by experience, the one thing a 17-year-old doesn't have. Simultaneously, restaurants and retail, which accounted for the bulk of Saturday jobs, are both shedding staff.

Recently our local inn, which has been in business since 1601, closed without warning. Despite signs speaking of refurbishment, you wouldn't put folding money on it re-opening. As few locals patronised the place, one response has been: "Good riddance. We'd be better off using the site for housing." And yet here was one of the few local employers of those 16 and 17-year-olds who were prepared to scrub saucepans or wait at table on Saturday nights in return for the price of a pair of sneakers or a few downloads.

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I was lucky. At that age, weekend and holiday jobs were there for the asking, especially in a seaside resort. There wasn't an application form, let alone a proper interview. I opened my first pay packet with such zest that the lone £5 note inside was ripped clean in two. The chambermaid's job, which included emptying chamber pots at a humdrum establishment called The Lupins, paid £1 an hour. But that job provided the freedom to spend my own money for the first time. It went on the Sergeant Pepper album, cinema tickets and the sort of clothes my parents refused to subsidise. Soon I could calculate how many beds I'd need to change to earn a pair of Levis. About 65.

It gave me a sense of responsibility and the sort of survival skills I never learned at school. It forced me to relate to folk from all walks of life and work alongside people I disliked. Most of all, it convinced me that I needed to study hard enough at college to escape such drudgery forever.

The current recession has hit the young disproportionately. Today a single supermarket job can attract 80 applicants and to have a chance of getting it you'll need to fill in a six-page form and provide two references. Even then, it's likely to go to a university student or even an unemployed graduate, so there's been an element of displacement in the jobs market with the youngest, least qualified, most inexperienced squeezed out. Why take on a 17-year-old to bang out the coffee grounds, work a checkout, or make the beds when you can have a graduate with a good 2-1 or an industrious Polish lady?

In fact, this process has been going on for years. Youth unemployment has been rising since 2005 because of fundamental changes in society and the labour market.

There's more emphasis on staying on at school and studying hard to get good grades. Yet work experience is what employers and even universities look for. I'm certain one of my daughters got into medical school against stiff competition on the back of taking over at the local deli after the proprietor broke his leg during the summer holidays. In six weeks it transformed her from a messy adolescent to a grown-up, responsible for everything from work rotas and the burglar alarm to ordering cheese and banking the takings.

Yet many teenagers are stuck in the Catch-22 of needing experience to get work and vice versa. UKCES found 29% of employers rate experience as "critical" and 45% say it is "significant". Fewer than a quarter of all employers have recruited a young person directly from education in the last three years. They are also more likely to take on workers via informal networks. That too puts young people at a disadvantage, especially those from poorer backgrounds.

We've just fixed an interesting holiday job for our student son through a friend of a friend. It will look good on his CV. Would this have happened had we been living on jobseekers' allowance in some peripheral housing scheme? Extremely unlikely. Thus the disadvantaged lose out to their better-connected peers, regardless of talent.

To cap it all, those teenagers lucky enough to find work are paid less. Wages for 16 and 17-year-olds fell by 13% last year, from £4.70 an hour to £4.10.

Does youth unemployment matter? You bet it does. In terms of lost output alone, it's costing the UK economy an estimated £28bn a year and the human and social costs are far higher. The Financial Times this week invited us to compare two young men who live in the same town and leave school with identical qualifications but only one is lucky enough to land a job. Even if the second lad gets a post in two years' time and works continuously thereafter, he will still be earning 16% less 15 years later. Lengthy unemployment at a young age leaves scars. It makes that person less likely to sustain relationships and more prone to ill-health and premature death. Admittedly youth unemployment in Spain, Greece and even France is far worse, but we are still wasting the skills and talents of hundreds of thousands of young British people.

How can we reinvent routes into work for them? How can we embed the development of young talent into our culture? That applies especially to those from disadvantaged backgrounds and those emerging from local authority or foster care in particular. UKCES appeals to employers to give youth a chance and offers them a free downloadable guide, "Grow Your Own: how young people can work for you". Ultimately the only way out of this dilemma is to produce the sort of economy that generates more jobs. Meanwhile, clearly, more needs to be done at government level to incentivise employers to do the right thing.

In that context, the long slow death of the Saturday job as part of the rite of passage into adulthood is a loss to all of us.