The study, which gathered views from more than 1,000 small, medium and large businesses, found half of employers said the education system does not meet the needs of business.
It also showed that more than 60% of young people have employment expectations which are 'too high' and that many young people do not understand what employers are looking for.
The findings, which are published at the beginning of Work Experience week in the UK, found almost 60% of employers said their sector is facing a skills shortage and a third are considering looking abroad for key talent.
The sectors with the highest skills shortages are IT, engineering and manufacturing.
Chris Jones, CEO and director-general of City and Guilds, said youth unemployment isn't just due to a lack of opportunity. "There is a more fundamental problem with the qualifications, core skills and lack of understanding of the workplace," he said.
"It's clear a step-change is needed in the education system to move away from a pure focus on academia towards a curriculum that meets the needs of employers."
The study found strong core skills such as numeracy, literacy and communication are more valued in a potential candidate than academic qualifications, with the majority of employers (55%) stating they would hire someone without a degree.
Tony Moloney, head of education and skills, National Grid, said: "I strongly believe there needs to be collaboration between employers, politicians and the education community to help prepare young people for the world of work."
