Young people need help developing "soft" skills, such as communication, if they are going to appeal to more employers, a business group has said.
The British Chambers of Commerce (BCC) warned not enough young people had the required standards of communication and teamwork for the business world.
Some 3,000 firms took part in a BCC survey and almost nine out of every 10 said school-leavers were not ready for the workplace.
Just over half of those businesses felt the same way about graduates.
Three out of four blamed a lack of work experience, while over half said young people did not have basic "soft" skills, such as communication.
Instead, work experience should be compulsory in all secondary schools and assessment data of all schools, colleges and universities should include employment data as well as exam results.
However, half of the businesses who took part in the poll admitted they did not offer work experience placements.
John Longworth, director general of the BCC, said part of the problem was past governments setting "artificial targets" which gave school children the wrong picture about what was valued in the workplace: