The Chancellor has been urged to tackle the record levels of youth unemployment in next week's Budget amid warnings that a generation of talented youngsters could be lost.
The TUC said on Tuesday the current "cut-price, poorly-targeted and unpaid" work experience schemes were not helping enough young people find jobs.
Ahead of new unemployment figures tomorrow, the union organisation called for a guarantee of paid work or training for any youngster who has been out of work for at least six months.
A new youth credit should be offered to all 16 to 24-year-olds to boost training, work placements and the chance of getting a better job, said the TUC.
In its submission to the Government ahead of next week's Budget, the TUC said the economic case for a change of direction in Government policy was now "overwhelming."
General Secretary Brendan Barber said: "Over the last year growth has flat-lined, more people are out of work and government borrowing has risen sharply as a result. The Government's austerity strategy is plainly not working.
"So rather than carrying on with self-defeating cuts, the Chancellor should do what's right for the economy and prioritise tackling our jobs crisis and getting businesses to invest more of the £724 billion they are currently sitting on.
"Bold new measures such as youth credits and a job guarantee will help get young people's careers off the ground. A tax system that rewards investment, rather than propping up the City, will help generate growth and jobs in the real economy too.
"The Chancellor must not lose sight of the UK's long-term growth prospects either. A state investment bank and a modern industrial policy may not gel with his laissez-faire instincts but they will help deliver the rebalancing of our economy that virtually everyone outside of the City accepts we need."
Unemployment increased to 2.67 million last month, including over a million 16 to 24-year-olds, figures which are expected to increase tomorrow.
A Department for Work and Pensions spokesman said: "Tackling youth unemployment is an absolute priority for this Government - we want to help young people find sustainable jobs that will set them up for the future.
"Our work experience scheme offers young jobseekers the opportunity to get invaluable experience in a range of sectors and sector-based work academies operating across the country offer targeted and specialist training and experience. On top of that, the Work Programme is helping young people get the skills and expertise they need to impress employers in a tough jobs market."