Millions of people could be without a job or in work they are over-qualified for within the next decade unless action is taken to tackle a future unemployment "twilight zone", a council leader will warn.
David Sparks, incoming chairman of the Local Government Association (LGA), will say the current system for helping the unemployed find work needed "radical reform".
The LGA estimates that a "lost generation" of eight million people face being in low paid, insecure work and reliant on benefits because of a "skills mismatch".
The true scale of unemployment and underemployment is being hidden because headline figures do not focus on people who work part-time or are over-qualified, said the LGA.
It believes centrally-governed skills and employment support schemes, totalling £13 billion, is "confusing, fragmented, untargeted and ineffective".
Mr Sparks, addressing the LGA's annual conference, will call for new Youth Jobcentres, bringing together different services.
"The current system for getting the unemployed into work needs radical reform. Hundreds of thousands of people - a lost generation - are being let down and sucked into an unemployment twilight zone, through no fault of their own.
"This staggering situation is only going to worsen without swift and decisive action.
"Councils are doing everything they can but the current system is a maze of fragmented and overlapping schemes. This has to change for the future economic prosperity of this country.
"The solution is to ensure councils can target training and employment funds, and join up with services such as jobs centres. Local authorities - not central government - best understand the needs of their residents and how to address their skills needs.
"From the older generation to the 10-year-olds sitting in classrooms today, we all face being unleashed into this system that is still broken and swamped with unemployment in eight years' time."
A Department for Work and Pensions spokesman said: "As part of our long-term economic plan, we have record numbers of people in work, with the majority of the rise in employment being full-time, permanent positions.
"Our flagship Work Programme is helping more people than any previous employment programme and has already helped half a million people start a job and 300,000 into lasting work.
"Contrary to what the LGA is suggesting, Jobcentres already work with local authorities to support jobseekers and there are two million more people in private sector jobs since 2010."