The House of Lords Committee on Social Mobility said the national curriculum should finish at 14, allowing students time to focus on transitioning to a career before leaving school.
The report, Improving the Transition from School to Work, said: “The current system for young people who do not follow an academic route is complex and incoherent, with confusing incentives for young people and employers.
“Careers advice and education are being delivered in a way which means that too many young people simply drift into further studies or their first job, which often has no real prospect of progression.”
The report continued: “Transitions to work take longer for some young people, and this is not recognised in the current format of 16-18 or 16-19 education.
“It would be better for the national curriculum to stop at age 14, rather than 16, and for a new 14-19 transition stage to be developed.
“This would enable a tailor-made route to work to be developed. Such a route would combine a core element with either academic or vocational elements.”
It added that there is currently too much focus on apprenticeships, which are taken up by six per cent of 16-18 year-olds.
The committee also recommends that responsibility for careers advice should be moved away from schools and colleges and given to an independent careers advice and guidance service.
The Government should establish a Cabinet-level minister to oversee the transition from school to work for young people, a responsibility which currently falls between a number of departments and ministers.
Chair of the committee, Baroness Corston, said: “The current system for helping people move from school to work is failing most young people. They are simply not being adequately prepared for the world of work. This significantly disadvantages a huge number of young people and limits their opportunity for social mobility.
“A young person considering their options for further education or employment is presented with gobbledygook. It is totally unclear to them how they can get the skills needed for a successful career. It is also unclear to the people in their lives giving them advice and support in making these crucial decisions.”
The Department for Education said: “Latest figures show the number of young people not in education or training is at the lowest on record and we have the highest ever number of young people going into higher education. We have introduced a more rigorous curriculum so every child learns the basic skills they need such as English and maths so they can go on to fulfil their potential whether they are going into the world of work or continuing their studies.
“We will invest £70 million in our careers strategy over the course of this parliament to transform the quality of careers education.
“We have also set up the Careers & Enterprise Company to bring young people into contact with employers and develop closer links with employers so they can play a greater role in preparing young people for the world of work.”
Kirstie Donnelly, managing director of City & Guilds, said: ” The Lords Committee is right to say there has been a consistent failure to prepare young people for the workplace. How many more Parliamentary inquiries and reports will there be before politicians wake up to the problem?
“If we want to see a change, we need to vastly improve careers advice in schools. This means using labour market information and up-to-date data on skills gaps to shape the advice given to young people.”