YOUTH unemployment rates in Newcastle and Lake Macquarie could spike after the federal government announced it would axe funding to a local school-to-work transition program.
April labour force figures show the jobless rate among those aged 15 to 24 in the area is 12.3 per cent.
One local not-for-profit organisation attempting to reduce those statistics is Career Links.
The organisation runs a range of school-to-work transition programs and initiatives.
It puts 3500 Newcastle and Lake Macquarie secondary students through work placement each year.
One of the ways the organisation does this is through its Partnership Brokers program, which connects schools and industries by keeping them informed of skill shortages and job opportunities.
The federally-funded program provides options for students who choose not to go to university.
It has proved vital since the state government changed the school leaving age to 17 in 2010.
Any student under 17 who wishes to leave school must either enrol in a TAFE course, undertake an apprenticeship or be working more than 25 hours a week.
The Partnership Brokers program helps students follow these alternative paths.
However, under last month's federal budget, funding to the program will stop on December 31.
Without the program, many students will be forced to stay at school to complete their Higher School Certificate.
Career Links manager John Purcell said this would have several implications.
"Youth unemployment will rise and the social cost will be greater as more youth will need welfare benefits," he said.
"We'll have young people with a lot of time on their hands roaming the streets because they can't get work."