About 1721 people aged from 18-24 living between Timaru and Invercargill were receiving an unemployment benefit in December 2010.
The figure has increased by 65 people since December 2009, and concerns have been raised that youths accounted for 36.5% (in 2009) and 35% (in 2010) of the total number of people receiving unemployment benefits in the southern region.
Nationally the picture is different, with the number of youths receiving the unemployment benefit declining from 22,552 in December 2009 to 21,601 in December last year.
The Otago region has several initiatives aimed at assisting youth into employment - one of which is Salvation Army Employment Plus.
Centre manager Don Hammond, of Dunedin, said the southern region's statistics were concerning.
"I wouldn't like to say the word 'alarming' yet, because there is the fact that we're coming out of an uncertain economic time.
"But the warning bells are ringing. I'm alarmed at the number of young people out there currently unemployed.
"We don't want a generation of young people who lose the will to work because they have been on a benefit for too long."
Mr Hammond said the recent recession was a contributor to the continued increase in youth unemployment.
Times have been tough for employers and the Government's 90-day trial period for new employees had made little difference to youth unemployment.
Based on his experience, he had found employers wanted employees with experience in their field of work and who would turn up consistently.
"There's a stereotype that young people need training and they are harder to motivate."
So when employers could afford to take on more staff, they had opted to employ experienced people, he said.
"We are living in very fickle economic times, but it is encouraging there is positive talk about the economy."
Reports released recently showed New Zealand might be emerging from the recession, and Mr Hammond believed it would help lower the unemployment rate for young people.
"The fact that people are talking about it may stimulate employers to open their doors a bit more," he said.
The Mayor's Taskforce for Jobs acting chief executive officer Bry Kopu said the rise in youth unemployment was not only a problem experienced in many regions across New Zealand, it was also a problem in many other countries: "The waste of youth is a natural disaster."
While Ms Kopu also believed the recession was a contributor to the rise, she said the market for youth employment was not improving.
She encouraged young unemployed people to continue their education.
Ministry statistics show the number of people nationally receiving the main benefits (unemployment, domestic purposes, sickness, and invalid's) rose steadily since 2007, when about 270,000 people received benefits.
In December last year, the total had reached 352,707.
Social Development, Employment and Youth Affairs Minister Paula Bennett said unemployment benefit figures remained high, making up 67,084 of the total number of benefits.
More than half of the increase in 2010 was driven by young people completing education and training and looking for work, she said.
"These young people are our focus and that's why Work and Income is providing extensive job search assistance and training."
