"Statistically last year we were picking from a pool in the Premier League of 33 percent English players, this year we are down to 30 - and (among) the top six teams we are on a downward curve," he said after announcing his squad for next month's international games with Spain and Switzerland.
"There are good (young) English players there, we have really got to think seriously how we try and get those opportunities increased."
Last year, England’s junior teams won the Under-20 World Cup, the Under-17 World Cup and the Under-19 European Championship.
But many of those players are struggling to get regular minutes in the first team at their Premier League clubs.
"None of the under-20 team who won the World Cup have established themselves in a first team," said Southgate.
"If they have proven themselves as good as any other young players in the world, that opportunity has to be there.
"For any player, playing football is important but even more so for young players... you want them to experience playing in big matches," he added.
England have undergone several reviews of the state of the game following World Cup disappointments and while Southgate is clearly pleased there is no need for a structural overhaul this time, he feels that the danger of young players not getting playing time needs to be looked at.
"I think it's worth us having that debate and getting people around the table to discuss that missing piece. If players are as good as any young players around the world then that opportunity needs to be there," he said.
"In the past we had reviews of youth development.
"(But) the precarious nature of managers in the top flight and the pressure on them to get results (means that they might not have the time to nurture young talent).
"We have some exciting young players we will lose if they are not given that opportunity."
Southgate noted that his second choice goalkeeper Jack Butland is now playing in the second-tier Championship with relegated Stoke City.
While he accepted that the Championship standard was not as demanding as the top flight, he said the situation meant that players in the second tier could still get call-ups.
"I can't rule out players in the Championship now as our pool is getting smaller and smaller," he said.
(Reporting by Simon Evans, editing by Pritha Sarkar)
