A national report card on the state of Australia's education suggests this is due to increased poverty and disadvantage in communities.
Jobseeker Kolet Reynolds has been out of work for nearly two years and says it is not just financial consequences that arise from unemployment.
"It brings down my self-esteem a lot, because I'm trying my hardest but nothing's really working," says Ms Reynolds.
Ms Reynolds completed an Indigenous traineeship but found her call centre job to be too high pressure.
She’d now like to work in customer service as low schooling results prevented her from attaining her dream career as a marine biologist.
The COAG Reform Council's 2011 education report has found that more students are reaching year 12 or equivalent, including Indigenous students. But the number of 17-24-year olds not fully employed or studying after school has increased dramatically.
For students from lower socio-economic backgrounds, it's 42 per cent and for Indigenous people, it's risen to 61 per cent.
Professor Greg Craven from the COAG Reform Council says it’s important to account for timing in this report,
"You have to put it into context of course; this is a five year report. There was a global economic crisis right at the beginning of that and in fact there are more people in study than there were, but significantly less in work," says Professor Craven.
Professor Craven also says policy action is needed to close the unemployment gap.
"Better quality pre-school education leads to smarter primary school kids, with improved literacy and numeracy. But there's still a huge gap between Indigenous and non-Indigenous students," says Professor Craven.
Not-for-profit organisation, the Brotherhood of St Laurence, also aims to close the gap by helping school leavers develop jobs skills.
Youth coordinator for the Brotherhood of St Laurence, Sally James, says she isn't surprised by the COAG report.
She says the government needs to allocate more funds to the most disadvantaged, particularly in the early years of high school.
"Their parents have left school early themselves, they may be in and out of work, so this group of young people really often don't have the employability skills or the work experience or the proper sort of careers advice to get their first job. So if we don't invest now, the community will be paying later and young people themselves will be living a life of despair," says Ms James.