Lord Jones told two young 'Neets' to get hair cuts to impress employers
Britain needs to adopt American-style 'workfare' to help push the chronically unemployed into finding jobs, former CBI head Lord Digby Jones told the BBC.
Lord Jones, a non-political former industry minister, said Britain is ready for a workfare scheme, but politicians are unwilling to raise it.
"The trouble is politicians are frightened of coming out with these ideas," he told the BBC's Panorama.
Lord Jones said workfare could include training or community service work.
He said: "I believe that we should, as a society, have a government of whichever party that actually passes a law that says you will not get the money from the state, from the taxpayer...unless you actually are either in training and you're going to college or apprenticeship or whatever and then you'll get your money.
"Or you're going to be contributing to the community by community service of some sort."
Figures released by the Office of National Statistics last week show that unemployment among 16-24-year-olds rose to 929,000 in the December to February period - a rise of 4,000 on the previous three months.
Lord Jones said the reality of the so-called 'Neets' in Britain - those under 24 who are not in education, employment or training - is "a national disgrace" that points to underlying failings in the education system.
"The whole idea of coming out into the world of work not fit for work, not in the habit of work, get your hands out of your pockets, get your hair cut, look me in the eye, don't believe that the pleasure of earning a living is entirely mine, all of that are things which should be inculcated during the education process."
He made his comments after being introduced to two young unemployed men in Swindon who were first featured on a Panorama programme in 2007 at the height of the economic boom.
More than two years later and after finding some work in 2007, both young men are again unemployed and agreed to meet with Lord Jones.
The young unemployed should not have the right to refuse any paid work and still expect to collect their jobseeker's allowance, he added.
"I don't think they should have the right to decline...if my taxes are going to be used to make sure they're not starving on the street, then in return we should ensure that they are back in the world of work just as quickly as possible."
He said even entry level jobs with low wages help young people pick up the basics of routine, time-keeping and could provide opportunities.
Panorama: Return of the Real Apprentices, BBC One, Monday, 26 April at 2030BST and then available in the UK on the