The Education Secretary, Charles Clarke, has said the government will have failed if adult literacy does not improve "massively" within five years.
Many youngsters leave school with no qualifications
He said the way seven million British adults struggled with basic sums was "an indictment of the whole way in which the education system operates".
Businesses said improving standards in maths and English should be the government's priority.
The GCSE maths entries awarded grade C or above fell this year to 50.2%.
That was in the context of a small rise in the overall top grades in all exams. Maths accounts for about one in seven of all GCSE entries.
Standards in English improved but the Confederation of British Industry (CBI) said too many youngsters still performed poorly.
Its director general, Digby Jones, said they lacked the basic skills they needed to join the world of business in the competitive environment of the 21st century.
There has been a marked rise in the numbers opting to do business studies - but his focus was on English and maths.
"I'm worried when I see that 50% of all the pupils that are getting their results today didn't get grade C or above in maths, 40% didn't get it in just basic English," he said.
"They have no equipment in skills such as career knowledge, self-management, work attitude - all the things which a boss is looking for just in basic skills and I would like to see GCSEs thrusting far more towards equipping young people for the world of work."
The Education Secretary, Charles Clarke, said he had already taken steps to address the maths issue.
In March he announced the creation of a National Centre for Excellence in Mathematics Teaching, covering maths for all ages, from toddlers to pensioners.
He criticised the notion that it was acceptable to be bad at maths.
Interviewed about the GCSE results on the Today programme on Radio 4, Mr Clarke was asked if the government would have failed if things did not improve "massively" on illiteracy within the next five years.
He said: "I think we would have failed in those circumstances, yes."
But he said there was "a wide range of successes and a wide range of failures".
"It's a question of trying to ensure that we get the successes greater and the failures less."
And he said: "There are a group of people coming through who still aren't achieving as much as they need to, to be able to operate well in the world of work that exists at the moment.
"But we are working at it very directly."
Ministers also make the point that the group of children now getting their results have not benefited from the literacy and numeracy strategies introduced in England's primary schools and now secondary schools since Labour came to power.
But his Conservative shadow, Damian Green, has said the gap between the best and worst students is widening and Labour is "failing to deliver".
More than 30,000 children were leaving school each year with no qualifications.
"Unless this damaging trend is reversed we will continue to allow generations to drift out of mainstream society and into crime."
The Liberal Democrat spokesman, Phil Willis, said the key question was how many children had English, maths, science and a modern foreign language.
One in four did not even make the attempt, and only 40% of those who did got good grades in all.
A common factor was alienation from the curriculum.
"Liberal Democrats believe that the age-related GCSE should be abolished and replaced by flexible national standard tests in core subjects."