England's sixth form colleges should work more closely with employers to improve vocational qualifications, inspectors have said.
Colleges are told they need to raise their students' "employability"
Ofsted said half of general further education colleges did a significant amount with and for employers.
But sixth form colleges, with a more academic mission, rarely worked directly with employers.
The head of the CBI, Digby Jones, said youngsters needed to "hit the ground running" when they started work.
He told a conference on Monday that research conducted by the CBI had found that 47% of employers were unhappy with young people's basic skills and 72% with their business awareness.
This demanded urgent attention and dramatic improvement.
"Young people entering the modern world of work must be able to hit the ground running.
"Vocational courses present an excellent opportunity to prepare young people for the challenge of today's workplace.
"But employers' needs have not yet been completely met by these qualifications."
The government must make the qualifications "relevant, flexible and well-taught".
Speaking at the same conference the head of Ofsted, David Bell said: "As the education and working environments become ever more competitive we must ensure that every young person is given the opportunity to fulfil their full potential.
"Well-known names like chef Jamie Oliver and fashion designer Stella McCartney are examples of some of our most successful, practically-minded, professionals.
"Increasingly, many professions require young people to take vocational routes through education.
"It is therefore essential that vocational courses are tailored to the needs of employers, are taught by teachers with relevant experience and are recognised with the high esteem they deserve."
Ofsted's report, The Responsiveness of Colleges to the Needs of Employers, said the Learning and Skills Council - which funds post-16 education outside universities - now required all colleges to set targets for their work with employers.
But it said more needed to be done to ensure consistency in the range and quality of this work across the country.
As an example of what could be achieved, it cited Greenhead College in Huddersfield.
This was academically successful (last year it out-performed local selective schools at A-level) but with a curriculum that also developed "employability".
This included having 500 first year students each June shadow people at work, involving almost 1,000 employers.
A further 350 learners chose from 30 different projects including a management skills project run by the Navy, law court visits and a mock court case, and writing, producing and developing sets for a primary school play.
David Bell said: "The old glory days of heavy industry are no longer with us."
While "UK Ltd" in the 60s had been "forged in the 'white heat' of technology, the new glory days will be shaped by cool heads, responding in a more enterprising way".
And he stressed the need for those teaching vocational courses to have a relevant qualification in their subject - and short-term industrial placements to keep their experience current.