Employers and graduates don’t understand each other, leading to a lack of productivity, a new report from think-tank Demos and mobile phone group Orange has found.

The report said: “Talented graduates feel out of place in organisations as companies struggle to motivate and support a generation of young people with higher debt, different values and expectations of a better work/life balance. Graduates in turn must develop a better understanding of the needs of their employers.”

The report, Working Progress: how to reconnect young people and organisations, suggests that while today’s well-qualified graduates need to improve their skills on creativity and communication, employers need to work on their cultural understanding of young people’s needs and lifestyles to ensure they retain their best and brightest recruits.