A new survey conducted by the group says employers struggle with a lack of skills among graduates of academic and vocational courses,particularly for medium and high-skilled jobs, such as teaching and medicine.
'The gap is tremendous. It's a real tragedy', Farrell said.
The shortage of workers in skilled jobs could reach 85 million by 2020, according to McKinsey report. The company defines youth as individuals between 15 and 29 years old.
The survey revealed that just 42% of employers believed young people were adequately skilled.
Farrell said the education to employment system was not working properly and the mismatch between education providers and industry requirements was rendering young people unemployable.
The McKinsey study conducted among 8,000 participants in nine countries revealed half of young people are not sure their postsecondary education improved their chances of finding a job, with the U.K. at a low of 40% and Saudi Arabia at 60%, though local Saudi graduates are guaranteed a public sector job in the country.
'This is quite low considering how much money is spent on education', Farrell said.
She said the most successful were those employers who spent time with young people before they finished school, with some kind of on-the-job training or exposure to the kind of work they do.
Writing by Tanya Ashreena, special to CNBC.com