Labour was right to admit its mistakes – but now it’s time to formulate fresh thinking on our economy and education system, Shadow Business Secretary Chuka Umunna tells Political Editor Jonathan Walker.

Employers are struggling to cope with new recruits who may know how to use an iPhone – but have no idea how to hold a telephone conversation with a client.

And it is Britain’s schools which are failing to prepare our children for the world of work, according to Chuka Umunna.

Part of the solution is to get businesses into schools, including primaries as well as secondaries, to talk to youngsters about employment and the workplace, he said.

Mr Umunna spoke frankly about the challenges facing industry, and some of the challenges facing Labour, when we met in his Streatham constituency.

He had a busy day ahead of him. After talking to the Birmingham Post he was due to unveil a plaque in honour of his heroes Soul II Soul – the British R&B group led by Jazzie B – in Brixton. The first concert he ever attended was Soul II Soul at the Brixton Academy in the early 1990s, he said.

At only 33, Mr Umunna is a high-flier. He became an MP for the first time in May 2010 and already holds a senior post in Ed Miliband’s shadow cabinet, opposite Business Secretary Vince Cable, although this follows a successful if brief career as a lawyer.

Now he’s helping shape Labour’s policy on perhaps the most pressing issue of the day – how to get the economy growing and industry creating jobs again.

But along with his party leader, he insists a Labour government would have ambitions which go beyond simply growing the economy. The last Labour government appeared to preside over a period of economic success but the headline figures hid the fact that living standards were falling for many people.

What is needed is nothing less than a new version of capitalism, he says.

“We need to transform the way the economy operates.

“We know that since the early noughties, structurally it hasn’t been fit for purpose. So since 2002 or thereabouts, median wages stagnated despite productivity increases – and at the same time, living costs started to rise.”

This is what Labour means when it talks about the “squeezed middle”, he said. “But it’s not just that there is a squeeze on the middle – you have a hollowed-out middle too, an hour glass economy with an insecure, low-paid, not terribly highly-skilled economy at one end, and then a very highly skilled and highly-paid economy at the other, and a hollowing out of those intermediate jobs in the middle.”

Britain needed a balanced economy, he said, with less reliance on one part of the country and less reliance on the financial sector.

Among other things, this would involve ensuring schools were equipping young people for the workplace – something they were not doing adequately at the moment.

“I don’t think the school system is sufficiently preparing young people for the world of work despite the superb job they do educating our children.

“The number one message I get from businesses is first, we don’t have enough young people coming through with the engineering skills we need, and secondly the soft skills that we often need in the workplace are lacking.

“Despite the fact we have the most technologically clued-up young generation ever, who use iPads or have a mobile phone, and are proficient in social media in a way older generations are not, too often businesses tell me that the young people they have coming in to their business lack just the basic phone manner.”