The OECD measured literacy, numeracy and problem-solving skills among 16 to 65-year olds across 24 countries.
Young adults aged 16 to 24 in England rank 22nd for literacy and 21st for numeracy.
English adults (aged 16-65) rank 11th for literacy and 17th for numeracy.
The low-skilled are more likely than others to be unemployed, have bad health and earn much less, according to the OECD. Countries with greater inequality in skills proficiency also have higher income inequality.
Ian Brinkley, director at
The Work Foundation, said:
“This is a ground-breaking study that policymakers throughout the UK must take very seriously. We now have a comprehensive measure of the levels of literacy, numeracy, and problem-solving skills, instead of having to use educational achievements as a proxy.
“It shows that investment in skills pays, both economically and socially, and for individuals and economies; it shows we are good at producing and extracting value from high levels skills; and that concerns that we were overinvesting in high level skills are misplaced. This success must be reinforced."
England ranks among the top three countries surveyed for literacy skills among the 55-65 year-olds.
But the country is in the bottom three when it comes to such skills among 16-25 year-olds.
Mr Brinkley said England faces a major generational challenge.
"We are the only OECD economy where the average skill levels of the younger generations in work are no better than the older generations they will eventually replace.
"According to the OECD, we face a relative decline in the economy’s skills base. We must develop more effective policies to increase investment and promote the benefits of life-long learning, especially for lower skill groups and for younger workers, if we hope to compete internationally as a knowledge based economy."
The OECD said some countries have made impressive progress over recent decades in equipping more people with better literacy and numeracy skills. Young Koreans, for example, are outperformed only by their Japanese peers, while Korea’s 55 to 64 year-olds are among the three lowest-performing groups of this age. Older Finns perform around the average, while younger Finns are among the top performers, together with Japan, Korea and the Netherlands.
But in England and the United States, the literacy and numeracy skills of young people entering the labour market are no better than those leaving for retirement.
American 55-65 year-olds perform around the average, but young Americans rank the lowest among their peers in the 24 countries surveyed.