It is no longer enough for young people to rely on qualifications, according to new research from the Institute for Public Policy Research (IPPR). It shows that the shift to a service economy has made the acquisition of personal and social skills more important than ever before.

IPPRs analysis of surveys with people born in 1958 and 1970, shows that personal and social skills - like communication, self esteem, planning and self control -became 33 times more important, between generations, in determining earnings later in life. Poor children who have high levels of application and concentration are 14 percent more likely to be well-off by age 30, than the average poor child. The report shows social mobility has stalled. Twenty two percent of the decrease in social mobility was because working class kids lacked personal and social skills.

But the report says qualifications still matter. GCSEs add around 10 percent to wages compared to those with no qualifications, A-levels add a further 15 percent for women and 20 percent for men and a degree adds a further 25 percent for women and 15 percent for men.

The report says the best way for children to learn the skills that they need outside the family is through structured activities where they mix with children of other ages and backgrounds but are mentored by adult activity leaders and work towards specific goals. Examples include the Scouts, Cadets, music, martial arts, drama clubs and sporting teams.

Nick Pearce, IPPR Director said, "There have always been class divides in education. But in the post-war period there were no social class gaps in how children were socialised into developing personal and social skills. Now there is a personal skills class divide and it is contributing in the decrease in social mobility." Adolescence is also being stretched at both ends, with children becoming teenagers earlier and adults later. For too many young people this transition to adulthood is complex, messy and unsuccessful.

The report concludes that learning soft skills has become more important because of: The structure of firms and the shift towards a service economy, which has led to an increase in both high skilled and low skilled technology-proof jobs that cannot be outsourced. Greater choice of different courses in further and higher education than ever before. A shift in public policy, which has emphasised choice, voice, personalisation and individual customised public services. Widening inequality in the 1980s and stalling social mobility, which have increased the gap between the best and worst-off. IPPRs report, Freedoms Orphans: Raising Youth in a Changing World, recommends:

Participation of every secondary school pupil (from 11- to 16-years-old) in at least two hours a week of structured and purposeful extracurricular activities such as music, drama clubs, martial arts, sports, cadets and Scouts. This would take place through extended school hours of between 8am and 6pm and would involve a legal extension of the school day. Parents who did not ensure their child attended two hours a week of activities might ultimately be fined, in the same way as parents are punished for their childs persistent truancy.

More school house systems and more multi-age classes to strengthen childrens self-esteem and help develop their social skills.

A ban on commercial television and print media advertising designed to capture the attention of children of primary school age. This will be a first step, while further consultation should be encouraged to determine the appropriate age limit.

A ban on commercial advertising through mobile phone and 3G platforms to handsets registered to children of primary school age. Parents should have the option of registering phone numbers with a dedicated body to ensure this happens.

Monitoring by Ofsted of commercial advertising in primary schools and other educational institutions for the primary age group must be carefully.

Investment in a range of relationship support services for parents and couples, particularly lone parents. This needs to include new skills for professionals as part of workforce development in the NHS and social services, to enable them to identify and respond to relationship difficulties in couples.

Inclusion of couple relationship support training and training on working with men and fathers in social worker, health visitor and perinatal training and development, and a pilot scheme to test supportive interventions. Development of information and support services for fathers at key transition points, notably in perinatal services and during separation.

Establishment of a UK cohort study to explore how relationships within families can best be supported by policy. Roll-out of community-based perpetrator programmes for fathers with violent behaviour.

A role for the Child Support Agency in supporting families through divorce and separation. This should be modelled on the Australian Child Support Agency, which takes an active role in facilitating better relations between separating parents.

Children's personal skills are increasingly likely to influence their future earning potential, not just exam results, a think-tank suggests. Failure to teach key skills such as communication is widening the gap between rich and poor, says the Institute for Public Policy Research.