This paper presents a critical analysis of the contemporary policy focus on promoting employability among young people in the UK. Drawing on analysis of UK policy approaches to tackling youth unemployment since the late 1970s, we suggest that existing critiques of employability as ‘supply-side orthodoxy’ fail to capture fully its evolving meaning and function. Under the UK Coalition Government, it became increasingly colonised as a targeted tool of urban governance to legitimise ever more punitive forms of conditional welfare. We argue that this colonisation undermines the value of the notion of employability as an academic tool for understanding the reasons why young people face difficulties in entering the labour market. The paper suggests that the notion of youth transitions offers more potential for understanding youth unemployment, and that more clearly linking this body of research to policy could provide a fruitful avenue for future research. Such a shift requires a longer term, spatially informed perspective as well as greater emphasis on the changing power relations that mediate young people’s experiences of wider social and economic transformations. The paper concludes that promoting employment among urban young people requires a marked shift to address the historically and geographically inadequate knowledge and assumptions on which policies are based.