A majority of young people would leave Northern Ireland because of lack of job opportunities, a report said.
Seventeen years after the Good Friday Agreement which largely ended violence, children are still growing up divided and segregated by religion, change advocates added.
Young people are not being educated to meet the job requirements of the market and many are taking their skills elsewhere, the Integrated Education Fund (IEF) said.
The report said: "Seventeen years after the Good Friday/Belfast Agreement was signed and endorsed by referendum, our young people are still growing up in a context of division and segregation, with some evidence that the fear of conflict and violence remains strong in many areas."
Although the general unemployment rate for the period April to June was estimated at 6.5%, around a fifth of young people were out of work this year.
"When considered alongside the other post-conflict challenges that Northern Ireland is still facing, it is not surprising that a majority of young people, asked at different points in this engagement project, would be willing or indeed expect to leave Northern Ireland due to a lack of job opportunities," it added.
Although there have been moves towards shared education between the Catholic and state-run sectors, Northern Ireland's education system has been largely based on separate schooling, with the Catholic church keen to maintain its ethos and a range of Irish language schools emerging. Only a minority live in a mixed area, the report said.
The number of "peace walls" designed to separate Protestant from Catholic at sectarian interfaces numbers in the dozens.
Political paralysis at Stormont has stalled projects such as the building of a peace and reconciliation centre on the site of a former high security prison near Belfast.
However, the First Minister and Deputy First Minister have endorsed shared housing developments and summer youth camps designed to encourage a shared future.
The IEF report said: "Despite choosing 17 years ago to move towards a shared future, Northern Ireland continues to be a religiously segregated country.
"Many of those who participated in the events run during this project continue to experience and to be impacted by divisions, in particular through segregated housing and education."
Green Party leader Steven Agnew said education together should be the norm, adding: "It would be better for our society if our children could be educated together in one school, with no differentiation in terms of faith, ability or socio-economic background. "