Root cause?
The world of flying has changed considerably over the last 30 years. Except for ticket price, perhaps not much for the better.
As an American who lived in Europe for several years, I enjoy reading here to compare/contrast life on both sides of the pond.
The American model of the route to the cockpit works here because there is a fairly large population interested in flying as a hobby: 0-250 commercial certificate/Flight instructor build time instructing, get a little right seat charter time, left seat charter time, 1000+ hours to FO on a regional. The US Congress has - in my opinion - stupidly increased regional right seat to ATP, and increased ATP to include some very expensive simulator time.
[Brief war story: I once worked with a US Navy lieutenant in the pre-regionals days who had 1800 of flight time. All of it was single- two- or four-engine turbine time (P-3 pilot). He applied for a job with Delta and was told to get 200 more hours, even if Cessna 152 time, so he could meet their 2000-hour minimum. I found it fascinating that 2000 hours of giving flight instruction in a C-172 was not weighted any different than almost 2000 hours of heavy, multi-crew, four-engine time. Back to our regularly scheduled broadcast...]
In this US model, by the time someone is carrying passengers who paid for a ticket on a scheduled flight, the copilot has several hundred hours or more and a few years experience.
The European/British model divides sport flying from the commercial pilot track almost from the beginning (yes, I know about modularity/etc.). There are very expensive courses, and graduates end up with 150,000 GBP debt. That used to be enough to get hired, then the world became more competetive. Someone thought "only one ouf of five of my classmates will get a job, I think I'll go get my own 318/320/etc type rating to be more competetive on my application..."
Next thing you know, the low cost airlines realize they can reduce training costs by only hiring people willing to fund their own type rating. Now the aspirants are even deeper in debt. Some airlines even make a profit on by charging for the training in their own equipment.
Drive wages down to save money. What's cheaper than a low wage? How about some schmuck willing to pay to be there instead of earning a salary?
Don't misunderstand what I'm saying. I'm describing how I see the two different models. Ignoring the TR and P2F parts, I do not believe that one model is better/worse than the other. Each is simply how the field has developed in its prespective environment. Military pilots do very complicated things, often with less flight time than required to get on with a major airline in the US. A small number in the log book doesn't mean an unsafe pilot.
How can you change things? If all the future pilots said "we won't pay for our own TR any more" eventually someone would do it anyway to get ahead. If the future pilots all said "we won't work for less than $40/hour" then someone would eventually quietly offer to work for $38.
As long as the fATPL-academy-industry trains many times more people than will ever find a job, there will be supply/demand issues that are not in favor of the pilots. As long as Ryan Air can pay less than BA and still turn away many applicants they will pay as little as they can. Read the Norwegian stuff here on PPRUNE. As long as people are willing to accept that "stuff" there's no hope. Even if P2F is outlawed by the ICAO, determined to be slavery by the UN, or whatever, there will still be people lined up for every job posted.
I would think you could shut down the flight schools and still meet the entry level jobs from existing graduates for several years. You know the schools are not going to say "your job prospects are much weaker than the likelihood of filing for bankruptcy one day..."
All of that to say, "I have no idea what the answers are, but it's a mess - not a lot different on this side of the pond except no type rating required for FO and flying is a lot cheaper."
(Very slow at work today, but I do disagree with the pay-to-fly model of doing business.)