Britain is facing an “economic catastrophe” as young adults “rewired” by smartphones are becoming trapped in worklessness, a government review has found.
A landmark report into why one million young people are off work says businesses must adapt to this “anxious generation” by offering greater flexibility and mental health support.
Alan Milburn, a former health secretary, was appointed by Sir Keir Starmer to investigate the 946,000 16 to 24-year-olds not in education, employment or training, known as Neets.
His interim report, to be published next week, says that a “rising tide of mental ill-health, anxiety, depression, neurodiversity” is the main reason for high economic inactivity.
Milburn said that these young people “are not snowflakes or faking it”, adding that their heightened distress and anxiety is linked to growing up in a digital age on social media.
However, he said they were being failed by the state and it was a “necessity” the Labour government reformed the welfare system to encourage work.
“The system is trapping people in worklessness rather than enabling them into work,” Milburn told The Times. “We’re at a risk of just writing a whole generation off.”
The report says that the welfare state was “built for a different era and must change now if we are to avoid a generational, societal and economic catastrophe”. Failing to tackle the problem risks leaving a generation stuck on benefits for life, preventing economic growth, the review finds.
The findings will put pressure on Labour leadership contenders, including Andy Burnham, to set out plans for welfare reform. Starmer has backed away from attempts to reform the welfare system after facing a backbench revolt last summer over proposed cuts to benefits.
More than half of Neets have never worked and one in four are signed off with long-term sickness or disability. Of these, 43 per cent say mental health is their main problem, up from 24 per cent in 2011. The proportion blaming physical health problems has halved in 15 years, from 74 per cent to 32 per cent.
Andy Burnham launching his by-election campaign on FridayIan Hodgson/AP
The report highlights the role of social media in driving economic inactivity in young people, with research finding some spend “not just months but years at home, online, and losing hope”.
The review team held focus groups with young people, which revealed smartphones had led to poorer sleep and mental distress. “Every one of a group of ten 12 and 13-year-olds told us they went to bed between midnight and 3am because they were scrolling on their phone,” the review says.
Milburn said: “This is a bedroom generation. They are sort of living in their bedrooms. They are on all the time, they’re never off. [Social media] is leading to some evidence of functional impairment, changing their sleep patterns, concentration levels. That is having an impact on their ability to work.
“They are not snowflakes. People say it’s a soft generation. My view unequivocally is that it isn’t. It is an anxious generation.”
The report says: ”[Young people] are different, not worse, not lazier, not less intelligent. They have grown up in a digital world that has rewired how they communicate, form relationships and manage stress. They have fewer experiences of workplaces and they present with higher levels of anxiety and depression.”
It will state that getting a diagnosis of anxiety, depression, ADHD or autism should not automatically translate into dropping out of the workforce.
Worsening trends in mental illness were exacerbated by the pandemic, according to the review. Today’s 16 to 24-year-olds were aged between 11 and 18 during Covid, and suffered through lockdown school closures.
Milburn said that the one million Neets could provide a solution for UK employers struggling to find skilled labour amid a fall in immigration.
On Thursday figures revealed that net migration to the UK fell to 171,000 last year, down from a peak of 891,000 in 2022. Separate data revealed that youth unemployment has reached an 11-year high in the UK, at a rate of 16.2 per cent.
“Employers have been on easy streets because they have been able to import migrant labour, oven-ready. That has fallen off the cliff,” said Milburn. “Every employer I talk to complains about a shortage of skilled labour, and here is that potential pool of labour. I think that is part of the solution.”
He said British businesses would have to adjust to offer “a high level of pastoral care for this cohort of young people living with mental distress”, giving the example of an Amazon initiative for autistic workers.
“They love those workers because they’re reliable and turn up on time. Just because you have a diagnosis it doesn’t mean you can’t get a job,” he said.
Milburn, who was a cabinet minister under Tony Blair, urged the Labour Party to get behind reforms to help the younger generation work.
He said: “Welfare reform is not an optional extra, it’s a necessity. Not even because of the fiscal cost, but because of the cost that is paid in the life chances of young people who are being trapped in a system that isn’t recognising their potential or rewarding their aspirations.
“There aren’t many causes in modern politics, but if the future of one million young people can’t be a cause for progressive politics, then I don’t know what is. This is a cause. We can’t be writing off a whole generation.”
The interim report will be published in full next week. Milburn will publish his final recommendations, including on the benefits system, in the autumn.