Generation Z are giving up on work, a new study suggests, with almost four in 10 considering leaving their job and ending up on benefits.
PwC warned that a generation of workers were now in danger of permanently drifting out of the jobs market, and identified mental health conditions as a “major driver” of youth worklessness.
It said economic inactivity, where people are neither in work nor looking for a job, was on course to rise further, with 4.4m workers – one in 10 of the overall workforce – now “on the brink of leaving the labour market”.
In a stark warning, the Big Four accountancy firm, which employs roughly 26,000 people in the UK, also said many employers were wary of taking on people who had been out of work for an extended period.
Concerns are rising over the number of young people condemned to a life on benefits as Liz Kendall, the Work and Pensions Secretary, prepares to unveil a major overhaul of sickness and disability payments this week in the face a likely backbench rebellion.
PwC said: “Younger workers – aged 18 to 24 – are particularly at risk, with mental health a major driver.”
It added that 37pc had considered in the last 12 months leaving their jobs.
Almost 2.8m people are economically inactive because they say they are too sick to work.
While the rate of inactivity has declined from its peak last year, worklessness among under-35s has “proved more stubborn”, according to PwC, with an increasing proportion out of work because of long-term sickness.
PwC’s poll of 4,000 people found that those aged between 18-24 were 40pc more likely to cite concerns with mental health compared with older respondents.
The UK remains the only G7 country with fewer people in work now than before the Covid lockdowns in 2020.
Ms Kendall will unveil full details of the planned cuts on Tuesday, with expected savings of between £5bn and £6bn a year.
Personal Independence Payments (Pip) have been targeted for most of the savings, with changes to eligibility and a reduction in the highest payments set to be unveiled.
A move to freeze the current level of Pip this April, in what would have amounted to a real terms cut, has been dropped amid fears of the biggest rebellion of Sir Keir Starmer’s premiership.
But Labour MPs critical of the cuts are warning Downing Street that they must water down the package further if they are to avoid a public showdown over the plans.
Rachael Maskell, the Labour MP for York Central, said: “It is not too late to change these possible proposals.
“The Government must now go out to talk to the experts who are impacted by them as well as people like occupational therapists, to make sure people are being protected and won’t fall further into poverty.
“I’m hearing from my constituents that they are very concerned and distressed about the plans.”
A second Labour MP said the apparent about-turn on the Pip freeze had only brought the Government temporary “breathing room”, adding: “The opposition inside the party will now move on to other aspects of the cuts.”
The source said: “The Cabinet needs to do its job and tell them Rachel Reeves is out of order.”
But Number 10 is holding firm, with one insider making clear the package has been approved by the key ministers and will now not change.
Wes Streeting, the Health Secretary, on Sunday said that the welfare benefits system would be “unsustainable” and “unaffordable” if savings were not made.
He also said in his BBC One interview that there had been an “overdiagnosis” in mental health conditions, adding that “too many people [are] being written off”.
Labour is attempting to frame the reforms as living up to its party name’s belief in the power of work, arguing the current welfare system is failing to help people get back into employment.
Marco Amitrano, a senior partner at PwC said its survey of 4,000 people revealed some “hard truths”.
He said: “The UK has an excessive number of adults who are neither in work nor actively looking for work, eclipsing the number of unemployed by six to one.
“As well as a major societal problem, economic inactivity acts as a constant handbrake on growth. While the issue is rightly attracting strong attention, understanding of how to tackle it is weak.”
Mr Amitrano said there was a widespread reluctance among businesses to take a chance on people they felt may not have the right skills for the job.
As many as a third of employers said they linked economic inactivity with people “gaming the system”.
He said: “Businesses told us they are wary of recruiting people who have been out of the workforce for a long time – with skills and experience gaps being a particular concern. But it is equally true that businesses want to stop talented workers from leaving.”
PwC called for more support to stop people from drifting out of the workforce, particularly from small and medium companies.
Business groups have already warned that a combination of increases in the minimum wage and the workers’ rights bill championed by Angela Rayner, the Deputy Prime Minister, mean companies are more likely to hire experienced staff and pass over young workers.
