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Can Gen Z Solve the UK’s Productivity Crisis?

The UK is facing a unique problem. Since the 2008 financial crisis, our productivity has consistently lagged behind our European counterparts: for every hour worked, the UK generates £46.92, compared to £58.88 in the US, £55.83 in Germany, and £55.50 in France. The media has been quick to take aim at younger generations as the source of these productivity woes with stark headlines such as “Gen Z is the most difficult to work with”.

While it’s a rite of passage for the media to criticize the productivity and usefulness of the young, it’s important to remember that Gen Z has come of age during a period of multiple integrated crises: a global pandemic which prevented Gen Z from partaking in educational, professional, and social opportunities; the cost of living crisis, with the highest rate of inflation in over 30 years and record-shattering home prices; climate change; Putin’s war in Ukraine; the list goes on.

It is clear that the younger generations are dissatisfied with the status quo. When asked about their attitudes to the UK, a minority of young people are positive about the UK’s future: only 17% feel positive about the future of UK politics, 20% feel positive about the future of the UK economy and 26% about the environment.

How can the UK unlock the productivity of Gen Z? In order to solve this productivity puzzle, we must first understand the root causes of Gen Z’s pessimism.

Firstly, many young people are experiencing a skills gap: that is, a mismatch between the skills acquired through education and the demands of the job market. Despite investing in higher education, many young people find themselves in underemployment or unable to secure well-paying jobs. Research from Open Study College shows that Gen Z is entering the workforce as the most qualified generation in the UK, but despite this, a quarter of Gen Z struggle to find their first job even though they are overqualified. This skills gap not only erodes confidence but also undermines the value of higher education. When skilled individuals are unable to find suitable employment, productivity suffers, and innovation is stifled. The NHS presents a particularly stark example: In a recent survey by the British Medical Association (BMA), a third of respondents said they plan to take their skills abroad in the next 12 months.

Second, the high cost of living, particularly housing, places significant financial strain on young people. House prices have increased by 73% over the last 10 years whilst wages have stagnated. This creates the perfect cocktail for young individuals to delay important milestones such as getting on the property ladder and starting a family. This financial burden limits their ability to invest in education, entrepreneurship, and the local economy, whilst also handing the youngest generations additional financial burdens as pension and welfare costs soar for the UK’s ageing population. Meanwhile, the government continues to insist the UK will preserve the triple lock – at any cost to the young.

Finally, another aspect contributing to youth disengagement and the productivity puzzle is the mental health crisis among young people. Long-term illness has skyrocketed with a quarter of 18-to-24 year olds who were out of work last year blamed ill health, almost three times as much from just a decade earlier. Mental health concerns were behind almost two in three young people being unable to work. These mental health challenges can lead to reduced productivity, increased absenteeism, and difficulties in sustaining employment. The impact is not only felt at the individual level but also ripples through the economy, hindering overall productivity.

Addressing the link between the UK productivity puzzle and youth disengagement requires a multi-faceted approach.

Firstly, policymakers must prioritise investments in education and skills training to bridge the gap between what young people learn and the needs of the job market. Promoting valuable apprenticeships, internships, and vocational training can provide valuable hands-on experience and increase employability, giving an early competitive edge in the workforce.

Secondly, efforts to improve mental health support systems, both within educational institutions and the workplace, are also crucial. Creating an environment that fosters emotional well-being and resilience among young people can enhance their productivity and overall engagement, encouraging them back to the workplace.

Despite their pessimistic outlook, we can find reasons to be optimistic about how Gen Z will positively affect the UK’s economy and society, as one British student wrote: “Perhaps counterintuitively, one of the healthiest things we can do is recognize that the world is absolutely falling apart right now. … This is not to say that I advocate for misery or detest hope. I firmly believe that we as a generation have the power to fix the problems we face, and to do so will require more than a little faith and belief in ourselves.”


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