Young people with mental health conditions are nearly five times more likely to be out of work than their peers, new research has revealed, prompting urgent calls for employers and the government to take action.
The Keep Britain Working Review, commissioned by the Department for Work and Pensions (DWP), reveals a worrying rise in economic inactivity among 16- to 34-year-olds due to poor mental health. Nearly a quarter of all working-age people who are unable to work due to ill health now fall within this age bracket, raising concerns that a generation is being left behind before their careers even begin.
The review, led by former John Lewis chairman Sir Charlie Mayfield, is investigating why growing numbers of people — particularly younger workers — are dropping out of employment due to health conditions. The findings reveal that over the past decade, the number of young people with a work-limiting health condition has surged by 1.2 million, contributing to a wider trend of long-term sickness driving economic inactivity.
A Shift Towards Prevention and Retention
The government has acknowledged the scale of the problem and stressed the need for employers to play a more active role in keeping workers in jobs. Work and Pensions Secretary Liz Kendall said current employment policies must change and show a need for early intervention strategies to prevent people from leaving the workforce in the first place.
“We must do far more to help people stay in work and get back quickly if they fall out,” she said. “That’s why, as part of the reforms in our Pathways to Work Green Paper and our Plan for Change, we are making a decisive shift towards prevention and early intervention.”
Kendall said that businesses must step up their efforts to create inclusive, supportive work environments, particularly as the UK faces a persistent skills shortage. She noted that while some employers are already making significant strides, more need to adopt proactive approaches to workplace wellbeing.
“We want to help more employers to offer opportunities for disabled people, including through measures such as reasonable adjustments, and we are consulting on reforming Access to Work so it is fit for the future.”
Economic Impact of Workforce Dropouts
The financial consequences of young people dropping out of work due to poor mental health are substantial. The review estimates that tackling sickness absence and work-related ill health more effectively could add £150 billion per year to the UK economy.
Separate research suggests that if the number of young people who are not in education, employment or training was reduced by a third, the UK’s GDP could increase by 1.8% — equivalent to a £38 billion economic boost.
The figures underline why employment retention is a top priority for the government’s Plan for Change, which aims to overhaul welfare and employment policies to reduce long-term reliance on benefits. With the UK currently experiencing one of the highest rates of economic inactivity due to long-term sickness in the G7, ministers are keen to implement measures that will keep more people in work and improve overall productivity.
How Employers Can Help
For businesses, the rising number of young people leaving the workforce due to mental health conditions presents a significant challenge. Many employers are already struggling to fill vacancies, with skills shortages affecting key industries. Yet some still view replacing workers as an easier solution than supporting those with long-term health conditions.
The review has found that companies that invest in employee wellbeing, offer flexible working arrangements and provide early mental health support see higher staff retention rates. In contrast, organisations that fail to address mental health concerns risk losing valuable talent and increasing recruitment costs.
Sir Charlie Mayfield, who is leading the review, said tackling the problem would require a joint effort from businesses and policymakers.
He said the initial report “underlines the urgency that we tackle this challenge by improving prevention and retention of those in work and by creating better pathways back into work for those who are economically inactive.”
Sir Charlie added that “[e]ven at this initial stage of the review, we have found inspiring examples of employers making a difference that’s literally life changing for some people. We need more of these on a greater scale and, in the next stages of the review, we will be engaging with many organisations to establish how that can be achieved.”
Consultations with Companies
The Keep Britain Working Review will continue gathering evidence and consulting with businesses over the coming months. The next phase will focus on developing practical recommendations to improve employment retention and ensure that young people with mental health conditions receive the support they need.
Meanwhile, the government has already begun introducing measures aimed at making work more accessible and secure. This includes strengthening workers’ rights through the Employment Rights Bill, which would expand statutory sick pay to 1.3 million low earners and ensure employees can access payments from the first day of illness. Additionally, the National Living Wage is set to rise in April, benefiting an estimated three million workers.