Are rising debts, weak wages pushing Gen-Z out of the workforce?

A growing share of Gen-Z (defined as those born between 1997 and 2012) is stepping away from work and education at the same time that debt burdens are rising and wages are struggling to keep up with living costs.

Across major economies, millions of young people are now classified as NEETs, meaning they are not in employment, education, or training.

This shift is raising concerns about long-term labour participation and economic growth.

Data from global institutions and labour surveys suggest financial pressure, weak job prospects, and changing attitudes toward work are all contributing to a widening disconnect between young people and the workforce.

Youth inactivity rises

Globally, around one in five people aged 15 to 24 were classified as NEETs in 2023, according to the International Labour Organization.

The trend is particularly visible in Europe.

Spain has more than half a million young people neither working nor studying. In the UK, nearly 3 million Gen Z individuals are economically inactive, with 384,000 joining since the COVID pandemic.

A PwC report found that four in 10 Gen-Z workers would consider leaving their jobs and relying on unemployment benefits instead. This reflects a growing disengagement from traditional employment pathways.

Debt burden rises

Student debt is becoming a central factor in this shift. In the UK, one graduate now owes more than £314,356, exceeding the average cost of a home and setting a new record.

While the typical graduate leaves university with about £45,000 in debt, a small but increasing group owes more than £267,000.

More than 150,000 borrowers now have balances above £100,000, rising as interest compounds.

The pattern is global. In the US, total student debt has surpassed $1.7 trillion.

At the same time, earnings have failed to keep pace. Data shows people in their early twenties earn about $45,500, compared with $51,852 for millennials at the same age when adjusted for inflation.

Meanwhile, house prices have risen more than twice as fast as incomes since 2000, widening the gap between earnings and affordability.

Job market tightens

Opportunities for new entrants are becoming more limited. In the UK, more than 1.2 million applications were submitted for fewer than 17,000 graduate roles in a recent hiring cycle.

Some graduates report applying to hundreds of jobs without success.

In the US, organisations such as Goodwill have warned of a potential rise in youth unemployment as artificial intelligence replaces entry-level roles.

Employers are also shifting priorities, placing less emphasis on degrees and more on practical skills.

Attitudes toward work shift

Economic pressure is reshaping how Gen Z approaches work. Many are less focused on traditional career paths and long hours.

Some are choosing lower-pressure roles with more flexibility, including teaching and trade jobs, while others are avoiding corporate careers.

Mental health trends are also influencing decisions. More than a third of people aged 18 to 24 report conditions such as anxiety or depression.

Financial strain is delaying key life milestones.

Around 14% of graduates say debt has forced them to postpone moving out or starting a family, while a third have delayed saving for a home or retirement.

As a result, one in three graduates now believes their degree was not financially worthwhile.