Iain Duncan Smith said the Government must push ahead with welfare change to "reform a group that's progressively less able to do the work".
He has called for the benefits system to be simplified with a universal credit and work incentives to be used to tackle worklessness.
"I always argued that the last Conservative government freed up the markets, but what was missing was the next bit," he told The Spectator.
"Getting society in Britain ready to meet that change. We never did.
"We ended up with a sort of mid-20th century society, many locked away in welfarism, and a 21st century economy.
"We see now that one cannot meet the results of the other. It's not optional.
"If anything tells you that it's not optional, look at the 2.5 million jobs created under Labour out of which at least 60% went to foreign nationals."
According to the Spectator, latest figures from the Office of National Statistics show in the second quarter of 2010 there were 24,287,000 UK-born people in work, this dropped to 24,188,000 in the second quarter of 2011 - a fall of 99,000.
It's getting worse, and it's getting worse because we face the problem of having to reform a group that's progressively less able to do the work.
Work and Pensions Secretary Iain Duncan Smith
During the same period, the number of foreign-born people in work rose by 278,000 to 4,080,000.
Mr Duncan Smith added: "It's getting worse, and it's getting worse because we face the problem of having to reform a group that's progressively less able to do the work.
"That's why I believe we're in the last chance saloon.
"Last week [the riots] was a wake-up call for us but we should thank our lucky stars that we had one."
Last month he appealed to businesses to employ young and unemployed British people ahead of "labour from abroad".
Former prime minister Gordon Brown was criticised after his 2007 pledge to provide "British jobs for British workers".
Figures released after his statement showed around 80% of jobs created during Labour's time in power went to migrants.
The definitions of "UK-born" and "foreign-born" are set by the European Commission.