The self-made millionaire, who kicks off an eighth series of the BBC One business show on Wednesday, told The Sun that the country's benefits system has got "right out of hand".
He said: "Mums and dads are the culprits. When their kids get to 13 they should bring down the curtain and say, 'No, you can't have a PlayStation'.
"'If you want one, there's the supermarket — go down there and stack some shelves. Get yourself £40. Do that five times a week and you've got £200'."
The Amstrad boss continued: "The benefits system has got right out of hand. It is a total joke in this country.
"Why work when you can fill out a few forms and get paid for doing nothing?"
But Lord Sugar confessed changing the system would be a monumental task.
He added: "It will take a brave person to cull the benefits system and analyse who deserves and who doesn't.”
The Apprentice 2012 starts on BBC One this Wednesday.