Unemployment and (re)employment: what works for wellbeing?

Download the second briefing in our Work and Wellbeing: What Works series, unemployment, (re)employment and wellbeing.

Kevin Daniels is Professor of Organisational Behaviour at University of East Anglia and leads the Work, Learning and Wellbeing evidence programme for our Centre. Here, he gives an overview of the findings from our latest systematic review into unemployment, (re)employment and wellbeing and digs deeper into the evidence.

Our latest systematic review looks at the impact of losing, changing and getting a job on our wellbeing. It might seem like a simple relationship – we need to work to pay rent, after all – but in reality our work often means more to us than income alone.

This means becoming unemployed, or finding work, impacts us in profound ways. And not just us as individuals: our families and communities are affected too.

When we asked members of the public, business leaders, trades unionists and others about the wellbeing effects of unemployment and employment the clear priority emerged as improving job opportunities and promoting high quality, sustainable jobs.

Unemployment is damaging to wellbeing regardless of personal characteristics. Longer spells of unemployment are more damaging than short spells to wellbeing and there is very little evidence of adaptation – that is, wellbeing improving as people learn to cope with unemployment.  

There are differences in how the length and frequency of unemployment affect men and women.

There is also evidence that the damage to wellbeing may be greater for the young, particularly when the spells of unemployment are longer.  This evidence is best highlighted by a piece of research called The Happiness of Young Australians: Empirical Evidence on the Role of Labour Market Experience published in the Economic Record (2005) by Dockery, A.M.

Finally, unemployment not only reduces the wellbeing of the person who lost their job – it can also damage that of those that they live with.

Interestingly, living in an area with high unemployment had a mitigating effect on poor life satisfaction for its unemployed residents. This may be because there is less stigma associated with unemployment where the local unemployment rates is higher, and in the UK this results in a smaller reduction in wellbeing from being unemployed.

The research comes from Flint et al., (2013) which presented evidence using UK panel data of 10,702 individuals, across 347 areas and 17 years, finding that high local unemployment rates reduced the negative effect of unemployment. However, individuals who were unemployed, insecurely employed or permanently sick continued to have worse mental health when compared to individuals in secure employment.

A natural question to ask is “can re-employment help and to what extent?”. The evidence suggests that re-employment can be helpful in eliminating the negative wellbeing effects of unemployment but this is sensitive to job quality.

Reemployment is less rewarding for entry into jobs with less prestige, lower pay, or lower autonomy (Gedikli et al., 2017). What’s more, moving from standard to non-standard forms of employment (i.e. jobs with temporary contracts) reduces wellbeing (Llena-Nozal, 2009).

For policymakers, this translates into a need for continued development not only of strategies to increase employment, but also trying to reduce the impacts of unemployment on people and their families, especially the long-term and youth unemployed. There should be an emphasis on creating ‘entry’ level jobs which offer interesting work that builds skills and offers a career path. Apprenticeships can play an important role, highlighting the potential importance of the new Apprenticeship Levy.