Unemployment, (Re)employment and Wellbeing

How does unemployment affect our wellbeing? What can reduce the damaging effects of unemployment? What happens to wellbeing when people (re)enter work?

People who lose their jobs lose their incomes. But what are the broader effects
of unemployment on the wellbeing of individuals and their families?
Wellbeing measures how people feel about their lives, their own report of how
things are going. The wellbeing measures considered in the studies in this review
include life satisfaction, assessments of mental health, and self-esteem.

Unemployment is one of the most important factors affecting individual wellbeing,
with negative impacts going beyond the effects on income. When measuring life
satisfaction on a 0-10 scale, the unemployed report about 0.5 points lower
compared to those who are in employment. However, the effects are different for
different groups in different contexts.

Prioritise long term and youth unemployed

The evidence is clear that unemployment is damaging to wellbeing, with the effects going well beyond the loss of income and also affecting other household members. Interventions aimed at mitigating this should be targeted at all those experiencing unemployment but priority given to long term unemployed and youth unemployed, where the loss in wellbeing and potential for scarring is greatest.

Reduce the negative impacts

Evidence suggests the priority lies with increasing employment. There could also a role for decreasing the negative experiences of the unemployed. This evidence suggests there could be a role through improving employability or recognising the importance of family and social connections.

Focus on quality jobs

The evidence confirms that wellbeing recovers on reemployment, but the size of the rebound depends on the quality of the new job. Thus as well as helping the unemployed back into work, policy has a role in promoting good quality, sustainable jobs (for example, through accreditation).