When the financial crisis first struck in 2007, a number of commentators pointed out that it would take its toll not only on employment and pensions, but would also increase health-care costs, in particular by increasing the incidence of mental illness ( 1, 2). It was reasoned that the crisis would create a more stressful environment and this would have an impact on the mental health of workers. Recent evidence presented in this feature seems to confirm this prediction.
What can we learn from previous crises?
Evidence from previous financial and economic shocks illustrates the adverse impact crises can have on the mental health of workers and the newly-unemployed. A recent “study of studies” that conducted a literature review of studies of crises concludes that economic recessions and crises have a context-dependent negative impact on mental health ( 3).
Past evidence also serves to justify the current concern that social security managers ought to have regarding the mental health fallout from the recent crisis. This concern should also be heightened by the fact that according to analysis carried out by the International Labour Office (ILO) ( 4) (covering the period 1990-2003) there has been an increase in the frequency and severity of systemic shocks (i.e. financial and economic crises) which it suggests is connected with greater economic liberalisation.
The ILO report also argues that the rise in systemic shocks implies a systemic insecurity of a type that is hard to cover through standard forms of social insurance. Greater economic insecurity is likely to produce more mental illness and thus more need for related benefit payments. These benefits will have to be paid by social security administrations. In short, the increasing proliferation of crises will add to the burden of social security.
Recession and mental health
The analysis of crises shows that increased unemployment invariably results in adverse impacts on mental health. It is widely accepted that unemployed people are more often in psychological distress than employed people, thus one can reason that crises serve to exacerbate the level and extent of mental distress. For example, according to a long-term study by Paul and Moser ( 5), the average number of persons with psychological problems among the unemployed was found to be 34 per cent compared with 16 per cent among employed individuals. Thus the unemployment generated by crises significantly increases the incidence of mental health difficulties. The longer the duration of unemployment the harder its consequences on mental health were. According to other studies, the negative effect of unemployment on mental health was also stronger in countries with a weak level of economic development, unequal income distributions, or weak unemployment protection systems when compared with other countries with more robust systems.
The increased incidence of mental health difficulties, unsurprisingly, accounts for increased levels of suicide. While the motivations for suicide are very personal and these potentially can be as diverse as the total numbers of individuals who pursue such an option, crises nevertheless seem to escalate the incidence of suicide. This should come as no great revelation given the highly permeable relationship between deteriorating social conditions and inner well-being. For example, a study of 26 European countries between 1970 and 2007 found that for every 1 per cent increase in unemployment, there was a 0.79 per cent rise in suicides at ages younger than 65 years.
It may be assumed that shocks which induce increased unemployment and the associated mental health affects will induce increased suicide. This assumption is borne out by evidence from the Asian economic crisis which had a significant impact on the incidence of suicide in this region ( 6). Compared with 1997, male suicide rates in 1998 rose by 39 per cent in Japan, 44 per cent in Hong Kong and 45 per cent in the Republic of Korea, although the rise in female suicide rates was less marked. Thus in these countries, the Asian economic crisis is associated with 10,400 more suicides in 1998 than 1997 ( 7).
With regard to other health impacts and mortality in general, crises can have extremely marked impacts. Eleven studies focusing on data from the Russian Federation, the Republic of Korea, as well as South and Central American, African and European countries found that economic crises were associated with an increase in all-cause mortality (i.e. cardio-vascular illness, respiratory infections, chronic liver disease, suicides, homicides and mortality in infants ( 3). By way of another striking example, Stuckler et al in another study point out that with the collapse of the Soviet system in 1991 and the associated economic decline, there was a rapid increase in death rates, by up to 20 per cent. This equated to approximately three million excess deaths, which is a devastating figure in a peacetime era ( 8). The economic decline and the dismantling of state social protection that ensued in the countries of the former Soviet Union contributed to the dropping of male life expectancy in Russia from sixty-four to fifty-eight ( 9), and one can reasonably assume a significant impact on mental health.
In short, and to paraphrase Uutela ( 3), studies of previous crises demonstrate that mental health disorders are an aspect of ill health in which economic crises show a procyclical effect. In some ways the effect of the crisis gives substance to the Seve's observation "that psychology is not the secrete of human affairs, economics is".
The impact of recent financial and economic crisis
While there is always a certain level of mental illness in every society, with around 8-26 per cent of the population in the industrialized countries (Italy having the lowest and USA the highest) suffering some kind of mental health difficulties at any one time ( 10, 11), it seems that the recent crisis has accentuated the extent of this situation.
According to a survey conducted in the United Kingdom by the mental health charity MIND, the crisis has worsened the mental well-being of workers in this country ( 12). MIND’s Populus poll of 2050 workers found that as a direct result of the crisis 10 per cent of workers had to seek support from their doctors. Likewise, 7 per cent have started taking a course of medical treatment for depression, and 5 per cent reported that they had to see a counsellor for stress and mental health problems directly caused by the pressures of the recession in their workplace. The survey also revealed a significant increase in “presenteeism”, whereby workers have felt compelled to put in additional hours in order to deal with extra workloads and keep their jobs. Thus, 28 per cent said they were working longer hours. A third of workers also reported that the working environment had become more competitive and that workplace morale had dipped significantly.
MIND suggests that the results of its survey also correspond to UK government statistics showing an unprecedented rise in the use of antidepressant prescriptions nationwide, with a record 39.1 million issued in 2009, up from 35.9 million in 2008. MIND’s survey displays evidence of the relationship between the crisis, medical problems and disabilities, and suggests a potential cost for the health-care system.
In other countries as well, the evidence shows that the crisis has impacted on mental health. In one study by the Latvian government, suicide levels were shown to have increased by 16 per cent in 2008 compared to 2007. Latvia was hit hard by the crisis and its economy retracted by 19 per cent, therefore the link with the crisis is obvious ( 13).
A survey documented in the 2010 World of Work Report published by the International Institute for Labour Studies suggests that the crisis has induced an unprecedented global decline in life satisfaction ( 14). In concrete terms this translates to into greater pessimism about the quality of life, diminished confidence in the ability of governments to shape brighter and fairer futures, and greater social unrest among other things.
According to the report, the worsening social climate is explained by higher unemployment and income inequalities brought about by the crisis. The report makes a clear link between the crisis, the labour market conditions and mental health, arguing that ‘the longer the labour market recession, the greater the difficulties for jobseekers to obtain new employment. In the 35 countries for which data exist, nearly 40 per cent of jobseekers have been without work for more than one year and therefore run significant risks of demoralization, loss of self-esteem and mental health problems ( 14).
Mitigating the mental health effect of systemic shocks through social protection
Studies on the impact of crises clearly show that where social protection is in place, the mental health impact of crises can be diminished considerably ( 4). For example, in a study of EU countries it was found that every US$10 invested per person in active labour market programmes reduced the effect of unemployment on suicides by 0.038 per cent ( 5). Another study of 27 OECD countries from 1980 to 2003 found that social welfare protection can be a pivotal factor in suicide prevention through protecting mental health, especially for countries experiencing a social crisis or significant and often painful transition ( 15). Importantly, the aforementioned macro study of studies makes an important conclusion: Active labour market programmes that keep and reintegrate workers in jobs were seen to mitigate some adverse health effects of economic downturns ( 4).
For those low- and middle-income countries where social security and health coverage is limited, the World Health Organization has warned that the impact of the crisis (which is still unfolding as per a lag effect) could be especially marked ( 16), thus underlining the importance of social security as an important ex ante preventative social intervention and the exigency of social security extension and augmentation in these countries.
All of the above indicates the important role that social security can play as a response mechanism to soften the psychologically damaging impact of economic and financial shocks, once again underlining its invaluable social function.
The significance for social security systems
Given forecasts that labour market problems and high unemployment look set to stay for another five years ( 14) longer than originally predicted ( 17), one can expect anxiety over income and job security to persist. This most likely means that mental health problems will pose an increasingly serious public health issue for governments and employers.
It is probable that there has been a mental health impact throughout all those countries affected by the crisis. This is a concern, not only from the perspective of diminished human well-being, but also because it will have had an impact on overall economic performance and the functioning of social security. It will mean reduced productivity and for social security it spells some degree of reduced contribution income and more expenditure. For example, the financial costs of mental illness are significant as it contributes to lost productivity as people who are mentally ill are less likely to be employed and to stay employed. Moreover, there are costs for society when it becomes necessary to grant incapacity and unemployment benefits. According to a psychologist from Kings College, London, these costs are estimated to amount to about US$19bn per year or around 1 per cent of the gross national product of the UK ( 18).
Over the last 10 to 15 years mental illness has now come to account for a high number of new cases of disability beneficiaries in many industrialized countries. For example, in Switzerland recent figures from 2009 show that benefits related to mental illness accounted for 42 per cent of all new disability benefits paid that year ( 19). Moreover, beneficiaries of disability benefits often prove the most difficult to reintegrate back into full employment. In addition to this, it is likely that more sickness benefits (as an initial effect) and medical expenses (drugs and psychiatric treatment) will be incurred.
The studies and experience presented in this article should give a renewed impetus to social security administrations, employers and others to consider how best they can limit the mental health impact of the recent crisis for human well-being and also to contain benefit and other costs related to schemes. For employers this means better practice in the workplace to protect their staff and to ensure both workers and the company can cope with the crisis, and future crises, in conditions that are as stable as possible.
This requires all actors, in particular those working in the field of occupational safety and health, to promote prevention. But it also means, more generally, to promote preventative approaches in all branches of social security. This involves preventing risks from emerging in the first place and helping individuals and families to make the best possible adjustments when faced with contingencies. Social security can play an important role in diminishing inequality and poverty, providing insurance in times of crisis, and therefore help limit mental illness.
This article was first published in December 2010.
(1) Reuters. 2008. Financial crisis to increase mental health woes - World Health Organization. www.alertnet.org/thenews/newsdesk/L9419369.htm
(2) Smith. R. 2008. ‘Financial crisis will hit mental health of the nation, warn Government advisors’, in The Daily Telegraph . www.telegraph.co.uk/finance/financetopics/financialcrisis/3235790/Financial-crisis-will-hit-mental-health-of-the-nation-warn-Government-advisors.html
(3) Uutela, A. 2010. ‘Economic crisis and mental health’, in Current Opinion in Psychiatry , Vol 23, No. 2.
(5) Paul, K. & K. Moser 2009. 'Unemployment impairs mental health: meta-analysis' in Journal of Vocational Behaviour 2009 , No. 74.
(6) Stuckler D. et al. 2009. 'The public health effect of economic crisis and alternative policy responses in Europe: An empirical analysis’, in The Lancet , No. 374.
(7) Chang, S-S., Gunnell, D., Sterne JAC, et al. ‘Was the economic crisis 1997-1998 responsible for rising suicide rates in east/south east Asia? A time-trend analysis for Japan, Hong-Kong, South Korea, Taiwan, Singapore and Thailand', in Social Science & Medicine , Vol. 68, No 7.
(8) Stuckler, D. et al. 2009. ‘The health implications of the financial crisis: A review of the evidence’, in Ulster Medical Journal , Vol 78, No. 3.
(9) Standing, G. 2008. ‘The ILO: An agency for globalization? ‘ in Development and Change , Vol 39, No. 3.
(12) MIND. 2010. Workers turn to antidepressants as recession takes its toll.
(13) Rettmann, A. 2010. 'Mental health experts fear crisis will cause spike in suicides' in EU Observer, 15 February. http://euobserver.com/867/29456
(14) International Institute for Labour studies. 2010. World of Work Report: From one crisis to the next? International Labour Organization. http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_145112.pdf
(15) Park, Y. et al. 2009. ‘The association between public social expenditure and suicides: evidence from OECD countries’, in Journal of Preventive Medicine & Public Health , Vol 42, No. 2.
(16) World Health Organization: 2009. The financial crisis and global health: Report of a high-level consultation . World Health Organization: Geneva. www.who.int/mediacentre/events/meetings/2009_financial_crisis_report_en_.pdf
(17) International Institute for Labour Studies, ILO. 2009. World of Work Report 2009
(18) BBC. 2009. Depression looms as a global crisis . http://news.bbc.co.uk/2/hi/8230549.stm
(19) Office fédéral de la statistique. 2010. Statistiques de la sécurité sociale: Statistique de l’Al décembre 2009 . www.bfs.admin.ch/bfs/portal/fr/index/news/publikationen.html?publicationID=3943