Organisational downsizing as a predictor of disability pension: the 10-town prospective cohort study

Abstract

Objective: To examine whether downsizing, the reduction of personnel in organisations, is a predictor of increased risk of disability retirement among employees who kept their jobs.

Design: Prospective cohort study. Based on reductions of personnel in participants’ occupation and workplace, employees were grouped into exposure categories of no downsizing (less than 8% reduction), minor downsizing (reduction between 8% and 18%), and major downsizing (more than 18% reduction). They were followed up for a five year period after downsizing.

Setting: Four towns in Finland.

Participants: 19 273 municipal employees, aged 21–54 years.

Main outcome measures: All permanent full disability pensions granted because of medical reasons below 55 years of age between 1 January 1994 and 31 December 1998 from the national registers.

Results: In all, 223 employees were granted a permanent disability pension. The overall rate for disability pensions per 1000 employees was 7.7 after no downsizing, 13.1 after minor downsizing, and 14.9 after major downsizing. Cox proportional hazard models adjusted for age, sex, occupational status, type of employment contract, and town showed 1.81 (95% confidence intervals 1.22 to 2.70) times higher risk of disability retirement after major downsizing than after no downsizing.

Conclusions: The immediate financial advantages of downsizing need to be considered in relation to increased occupational disability and the resulting extra costs to employers and society.