Do employment protection policies reduce the relative disadvantage in the labour market experienced by unhealthy people? A natural experiment created by the Great Recession in Europe
Introduction
There has been widespread concern that the Great Recession that began in 2008 has disproportionately impacted vulnerable groups, particularly those with chronic illnesses or disabilities (Kaye, 2010). Historically, persons with chronic illnesses have been twice as likely to lose jobs than those in good health (Schuring et al., 2007). During previous recessions in Europe, men with chronic illness, particularly from lower socio-economic groups, were more likely to lose their jobs than men without chronic illness, leading many to exit the labour force entirely (Bartley and Owen, 1996, Minton et al., 2012). Very few longitudinal analyses have examined this issue, but those that have consistently find that people who initially report poorer health were more likely to lose their jobs (Jusot et al., 2008, Montgomery et al., 1996, Schuring et al., 2012, Virtanen et al., 2013) – especially if they are older (van den Berg et al., 2010) – and then, when job loss occurs, to have more difficulty regaining work than those in better health (Stewart, 2001). Yet is it inevitable that economic downturns will heavily penalise those already disadvantaged on the grounds of health?
Cross-national variation in the extent to which chronically ill people are penalised in the labour market suggests that political and structural features of the labour market may protect them from any worsening of their existing disadvantage (Marmot et al., 2012). This political economy approach to health seeks to understand how politics, policies, and economics can influence the health and life chances of vulnerable groups, with potential implications for health inequalities (Beckfield and Krieger, 2009, Pega et al., 2013, Reeves et al., 2014). It further draws attention to how recessions and employment protection legislation, two under-researched economic and political determinants of health, influence the relative disadvantage in the labour market experienced by those with chronic illnesses.
Employment protection legislation is intended to help protect jobs during hard times. Such legislation includes safeguards for permanent contracts as well as measures that make redundancy more expensive or difficult for employers. For example, requiring redundancies be approved by third party organisations makes lay-offs more difficult. Dismissal can also be made more costly if longstanding employees are entitled to greater severance pay. In such circumstances, employers may seek alternative ways to achieve savings rather than by shedding workers who may be perceived as less productive, particularly those in ill health, during economic contractions.
Although it is plausible that employment protection may reduce the short-term risk of job loss, the OECD and IMF claim that these policies lead to labour market rigidity, worsening overall employment rates (IMF, 2013, OECD, 2013). It is argued that firms may be reluctant to hire employees if it is difficult to dismiss them. U.S. studies that examined the short-term impact of the 1991 Americans with Disabilities Act, which prohibited workplace discrimination against disabled people, suggested that it exacerbated already high unemployment rates in this group (Acemoglu and Angrist, 2001, DeLeire, 2000), with similar results observed in the UK (Bell and Heitmueller, 2009). Yet, others have suggested that these results were artefactual, since the Americans with Disabilities Act increased the numbers of persons designated as disabled (Jolls and Prescott, 2004, Kruse and Schur, 2003). Further studies that have investigated the longer-term effects find that anti-discrimination policies improved employment rates among disabled people although, in the UK, there is suggestive evidence that they have benefited men more than women (Jones et al., 2006, Kruse and Schur, 2003, Woodhams and Corby, 2007). These observations are thought to be a product of women's overrepresentation in precarious employment, including part-time work and the service sector. This debate reflects a growing concern with how politics and policies intersect with economic fluctuations in shaping population health (Pega et al., 2013).
In this study, drawing on the natural experiment created by the economic downturns in Europe that began to emerge in late-2007 following the collapse of the US housing bubble, we examine two questions concerned with the political economy of labour market inequalities:
- 1.
Are unhealthy persons at greater risk of losing jobs than healthy persons during economic recessions?
- 2.
Do employment protection policies mitigate their relative disadvantage during periods of (a) no recession, (b) mild recession, and (c) severe economic recession?
Section snippets
Retrospective cohort data
Individual-level data were taken from the European Statistics of Income and Living Conditions (EU-SILC). We included data from individual surveys from 26 EU/EEA countries, apart from Germany in the years 2006–2010, Ireland in 2008–2010, Romania in 2006–2008 and Switzerland in 2006–2010 for which data were unavailable. Household response rates vary by country from 53.7% in Luxembourg to over 90% in Slovakia and Romania, with an overall mean response rate of over 80%.
The SILC survey includes both
Results
Those who have health limitations or a chronic illness are more likely to be unemployed than those without poor health (Difference in means = 2.86 percentage points, t (df = 88603) = 10.58, p < 0.001) (Fig. 1). Between 2005 and 2011, unemployment rates were on average 25.3% in persons with severe health limitations, 13.7% in persons with chronic illnesses, and 9.29% in persons who were healthy (i.e. no chronic illnesses or health limitations). During the post-recession years 2009 and 2011,
Discussion
Our study finds that, during Europe's Great Recessions, unhealthy persons have been at greater risk of extended periods of unemployment, albeit the extent to which they have experienced this risk varied depending on the economic (i.e., severity of recession) and political (e.g., level of employment protection) context.
In nations experiencing severe recessions, the consequences have been worst where employment protection policies offer little or no protection in situations where firms shed large
Conclusion
Unhealthy persons are at greater risk of job loss than healthy persons during economic recession; yet, the disadvantages of unhealthy persons in the labour market vary among countries. We find that where employment protection legislation is strong, i.e., where the costs of both collective and individual dismissal are high, the gap in the probability of job loss between unhealthy and healthy persons is diminished; and, before the recession, it is entirely removed for women. However, this
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