Journal of Social Issues, Vol. 44, No. 4, 1988, pp. 141-152

Psychological Well-Being Among Unemployed and Employed People After a Company Closedown: A Longitudinal Study

Lars Iversen University of Copenhagen

Svend Sabroe University of Aarhus

In a three-year longitudinal study, we examined the effects of unemployment and the fear of becoming unemployed on the psychological well-being of 1153 em- ployees at a shipyard that was closed down, and a control group of 441 employees from another, operative shipyard. On all three questionnaires, unemployed people were significantly lower in psychological well-being than employed peo- ple. Change to orfrom employment was significantly associated with changes in psychological well-being, whereas remaining employed or unemployed did not lead to any systematic changes in psychological well-being. Among employed people, the fear of unemployment was strongly associated with reduced psycho- logical well-being. Thus, the health-related consequences of unemployment affect not only the unemployed but also employed people who have little job security. Consequently, we stress the need to create new workplaces and to implement reforms that can reduce job insecurity in the labor market.

Denmark has one of the highest rates of unemployment among western European countries. Since the beginning of the 1980s, an average of 10% of the potential work force has been without work. Every fourth wage earner is unem-

This study was supported by grant 12-4218 and 14-3616 from the Danish Medical Research Council jointly with the Danish Science Research Council, and by Grant 11/30.84 from Syg- ekassernes Helsefond.

Correspondence regarding this article should be addressed to Lars Iversen, Institute of Social Medicine, University of Copenhagen, Blegdamsvej 3, 2200 Copenhagen N, Denmark.

141

0022-4537/88/1200-0141506.00/1 0 1988 The Society for the Psychological Study of Social Issues

142 Iversen and Sabroe

ployed at least once a year. More than half of the unskilled workers are hit by periods of unemployment of various durations each year.

Shipbuilding is one of the industries that has been particularly hard hit by structural changes and company closedowns. More than 50% of the shipyard work force has been dismissed over the past ten years. In 1983, one of the largest Danish shipyards, Helsingar Shipyard, was closed. With this closedown as its starting point a longitudinal study program was initiated, comprising former employees at Helsingar Shipyard and a control group of employees from an- other, operative Danish shipyard, Dannebrog Shipyard. The objective of the research was to determine the nature and extent of the effects that this closedown and subsequent unemployment had on the health of the former employees (Iversen & Sabroe, in press; Sabroe & Iversen, 1987).

Despite numerous studies, the empirical evidence of a causal relation be- tween unemployment and poor health is still insufficient. The best documented effects are psychological ones such as increased occurrence of depressive symp- toms, and reduced self-esteem and initiative. Studies of English and Swedish pupils have shown that employed school-leavers were far better able to cope psychologically than unemployed school-leavers, adjusting for participants’ psy- chological well-being before leaving school (Banks & Jackson, 1982; Ham- marstrom, 1986). In an American study of an adult population, Pearlin, Men- aghan, Liebermann, and Mullan (1981) established similar effects in connection with job loss.

There are surprisingly few actual morbidity studies. Noteworthy recent studies are those by Linn, Sandifer, and Stein (1983) and Beale and Nethercott (1985) from the United States and the United Kingdom respectively. Both these studies of job loss showed an increased use of health services that did not correspond to an equivalent increase in incidence of new illness. However, this could be attributed to changed illness behavior rather than increased morbidity alone.

In the present study we concentrated on investigating the following health problems that may ensue from a company closedown: reduced psychological well-being, psychosomatic symptoms, cardiovascular symptoms, and increased use of alcohol. The data were collected through surveys by means of self- administered questionnaires. From public registers, we determined the.diagnoses of research participants and their number of hospital admissions for psychiatric or somatic reasons three years before and four years after the company close- down. In addition, the mortality rate of the participants was followed from the year of the closedown to four years after.

This article focuses only on psychological well-being, because it is the most sensitive measurement of health. Our results show how unemployment both directly and indirectly influenced the study participants’ psychological well- being.

Psychologleal Well-Being After a Company Closedown 143

The direct influence of unemployment stems from a person’s actual job loss and unemployment, which constitutes a psychosocial stressor that threatens an individual’s identity, self-esteem, social network, and personal economy. The direct effect of unemployment is best analyzed dynamically, relating changes in employment status-from employment to unemployment and vice versa-to psychological well-being. The longitudinal design of this study made it possible to carry out such analyses, and the initial reason for the study, an actual company closedown, ensured that there were in fact many job shifts among study partici- pants in the follow-up period.

An indirect way in which unemployment can influence health is through the fear of becoming unemployed, as it affects employed individuals. This indirect effect of unemployment could also be studied here, for many participants avoid- ed unemployment stemming from the closedown by switching directly to other workplaces that offered little job security.

Sample and Method

The study sample consisted of two subsamples. One comprised 1153 men employed at Helsingar Shipyard in 1982, all having Danish citizenship and at least 6 months’ employment at the shipyard. The other subsample was the control group, consisting of 441 men with Danish citizenship employed at Dan- nebrog Shipyard in the fall of 1983. The control group was included to enable us to investigate whether health effects of unemployment stemming from the close- down of the shipyard differed from the health effects of unemployment caused by layoffs stemming from normal fluctuations in a shipyard’s production and man- power use. Since no difference of this nature could be established, the two subsamples are analyzed together as one sample in the results presented below.

The study was conducted over a three-year period. In November 1983, 1984, and 1985, identical questionnaires were sent to all people in the sample. In 1983, 73% participated; 84 and 80% of these respondents participated in the 1984 and 1985 surveys, respectively. (These percentages exclude people who in the follow-up period had either retired, emigrated, died, or were studying or engaged in training and therefore no longer available for unemployment.)

Detailed analyses of the people who did not participate in 1984 and 1985 did not indicate that the attrition introduced any significant bias into our conclusions on the connection between unemployment and psychological well-being. It was not possible to carry out more detailed analyses of the initial nonrespondents in 1983 owing to insufficient relevant information.

The questionnaire used in all three surveys contained questions on psycho- logical well-being, psychosomatic and cardiovascular symptoms, the use of medicine, alcohol, and tobacco, social support, life events, the use of general practitioner and hospital services, employment, and unemployment.

144 Iversen and Sabrae

The 12-item version of the General Health Questionnaire (GHQ) was used to measure psychological well-being (Goldberg & Hillier, 1979). The 12 ques- tions concern feelings of strain, being unable to face up to problems, feeling depressed and worthless, and thinking that life is not worth living. A 4-point response scale (from 0 to 3) was used, and items were summed to obtain a total score, with low score indicating well-being. The reliability and validity of the GHQ have been shown to be satisfactory (Goldberg, 1972) and it has been used in numerous studies on unemployment to measure psychological well-being (Banks, Clegg, Jackson, Kemp, Staffort, & Wall, 1980).

Information was available on every participant’s employment status during each follow-up year. In analyses where changes in employment status from T1 and from T2 (1983-1984, and 1984-1985) constitute the independent variable, we divided the study population into four groups, each reflecting a specific employment pattern: employed-employed (E-E), unemployed-employed (U-E), employed-unemployed (E-U), and unemployed-unemployed (U-U).

We investigated social support, occupation, and the presence of chronic health problems in 1983 as competing risk factors in the multivariate analyses. Social support was measured through five questions that covered both quan- titative and qualitative aspects of social support in 1983, including marital status, frequency of contact with family members and friends, and the quality of these contacts.

Information on occupation in 1983 was supplied by the two shipyards and divided into two categories: white-collar workers (office personnel, technicians, engineers, and supervisors on various levels) and blue-collar workers (skilled and unskilled).

Information on the presence of chronic health problems in 1983 (such as low back pain, bronchitis, diabetes, or severe mental problems) was obtained entirely through self-reports by the study participants.

Our statistical analysis used analysis of variance (ANOVA) and paired f tests. Adjustment for the confounding factors was made through a multiple regression analysis in which the employment pattern was the independent vari- able and changes in psychological well-being were the dependent variable. So- cial support, occupation, and chronic health problems were included as con- founding factors.

The Direct Effect of Unemployment

This section analyzes the relation between a shift in employment status and changes in psychological well-being. To maintain clarity and avoid too many subdivions, we divided the follow-up period into two phases: 1983-1984, and

psychological Well-Being After a Company Closedown 145

1984-1985. The number of people in each of the four employment patterns in the two phases is shown in Table 1. Also shown is the average duration of unemployment that each group experienced in each follow-up period. Group E-E was unemployed for about 0.5 month, and group U-U was unemployed for 7-10 months each year, while the unemployment of groups U-E and E-U was 4-6 months a year.

Table 1 also shows GHQ, the measure of psychological well-being, for every group in 1983, 1984, and 1985. Figure 1 graphically displays the changes in the GHQ score for all groups in the two follow-up phases.

There was a decline in the average GHQ score from 8.7 to 7.6 from 1983 to 1984 for the total sample, indicating an improvement in psychological well- being, and the decline occurred to some extent in all four groups. From 1984 to 1985 there was a nonsignificant rise for the whole sample from 7.6 to 7.7. In both follow-up periods the E-E group had the lowest GHQ score throughout, whereas the U-U group had the highest GHQ score. The position of the other two groups, U-E and E-U, however, changed in relation to each other. The GHQ score for group U-E dropped markedly and significantly in both periods; when the group was unemployed it had a score as high as the other unemployed people in that year; but when the group became employed, its score was close to that of other employed people in that year.

Group E-U, those who lost their jobs during the year, did not react as expected. From 1983 to 1984 this group actually improved its score from 9.3 to 8.1, but not significantly. From 1984 to 1985 the score worsened, as expected, but the amount of change was only marginally significant.

In Table 2, changes in psychological well-being are analyzed, using dif-

Table 1. Psychological Well-Being (GHQ) and Employment Pattern, 1983- 1984 and 1984- 1985"

Mean no. of months

unemployed in I-year

Mean GHQ score

Employment pattern

Period Start End N period Start End t P

1983-1984 E E 786 0.6 7.7 7.0 4.18 0.00 E U 36 5.6 9.3 8.1 1.14 0.26 U E 268 4.9 10.3 7.6 7.41 0.00 U U I85 10.1 10.5 10.3 0.47 0.64

Total 1275 8.7 7.6 7.23 0.00

1984-1985 E E 846 0.3 7.0 7.2 -1.35 0.18 E U 71 4.7 8.3 9.6 -1.93 0.06 U E 106 4.4 9.9 8.4 2.86 0.01 U U 59 7.1 11.3 11.1 0.18 0.86

Total 1082 7.6 7.7 -0.54 0.59

a A low GHQ score indicates positive psychological well-being.

146 Iversen and Sabroe

- r-

1983 1984

"T u U

U Unemployed

E Employed

1984 1985

Fig. 1. Changes in psychological well-being (GHQ score-a low score indicates positive well-being) and employment pattern, 1983-1984 and 1984-1985.

Table 2. ANOVA for Changes in Psychological Well-Being (Differences in GHQ Score), 1983- 1984 and 1984-1985: Full Model (Each Factor Adiusted for Other Covariates)

Factors

1983-1984 1984-1985

Sum of Sum of squares RZ p squares R2 p

~ ~ _ _ _ _ _

Main effect

Covariates Employment pattern"

Social support in 1983 Occupation in 1983 Chronic health problems in 1983

Residual Total

N

957.1 0.03 0.001

80.2 0.00 0.008 39.7 0.00 0.22

109.3 0.00 0.04 32848.1 34022.0 0.03

1404

416.4 0.02 0.001

3.9 0.00 0.66 8.1 0.00 0.45

11.2 0.00 0.52 21105.0 21546.0 0.02

1306

"BE and U-U combined, E-U, and U-E.

Psychological Well-Being After a Company Closedown 147

ferences in the GHQ score for 1983-1984 and 1984-1985 as measurements. Since other data analyses showed that several other factors differentiated the four employment-pattern groups, the most essential of these factors were included as covariates in an ANOVA of changes in GHQ scores. Employment pattern was included as a main effect with three levels (U-U and E-E combined, E-U, and U- E), and the following variables were incorporated as covariates: presence of inadequate social support in 1983, presence of chronic health problems in 1983, and white-collar or blue-collar occupational position at dismissal.

Table 2 shows that changes in employment status were most significantly related to the GHQ difference in both follow-up periods [ 1983- 1984: F(2,1257) = 18.24, p = 0.001; 1984-1985: F(2,1065) = 10.51, p = 0.0011. The covari- ates were not significant except for social support and chronic health problems in 1983-1984. It should be noted, however, that the model only explained 2-3% of the total variation in the well-being data.

The results concerning the direct influence of unemployment on psychologi- cal well-being among the unemployed can be summarized as follows:

1. There was a highly significant relationship between reduced psychologi- cal well-being and unemployment in 1983, 1984, and 1985.

2. A change in employment status was associated with a significant change in psychological well-being after adjusting for differences in social sup- port, occupation, and health.

3. Stability in employment status, either prolonged employment or pro- longed unemployment, generally did not result in changes in psychologi- cal well-being. However, there was one exception: the GHQ score of group E-E actually dropped significantly from 1983 to 1984.

The Indirect Effect: Fear of Job Loss

In all three surveys, the respondents were asked whether they were afraid of losing their job. The percentage among the employed who expressed such a fear was 21% in 1983, 12% in 1984, and 11% in 1985. As expected, the percentage was highest in the year when Helsingar Shipyard closed down.

In all three years, there were significant differences in psychological well- being between employed people who were afraid of losing their jobs and those who were not. The average GHQ scores of the former group were 10.0 in 1983, 9.4 in 1984, and 10.2 in 1985. The corresponding GHQ scores of the latter group were 7.2, 6.9, and 7.0.

Table 3 shows an ANOVA of the GHQ scores in 1983, 1984, and 1985 for those people who were employed in the given year. After adjustment for the GHQ score from the previous year, inadequate social support, occupation, and health, the fear of job loss made a significant contribution to GHQ in all three years. Moreover, the model explained 10% of the total variation in well-being in

Tab

le 3

. AN

OVA

for

Psyc

holo

gica

l Wel

l-Bei

ng (G

HQ

) and

Fea

r of

Job

Los

s fo

r Pe

ople

Em

ploy

ed

in 1

983,

198

4, a

nd 1

985:

Ful

l Mod

el (E

ach

Fact

or A

dius

ted

for

Oth

er C

ovar

iate

s)

~~

1983

19

84

1985

Sum

of

Sum

of

sum o

f Fa

ctor

s squares

R2

p sq

uare

s R2

p sq

uare

s R2

p

Main e

ffec

ts

Fear

of j

ob lo

ss (

X)

1170

.1

0.07

0.

001

103.

6 0.

01

0.00

5 13

3.6

0.01

0.

001

Tw

o-w

ay in

tera

ctio

ns (X

) X

(Y

) 32

3.3

0.02

0.

25

498.

2 0.

03

0.00

5

Soci

al su

ppor

t in

1983

58

.4

0.00

0.

076

179.

5 0.

01

0.00

1 17

1.1

0.01

0.

001

Occ

upat

ion

in 1

983

0.1

0.00

0.

94

0.9

0.00

0.

79

GH

Q sc

ore

in p

revi

ous

year

s (Y

) (I

3945

.3

0.26

0.

001

7219

.0

0.38

0.

001

Cov

aria

tes

14.9

0.

00

0.27

C

hron

ic he

alth

pro

blem

s in

198

3 32

1.1

0.02

0.

001

19.2

0.

00

0.22

33

.4

0.00

0.

10

Res

idua

l 14

567.

7 10

248.

8 10

326.

6 Total

1612

7.6

0.10

15

145.

3 0.

32

1911

1.1

0.46

Empl

oyed

N

792

847

890

aNo G

HQ

score f

or 1

982.

Psychological Well-Being After a Company Closedown 149

1983. In 1984 and 1985,32 and 46% of the variation was explained because the GHQ scores from the previous years were incorporated in these analyses. How- ever, there was no corresponding score for 1982, the year before the data collec- tion began.

Discussion

The pronounced relationship demonstrated here between psychological well-being and employment status on a cross-sectional level is a typical finding within research on unemployment (Smith, 1986; Warr, 1987). Of greater interest is the relationship we found between changes in employment status and changes in psychological well-being, which confirms that there is a causal relation.

Corresponding findings have been made by Banks and Jackson (1982) and Donovan, Oddy, Pardoe, and Ades (1986) in studies of English school-leavers, and by Hammarstrijm (1986) in a study of schoolchildren in Sweden. However, the findings of those studies cannot be safely generalized to adults who have a long occupational record behind them and who then lose their job.

In studies of Finnish and Dutch unemployed people, respectively, Lehelma and Kangas (1987) and Verkeij (1987) have shown a reemployment effect-a change in which the unemployed people who were reemployed felt much better in a number of psychological respects.

Our study dealt with a group of male employees who were already estab- lished in the labor market but who were victims of a company closedown. This gave us the opportunity to follow several different patterns of shifting em- ployment, and we found a clear connection between changes in employment status and changes in psychological well-being, including a marked reemploy- ment effect.

Furthermore, we found that the fear of job loss among employed people played an important role in relation to psychological well-being, even after adjusting for occupation, inadequate social networks, and chronic health prob- lems. This fear was particularly pronounced in the year when the shipyard closed down. The decline that we found in the GHQ score for group E-E in 1983-1984 can largely be attributed to the insecurity the closedown created among this group of employed people, who found new jobs following the closedown and had apparently adjusted to their new work situation. This group, too, paid a price for the closedown.

Several studies have established that job insecurity affects psychological well-being (Jenkins, MacDonald, Murray, & Strathdee, 1982), various physio- logical parameters, e.g., blood pressure (Kasl & Cobb, 1968), and frequency of doctor consultations (Beale & Nethercott, 1985). These findings suggest that closedowns and dismissals affect not only those who remain unemployed, but also many of those who switch to another occupation. The health consequences

150 Iversen and Sabroe

of unemployment and, more generally, of economic instability therefore apply not only to unemployed people, but also to large groups of employed people whose conditions of employment are uncertain or whose jobs are temporary (Catalan0 & Dooley, 1983).

Since these insecure groups are probably numerically larger than the number of unemployed people, it follows that a considerable amount of the unemployment-related health consequences on a societal level can be found among employed people, even though they experience less strain than unem- ployed people. It is also likely that there is a considerable overlap between unemployed people and groups in the work force whose jobs have a great deal of insecurity, and that these people will be caught in a vicious circle, alternating between the direct strain of being unemployed and the indirect strain created through job insecurity.

Policy Implications

Our results point to the need to address unemployment on two levels. First, more jobs must be created. Second, reforms must be implemented that reduce the fear of job loss.

Throughout the past ten years, various reforms have been implemented in Denmark to reduce unemployment and maintain the work capacity of the unem- ployed (Directorate of Labor, 1983). Probably the most essential reform was the Early Retirement Scheme for people aged 60-66, which entitles individuals to retire when they become 60 and to receive an amount that roughly corresponds to unemployment compensation. This scheme has been used by about 60% of those eligible, including about 80% of eligible unskilled workers. Consequently, the employment opportunities on the labor market for the young have been en- hanced.

Another important reform was the Job Offer Scheme for long-term unem- ployed people under 60. This scheme gives long-term unemployed people the right to employment for 7-9 months in either the private or public sector. Also, an opportunity for short-term training with a salary is provided to people who again become unemployed at the termination of a job offer. Other reforms were the Job Creation Scheme for young unemployed, as well as various training and production programs.

It is estimated that the total effect of these official initiatives in Denmark was a reduction in unemployment from about 15 to about 10%. Even though this is a significant reduction, it is evident that unemployment cannot be eliminated or substantially further reduced using these means. A central political question in Denmark, therefore, is what role the state should play in the effort to increase employment or to promote a more even distribution of the existing number of jobs, such as through a reduction in working hours.

Psychologiecrl Well-Being After a Company Closedown 151

Every fourth wage earner in Denmark is hit yearly by unemployment. Unemployment is thus a reality or a real threat to a very large section of the Danish population; and research shows that it must also be considered a threat to their health. A study of the rules for ensuring job security in various Western countries demonstrates that wage earners in Denmark are relatively poorly pro- tected in relation to wage earners in, for example, Sweden, France, or the Federal Republic of Germany (Pedersen, 1986).

Protection against the threat of unemployment can be improved in various ways: through better rules for a fair notice in connection with mass dismissals as well as individual dismissals, rules against wrongful dismissals, rules regarding reemployment, and so on. Even though full security against job dismissal can never be guaranteed in an economic system like the Danish one, there is little doubt that the fear of unemployment can be reduced. For health reasons alone, this is imperative.

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LARS IVERSEN earned a 1974 M.Sc. in sociology at the University of Copen- hagen. Since 1980 he has been Associate Professor in Medical Sociology at the Institute of Social Medicine, University of Copenhagen. His main research activities have focused on various health consequences of unemployment, includ- ing psychological well-being, use of alcohol, and mortality.

SVEND SABROE received an M.D. degree in 1970 from the University of Aarhus, Denmark, and in 1971 the university awarded him a gold medal for a dissertation in social medicine. Since 1976 he has been Associate Professor at the Institute of Social Medicine, University of Aarhus. His early research activities concerned risk factors in the work environment, but more recently he has explored social as well as health conditions, both as causes and as results of selection from employment into disability retirement or into unemployment.