Tag Archives: Welfare

Early retirement – can welfare systems help ease the transition?

The post-war baby boomgeneration in developed countries is reaching retirement age and this is placing strain on welfare systems. Sol Richardson and colleagues from the ESRC International Centre for Lifecourse Studies at UCL find the type of welfare system under which we live can affect our prospects of having a happy and fulfilled retirement.

We know stopping work can lead to changes in our sense of personal wellbeing both positive and negative. And we know this can be influenced by a range of factors, such as whether an individual has left work at the usual age or has stopped early.

There are other factors which can make a difference to how we fare after retirement, too: If we were dismissed, retired through illness or through unemployment, for instance, the change is more likely to hit us hard.  

But how much difference do the different types of welfare system which exist in different countries make to those who leave work early? Until now we havent had much clear evidence on this point.

Data

We looked at a sample of people from 16 countries, using data from the Study of Health, Ageing and Retirement in Europe (SHARE) between 2004 and 2013, and from the English Longitudinal Study of Ageing (ELSA) between 2002 and 2013 these are studies which revisit their participants over time.

Our subjects were aged 50 years and over and had been visited before and after they left work.

We looked at a total sample of 8037 respondents who had left work between 2002 and 2013 and for whom we had information not only on work history but also on personal wellbeing.

We categorised how people left work according to the type of benefit they received afterwards: Were they receiving disability benefit, unemployment benefit, sickness benefit, social assistance, early retirement pension, old age pension or none of those?

Retirement age is different in different countries it can depend on gender or on the number of years worked, and its been rising in many countries. So we defined retirement as the earliest age at which an individual can draw a full pension if he or she has been working since the age of 20.

And we looked at the wellbeing of our subjects, using a validated scale called CASP-12 (control, autonomy, self-realization and pleasure.)

And then we compared these findings according to the type of welfare regime the participants had in their home countries again using an internationally-recognised scheme that relates to how social benefits are granted and organized.

Negative effects

We found that those who left the labour market because of unemployment or disability and who left outside of the typical time-frame tended to experience negative effects on their personal wellbeing.

How much difference did country of residence make? We found this was significant, but that only a small proportion of the difference was down to the country itself. Almost two thirds of the wellbeing gaps we found between individuals in different countries could be accounted for, we found, by the type of welfare system they had.

Those living in Scandinavian social democratic welfare systems experienced the most positive transitions but this effect is unlikely to be down to expenditure alone. Other factors could be important for instance, employment rules guiding the ways people left work. Different finance mechanisms, the extent of benefit coverage and the eligibility regime for those benefits could also have an effect.  

When we looked at the different types of welfare system we found people in systems which could be described as Bismarckian,such as France or Germany, or  Scandinavian,such as Sweden or Denmark, did better than those in systems which could be categorised as Mediterranean,such as Italy or Greece.

As a generalisation, Scandinavian systems can be described as Social Democratic. They spend the most, they have high levels of cash benefits and a strong emphasis on services.

Bismarckian countries emphasise earnings-related cash benefits like pensions and they provide reasonable services, but not at the level of Social Democratic countries.

In Mediterranean countries, the pensions system is fragmented and services are rudimentary. People living in Mediterranean systems are more likely to rely on family and the voluntary sector for support.

Policy implications

What lessons should policy-makers draw from our study? We found that higher expenditure per head, particularly expenditure on non-healthcare services such as home help, did help our participants to feel better after they left paid work.

And our results have important implications for welfare policy: They underscore the importance of welfare services as greater numbers of workers approach retirement age and leave the labour market.

Country-level welfare-state measures and change in wellbeing following work exit in early old age: evidence from 16 European countries, by Sol Richardson, Ewan Carr, Gopalakrishnan Netuveli and Amanda Sacker, is published in the International Journal of Epidemiology, 2018, 113.

Out of work again? The psychological impacts of repeated unemployment

Being unemployed is bad for our mental well-being, but if we lose our job more than once does the psychological blow lessen in some way? Researchers Cara Booker from the University of Essex and Amanda Sacker at the International Centre for Lifecourse Studies at UCL used the long-running British Household Panel Survey to examine the psychological well-being of people who have repeatedly lost their jobs. Their findings show that our employment history makes a difference and could have implications for welfare to work initiatives from Governments looking to get people back to work.

Continuous employment may be what is best for us, but of course life is not always that straightforward and, at any given time, a significant proportion of the population will be out of work. This could be because we choose to take time out to undertake training or to have a family. We may fall ill or be made redundant.

The world of work is also becoming more flexible. Fewer people are staying with the same firm for long periods of time and more people are moving from contract to contract or job to job, sometimes with spells of unemployment in between.

At the same time, the Government wants to get more people off benefits and into work and is looking to make its Work Programme more effective.

Using 17 years of data collected from the participants in the British Household Panel Survey (1991-2008), we looked at any individual who had reported at least one spell of unemployment. Of these 1,642 participants, 82 per cent were unemployed once, 15 per cent twice and 3 per cent three or more times.

Mental health score

Participants were asked a range of questions about their mental health and answers to these were used to allot a score with 0-11 indicating good psychological health and 12 or more indicating stress or anxiety that could lead to ill health. The time periods before and after a spell of unemployment were also taken into account because job loss isn’t generally something that happens suddenly and there can be weeks or months building up to it.

Looking at the group as a whole, we found their psychological well-being was generally poorer during all spells of unemployment compared with when they were not unemployed, but there was no evidence of a lowering or increasing of the effect from one spell of unemployment to the next.

When we dug deeper into participants’ prior work history, however, we saw some differences between those people who had previously been ‘economically inactive’ (voluntarily not working e.g. to look after family or study) and those who had been working.

Those who prior to being employed had been ‘voluntarily’ not working suffered poorer psychological well-being after they went on to lose their job but became notably worse in the third spell of unemployment.

The previously employed group’s psychological well-being also took a knock after losing a job once and then again, but, by the third time there was no change, a possible indication that the individual is somehow adapting or getting used to dealing with the ‘shock’ of becoming unemployed.

When we compared levels of psychological well-being between these two groups, they were notably lower among the previously employed at unemployment spells one and two, but this was reversed at spell three.

Employment history matters

So only when we took into consideration being economically inactive as opposed to employed, did a slightly clearer picture emerge around this question of whether people adapt to the ‘shock’ of unemployment, with those previously employed seeming to adapt and those previously economically inactive becoming increasingly sensitive to it. These findings were given further weight when we looked at retrospective employment histories before the BHPS began.

One explanation for this is that those who come from an employed background tend to find work again after each unemployment spell they experience, so they become less anxious about finding another job. The economically inactive, meanwhile, seem to find it harder to enter and re-enter the job market which could account for increased anxiety with more attempts to sign up as ‘unemployed and seeking work’.

Household income also played a role with those who were economically inactive on higher than average incomes experiencing worse psychological well-being than their less off counterparts when making an unsuccessful attempt to enter employment.

In its recent Welfare-to-Work report, the Work and Pensions Committee pointed out that key to the programme’s success was providing unemployed people with “the right help at the right time” and a better understanding of the barriers and characteristics that prevent a swift return to work. A better understanding of the impacts of repeated spells of unemployment on people’s well-being would seem to resonate here.

It is also clear that good quality, secure employment opportunities with long term prospects are key to people’s health and happiness.

Psychological well-being and reactions to multiple unemployment events: adaptation or sensitisation? is research by Cara Booker and Amanda Sacker and is publishes in the Journal of Epidemiology and Community Health

Photo credit: Kathryn Decker