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

Abstract

Unhealthy persons are more likely to lose their jobs than those who are healthy but whether this is affected by recession is unclear. We asked how healthy and unhealthy persons fared in labour markets during Europe's 2008–2010 recessions and whether national differences in employment protection helped mitigate any relative disadvantage experienced by those in poor health. Two retrospective cohorts of persons employed at baseline were constructed from the European Statistics of Income and Living Conditions in 26 EU countries. The first comprised individuals followed between 2006 and 2008, n = 46,085 (pre-recession) and the second between 2008 and 2010, n = 85,786 (during recession). We used multi-level (individual- and country-fixed effects) logistic regression models to assess the relationship (overall and disaggregated by gender) between recessions, unemployment, and health status, as well as any modifying effect of OECD employment protection indices measuring the strength of policies against dismissal and redundancy. Those with chronic illnesses and health limitations were disproportionately affected by the recession, respectively with a 1.5- and 2.5-fold greater risk of unemployment than healthy people during 2008–2010. During severe recessions (>7% fall in GDP), employment protections did not mitigate the risk of job loss (OR = 1.06, 95% CI: 0.94–1.21). However, in countries experiencing milder recessions (<7% fall in GDP), each additional unit of employment protection reduced job loss risk (OR = 0.72, 95% CI: 0.58–0.90). Before the recession, women with severe health limitations especially benefited, with additional reductions of 22% for each unit of employment protection (AORfemale = 0.78, 95% CI: 0.62–0.97), such that at high levels the difference in the risk of job loss between healthy and unhealthy women disappeared. Employment protection policies may counteract labour market inequalities between healthy and unhealthy people, but additional programmes are likely needed to protect vulnerable groups during severe recessions.