Economic instability has a direct impact on mental health conditions. It is no longer a secret that financial well-being is a great predictor of mental health. Unstable economical times can leave employees worried about their job security, their bills and mortgage, and their ability to sustain loved ones. Knowing this, employers should no longer act like finances and mental health are separate issues — so what can they do when an inevitable recession threatens their team’s wellbeing?
How recession affects mental health
Studies have linked economic recession with a rise in mental health issues like depression, anxiety, and even suicide. It is not necessarily the recession per say which causes people to experience a decrease in well-being, but rather its implications. In such times, people lose their jobs, have lower employment prospects, and incur more debt. They experience significant uncertainty about the future and ponder on big questions such as ‘how will I support my children through school?’, ‘how will I pay off my mortgage?’, ‘how will I afford to take time off?’
Unfortunately, these are not just pessimistic assumptions. During the Great Recession, the loss of jobs increased mood disorders in the U.S. by 22%, according to a study published last year. Researchers also found 1.2 to 5.8 times higher odds of major depression. Recession exacerbates pre-existing mental health disorders, but it also triggers new ones — so even if some people’s mental health was stable in normal economic conditions, they are still more vulnerable in times of great financial instability.
Why is recession a threat to mental wellbeing?
In order for employees to understand why a recession is such a major threat to employee mental health, let’s look at how financial stress affects their wellbeing.
As it turns out, there is no mental well-being without financial security. It goes without saying that mental well-being and financial stress are intrinsically linked. Employees with debt issues are more likely to develop mental health problems that have a knock-on effect on their morale and motivation in the workplace.
Although debt or poor finances do not directly lead to mental disorders, constantly worrying about them does. The stress resulting from figuring out how to make payments on time and ensure a decent living can make many people highly anxious. Some other money-related issues that impact mental health are:
- Not having the confidence to manage finances in the long term
- Not being prepared for unexpected situations such as being dismissed from work, getting ill, or incurring sudden living costs
- Imbalanced monthly earnings and expenses (spending more than earning)