Greece's financial crisis: is it creating a mental health crisis?

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When financial crisis hits a country we would assume its people face a major decline in their sense of well-being – or do they? Dr Nick Drydakis wanted to find out.

The financial crisis facing Greece has resulted in its people experiencing, in the years 2010 to 2015, the highest levels of unemployment and income loss within the European Union. The number of unemployed reached an unprecedented 21% in 2010–2013, compared with 9.5% in 2000–2007. Small wonder that in 2015 the Greek financial crisis has dominated the newspaper headlines.

A crisis on this scale must impact on the well-being of the Greek people. This has been the focus of the research of Dr Nick Drydakis who has looked at longitudinal data covering the period 2008 to 2013. Nick emphasises how useful such findings can be for government and policy makers: “It is essential to evaluate whether unemployment has negatively or positively affected health and mental health,” he explains. “If it is found, for example, that unemployment actually exerts a positive effect on health and mental health – that the social cost of unemployment is lower than might be assumed – social policy should be well informed before establishing strategic plans.“But if unemployment causes a greater deterioration in individuals’ health during periods of financial crisis, policy makers should work even harder to return the unemployed to the labour market, with the aim of improving general health and narrowing inequality.”

What were his findings? “We found that job loss is particularly hurtful when there is high unemployment. In 2010–2013, where unemployment was statistically significantly higher than in 2008-2009, unemployment resulted in higher deterioration in physical and mental health. The physical health of the unemployed declined by 10.5%2. The physical health of those in work also declined, but by a smaller amount (4.8%).

 

Women’s health and mental health due to job loss were affected 15% more negatively than men’s during the financial crisis

 

“Our research also discovered that the mental health status of the unemployed deteriorated by 7.8%. A similar pattern was seen amongst those in work, with average mental health status declining, but by a smaller amount (5.5%).

“This supports the findings of similar EU and US studies into adverse economic conditions,” says Nick. The outcomes also suggested that women’s health and mental health due to job loss were affected 15% more negatively than men’s during the financial crisis: “We found that in this, as in other financial crises, higher unemployment particularly affects those who are already socioeconomically deprived and belong to disadvantaged minority groups.”

Why do people’s mental health deteriorate when they lose their job? “They are stripped of a time structure, social contact, status, activity, goals, health behaviours, and a valued social position. Having less money can also be stressful. We found that in 2008-09 the average Greek was 10.57 Euros worse off every month. This increased to a massive 255.65 Euros per month in 2010–13.”

And of course, public spending on health and hospital budgets in 2010–2013 was dramatically reduced at just the time when demand increased. Reduced public spending on health combined with a dramatic increase in the percentage of the population living on or below the poverty line; the unemployed were a large proportion of the groups at high risk of poverty.

Can anything be done? Labour programmes, household support and minimum-income benefit can all help – as can debt relief programmes, access to health services and psychological support. “Interventions may help maintain social cohesion and reduce inequalities. It is for this reason that fiscal policies that exploit an economy’s growth potential  and create jobs should be of great importance.”

In 2008–09 the average Greek was 10.57 Euros worse off every month. This increased to a massive 255.65 Euros per month in 2010–13

Research matters

What inspired you?
The social relevance of the project. I have a long-standing interest in labour and population economics and the Greek financial crisis is both topical and of great interest to me.
Why does this research matter?
From a policy perspective, if unemployment causes a greater deterioration in individuals’ health during periods of financial crisis, policy makers should work even harder to return the unemployed to the labour market. The outcomes of this study may be interesting to social planners from EU regions that experienced severe increases in unemployment due to the current financial crisis.

 

Dr Nick Drydakis is a Reader in Economics at our Lord Ashcroft International Business School (LAIBS). His research interests include labour and population economics. He has worked on European Union and World Bank research programmes.

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