Employment is one of the most important determinants of wellbeing, and conversely, unemployment has a strong deleterious effect on our wellbeing (studies examining mental health during lockdown conclude that those forced to leave paid work suffered much more than those who remained fully or partially employed or were furloughed). The repercussions of unemployment go well beyond the loss of income. It affects not only the wellbeing and mental health of the person concerned, but often, also that of other household members. For this reason, keeping unemployment as low as possible in times of pandemic and in the post-pandemic era should be a key policy objective.
On that front, Europe is doing better than the US. Europe’s furlough program offers a good model for short-term labor market management. This has resulted in the hit to employment and wages being much less severe in Europe than in the US.
On a related note, a new research paper led by academics from Cambridge University, entitled “Cut Hours, Not People,” argues that employers should limit unemployment (and its detrimental impact on mental wellbeing) by sharing employment more equitably. Their recommendations include the introduction of a shorter working week for all (except in those sectors under extreme pressure) in order to minimize the risk to mental health if those previously furloughed are forced into unemployment.
This is an intriguing proposition that could kill two birds with one stone: (1) it would limit the downside in terms of the impact that unemployment has on wellbeing, (2) it would directly improve wellbeing (and possibly productivity as well) by reducing the number of working hours.
Totally the most sensible thing to do.