Paper short abstract:

The UK Coronavirus Job Retention scheme (CJRS) was a temporary scheme designed to protect the economy supporting jobs and avoiding the social fallout of the COVID 19 crisis. Using April-July 2020 UKHLS data, we investigate whether the CJRS is able to mitigate individuals’ psychological distress, especially for individual experiencing neighbourhood social cohesion deprivation

Paper long abstract:

The COVID-19 pandemic, discovered in Whuan in December 2019, led to a global pandemic that have had an impact on the economy in the United Kingdom and around the world. Nations all over the world called for measures to combat the disease within their own countries. Lockdown policies, confinement measures and social distancing led to elevated levels of loneliness and social isolation, which in turn produce mental-health related repercussions (Moreno et al., 2020; Miao et al., 2021; Breedvelt et al., 2022; Ferber et al., 2022). In the UK, the first lockdown started on 23 March 2020 and by mid-April 2020 the peak of the first wave was reached and restrictions were gradually eased. During the lockdown periods, non-essential activities, leisure facilities and schools were closed. Some individuals were furloughed, and others lost their job. Greater financial strains and smaller reserves of coping resources contribute in varying degrees to heightened levels of distress found among displaced workers (Scarpetta et al., 2021; Günay, 2021; Grace, 2023).

The UK Coronavirus Job Retention scheme (CJRS), set up in March 2020, was a temporary scheme designed to protect the economy by helping employers’ firms affected by the pandemic to retain their employees and pay workers’ wages . Thus, despite the temporary cessation of work, employees maintained a substantial portion of their income. In other words, the CJRS supported the incomes of workers, mitigated their financial hardship and presumably decreasing workers’ psychological distress (OECD, 2020). However, some furloughed workers reported more depressive symptoms and anger than the stably employed people (Wilson and Finch, 2021). Furloughed workers were also concerned about the future: they were worried that the CJRS would only delay inevitable layoffs or hour reductions if they return to work. This concerns might create anxiety. Therefore, the impact of furlough (under the CJRS) on distress is not so straightful and need to be empirically tested.

The aim of this paper is to explore whether individuals’ mental health depends on labour market status. In particular, we investigate the association between being on furlough (under the CJRS) and psychological distress. We also explore this association in a specific case: individuals perceiving neighbourhood social cohesion deprivation. A neighbourhood low in cohesion refers to a neighbourhood where residents report feeling a weak sense of community, report engaging in rare (or none) acts of neighbouring and are poorly attracted to live in and remain residents of the neighbourhood (Buckner, 1988). Low levels of social cohesion mean limited capacities of supporting the needs of all in the community during the acute phase of the COVID-19 crisis and in recovery planning. The reasons for this are the following. First, social cohesion encourages closer adherence to public health guidelines through care for the collective (Jewett et al., 2021). Second, social cohesion includes the provision of social support, practical help, interpersonal reciprocity, and the sharing of information across social networks. And third, social cohesion promotes trust and creates a sense of belonging to the state (OECD, 2012). As results, low levels of social cohesion are associated with worst health outcomes, less engagement with positive health behaviours, and lower resilience and emotional wellbeing (Long et al., 2022; Ware, 2023; Zangger, 2023). Lack of social cohesion increases distress and depression during periods of high infection rates and restrictions on social activity (Best et al., 2021; O’Donnell et al., 2022; Zangger, 2023). Our hypothesis is that the CJRS is the main instrument for making ends meet for furlough workers living in social cohesion deprived neighbourhoods. These are often low-income areas where individuals do not benefit from social support, reciprocity, and practical help from other community members. Thus, being eligible for the CJRS represents for them a strong relief that could decrease stress. For individuals that can rely on social resources (that are individuals living in cohesive neighbourhoods) the psychological contribution of the CJRS could be smaller. We empirically test this hypothesis.

Using April-July 2020 data from the UK Understanding Society COVID-19 survey, we find that a continuous employment status is associated with better mental health outcomes. The Coronavirus Job Retention Scheme is able to mitigate distress. In particular, individuals perceiving neighbourhood social cohesion deprivation appear to benefit more (in terms of distress reduction) from the CJRS than individuals living in more cohesive neighbourhoods. We also find that individuals living in deprived neighbourhoods appear to experience, on average, higher level of distress.