Restructuring and its impact on workers’ health

Companies in Spain are failing to consider the effect of restructuring on workers’ health. A report from the national health and safety watchdog says that the health dimension has generally been missing when companies have reshaped their operations. Yet the process, more common in recent years because of the economic crisis, often brings changes that affect employees’ psychosocial health, leading to decreased productivity, more sickness and an increase in early retirement.

Introduction

The Spanish National Institute of Safety and Hygiene at Work (INSHT) published a report, A study on the effects of restructuring on the health of workers (in Spanish), in April 2012. The report was based on a literature review and qualitative research.

Existing literature analysing ‘staff downsizing’ or ‘staff reduction’ restructuring processes in large companies in Spain was reviewed. This study’s findings are based on the evolution of ‘downsizing’ processes in 500 large Spanish companies between 1990 and 2005.

Qualitative research was carried out through five case studies.

Literature review - main findings

The study examined working environments with a high level of stress and a low quality of mental health provision. It found that such establishments were likely to suffer in several ways. Productivity levels decreased and the number of employees taking sick leave rose. More people took early retirement and there was a general rise in labour turnover.

The study concludes that preventative action to promote a more healthy working environment, particularly after restructuring, is likely to result in economic benefits.

Health dimension lacking

Based on the literature review and analysis of the case studies, the report concludes that the consideration of the ‘health’ dimension is generally missing in restructuring processes and negotiations. The ‘economic’ dimension and the ‘social protection’ dimension were often the priority, with the focus on issues such as monetary compensation and unemployment benefits.

The report says there is a general lack of awareness of the existing relationship between restructuring and health. This lack of awareness extends to social partners, public administration, universities and research centres.

The review of the literature demonstrates that restructuring processes generate changes in work organisation, not just through dismissals, but also in altered working conditions for those who remain. These adjustments can pose health risks, particularly to workers’ psychosocial health.

Reactive approach

Among Spanish businesses, there appears to be little attempt to integrate restructuring, work organisation, working conditions and health issues. There are no statistical instruments or other means of evaluating the impact of restructuring on working conditions. Spanish quantitative research on this issue is also scarce.

Analysis of 500 large Spanish companies that reduced operations and cut jobs between 1990 and 2005, the study’s first conclusion is that half of the companies applied a reactive, rather than a proactive, approach. Revised studies show that for 38% of them, the main reason for staff reduction was as a reaction to a crisis in its business.

Staff reductions in large companies tended to be focused on the areas of manufacturing, finance, transport and communications.

The revised literature about restructuring in Spain which took place after the mid-90s and before the current crisis shows that changes in work organisation result in a trend towards work intensification, greater responsibility among workers, higher uncertainty, more diffuse control methods (although not necessarily less rigid controls) and worsening of social relationships. New labour conditions are also linked to more precarious work. These trends have implications for health, particularly musculoskeletal, mental and stress-related disorders.

Case studies – main findings

The five case studies on which the research was based were of large Spanish companies with offices throughout Spain and an international presence. The companies were from different economic sectors. All had been through the process of restructuring.

Lack of focus on health

Again, researchers concluded from the case studies that there was a lack of measures aimed at looking after workers’ psychosocial health. There were some exceptional reactive measures, applied after the restructuring process.

Clearly beneficial was workers’ involvement in change management. Where they did not take part in the restructuring process, workers were more likely to be less committed to it. This could pose health risks, particularly to psychosocial health.

The study’s conclusion was that there was a need to approach the restructuring processes from a more comprehensive and systemic perspective.

Long-term view of restructuring

Businesses needed to take a wide and long-term view of the restructuring process, say the researchers. After restructuring, the labour status and workload of the remaining employees may be affected, and this can have consequences for their mental and physical health.

The research showed that the effect of ‘adaptation mechanisms’ depended on the specific characteristics of each company. The main dimensions to be considered are:

  • cultural factors, for example values and their application in the company;
  • hierarchical and organisational structure;
  • work organisation;
  • existing labour relations;
  • individual and collective learning for change and ad-hoc supporting measures.

Managing collective dismissals

In particular, concerning collective dismissals, those interviewed during the case study research suggested that the management of the restructuring process could be improved by:

  • having a proactive attitude;
  • agreeing measures for less traumatic labour transitions;
  • creating support and assessment structures;
  • promoting workers’ participation in psychosocial risk prevention;
  • establishing communication tools;
  • developing a comprehensive approach.

Conclusion

It should be stressed that since change in the business environment is constant, so companies need to be constantly adapting and changing.

The current crisis has made the restructuring processes even more of a challenge, and the Spanish experience suggests that the effects of such processes on workers’ health are not usually taken into account when devising and implementing restructuring.

This research shows that health factors, as part of a multidimensional approach, need to be considered in the restructuring process. Workers’ health can be seriously affected before, during and after the process.

Antonio Corral, Ikei

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