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Fear of Unemployment and its Impact on Productivity

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Employee productivity and overall unemployment are certainly related. But a new post highlights some of the finer points of this connection.

The article came from our friends at OnlineCollege.org, a resource site for people interested in online education. Their post was actually a roundup of viewpoints on employee productivity and unemployment from around the web. They write:

When it comes to productivity, few of us consider the big picture. Being more productive at work means much more than just being able to finish more work in a day or getting your boss to notice your work ethic; it can also have a marked effect on the economy as a whole, especially when considered in relation to unemployment levels. These two markers of economic success (or distress as the case may be) are intertwined in a number of complex ways and the relationship between the two isn’t always as clear cut as we might think.

To put things in perspective, here’s an infographic about unemployment rates at the time:

business process improvement consultants discuss unemployment

In this context, unemployment can directly lead to more productivity. For example, the article argues:

If your employer was making major layoffs, how would you act around the office? If you’re like most people, you’d step up your game, working hard, staying late, and becoming as productive as possible so as to appear more indispensable to the company. In some cases, increased productivity may be the direct result of the threat of unemployment, much as unemployment may be the result of increased productivity.

Broadly speaking, this is true. Fear of job loss can inspire people to work harder. But will that increased effort be sustainable? Will they burn themselves out and have take time off to recover? And doesn’t it imply that they weren’t working at 100% in their first place?

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© Flickr user PICNIC Network

In an ideal world, recessions should not have any impact on individual worker productivity. But many people operate in a business environment where actual productivity is not as important as looking busy, putting in face-time, and warming up to the boss.

The article does say that just because productivity goes up, employment isn’t necessarily negatively impacted.

While it might seem like spikes in productivity and unemployment go hand in hand, the opposite is very often true. During the 1990s productivity experienced a boom, driven by new developments in the technology sector, growing at almost twice the pace of previous years. Yet despite a huge growth in productivity, unemployment levels actually bottomed out, reaching unusually low levels. A similar pattern happened during the 1970s, not just in the U.S. but also in Europe. The reality? Increased productivity has a pretty complicated relationship with unemployment. Depending on circumstances it can either help produce new jobs or eliminate a large swath of existing jobs. These changes often occur in cycles that occur time and time again as markets adjust and readjust to the realities of the modern world.

Just as productivity levels affect unemployment, unemployment can also have a marked effect on productivity, something we touched upon briefly earlier. Research has shown that unemployment can impact productivity growth, but the scope of the impact depends heavily on how much human capital means to a given business, which in today’s technology-driven marketplace may be at lower levels than in years past… Higher unemployment rates, and the social and economic problems that come with them, can eventually take a toll on productivity, showing that these two economic factors impact each other regardless of which is rising or falling in a given year.

Is your organization one where productivity fluctuates with fear? Or is it one where people focus on getting things done, not playing politics? Let us know in the comments!

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