The Psychological Impact of the Economic Crisis on Employees

The world is currently facing an unprecedented economic crisis, caused first by COVID, then by the crisis of the real economy, inflation and war. In these difficult times, it is often workers who bear the brunt, living in financial insecurity and whose jobs may be at risk. Understanding the impact of the economic crisis on employees and learning some coping strategies can help them get through this period.

Losing their jobs is not the biggest fear

It's easy to assume that people will lose their jobs as a direct result of the economic crisis. Downsizing may not be at the top of management's mind at the moment, but it can hang over the heads of workers like a "sword of Damocles" if internal communication fails. We have seen this during recent global downturns, such as the Great Recession of 2008, when unemployment rates rose sharply around the world.

“At DokiApp, we do not yet perceive that employees are coming forward because of the frustration of job loss”, says DokiApp's psychologist and head of professional services. “They are concerned about more mundane issues, such as work-life balance, which has become more and more topical since the pandemic. And within this, the focus is mainly on relationships and the related breakdowns and conflicts.” 

According to Mária Klinger, in addition to the specific issues addressed, it is clear that the most common problem is a lack of self-confidence and a lack of self-esteem, which is also linked to some extent to the workplace. The perfectionism that says "I'm not good enough" is another common source of job-related stress. This type of person often suffers from anxiety related to the question "do I make the cut," or "am I good enough at work." Problems with superiors, feeling out of place, or interpersonal strife are more common causes of employee dissatisfaction.

Impact on wages and benefits

The economic crisis has resulted in job losses and may also lead to wage stagnation or decreases for those still employed. Recent worldwide recessions are consistent with this pattern, with wages remaining stagnant or even declining as countries try to recover from economic setbacks. High inflation could cause Hungarian workers to feel like their wages are losing purchasing power. When times are tough, employers may decide to cut back on employee perks like bonuses and benefits, which can add stress to the lives of workers who are already struggling financially.

Impact on mental health

Workers may suffer not only material but also psychological and physiological costs as a result of the current economic downturn. Anxiety, depression, stress, and other mental health problems can result from job insecurity or reduced wages, and their manifestations can vary from person to person.

But what can we do? Coping strategies for employees

While the situation may seem daunting at first glance, there are steps people can take to protect themselves both financially and mentally when dealing with the economic crisis:

  • Budgeting
    It is important for people affected by recession or redundancy to budget themselves so that they know exactly how much money they have each month, so that they can make informed decisions about spending and have a better idea of their current financial situation.    
  • Physical health
    It is also important for workers in economic difficulties to pay more attention to their health, for example through regular exercise, yoga or even meditation etc. to stay physically fit. It's also worth thinking about what and how much we eat, watching our weight, or even how much water we drink at work.
  • Meet people in similar situations
    It is helpful to talk to people who have been through similar experiences during the recession because it gives people a sense of community and understanding, which can help to alleviate feelings of isolation or financial insecurity at such difficult times.

Although DokiApp receives mainly medical enquiries, it is also clear that in many cases there may be a psychological reason behind a musculoskeletal or even allergic problem.

“With the whole labor market becoming uncertain, our whole lives have become uncertain. I don't think there is any part of our lives today where this uncertainty or the specific fears behind it don't come up at some level," says Mária Klinger, who says that we can encounter a level of uncertainty in our everyday lives that would normally have appeared in a mid-life crisis: am I in the right place, am I doing the right thing, can I make a living out of this? Do I want to do this for the rest of my life? And these questions started to preoccupy workers and managers during the pandemic three years ago.

Increased responsibility of managers

According to DokiApp's psychologist, current leaders have had to change to an assertive or democratic style of leadership, if they had not already done so.

"We could call it a partnership, not a subordinate relationship", emphasizes Mária Klinger. “I'd rather refer to my coworkers as colleagues because they have the courage to confide in me about issues in their personal or professional lives. Whether you prefer to talk to someone one-on-one, in a small group, or even via email, the option is always there. It's crucial that there be openness and trust in all forms of communication, and that employees feel safe enough to express themselves openly to their managers.”

The expert claims that this is reflected in managers' acknowledgement of their own fallibility and willingness to admit when they're wrong. The new leadership toolkit also includes the ability to reflect on one's own strengths and weaknesses. A person who lacks confidence in themselves would never admit, "Hey, I was wrong."

No excuses! Come on out!

In today's difficult times, she says, it is important to have a good relationship with colleagues and a good atmosphere. Coffee breaks and lunch breaks, when you can step out of the workplace and talk to colleagues about other things, can take on a different priority. 

“I've had clients who I've had to specifically tell to go out to the canteen and not to eat at the computer," says Mária Klinger. “At such times, during the conversations, our tension can be released almost immediately. It can come up who I'm having a fight with or what my problem is with the boss. And when the sun comes out a bit, it's worth going for a walk. So I think the key word is "Come on out!”

More and more workplaces have gyms or even meditation rooms. And even during working hours, it is worthwhile for the manager to create this opportunity. These facilities can help a lot with stress management in the workplace.

DokiApp's psychologist believes that now is the time to be at a higher level of awareness. This is when the excuses typically come up: I have to work harder, I have to do more. Or, I avoid the gym because of the cost when I could just as easily run or do gymnastics online. Or I don't go see my friends because it's Covid.

It's also common to hear, "I'd rather work overtime and be afraid to set boundaries because I don't have any money right now" or "I'm afraid of getting fired, so I'd rather work overtime."

“Now is the time to be even more aware of saying no and setting boundaries, and to pay more attention to ourselves and our social relationships, because the work we put in is worth it," added Mária Klinger.

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