How does the closure of a factory affect the employment and well-being of displaced workers? LIVES Centre researchers Daniel Oesch, Fiona Köster, Isabel Baumann and Matthias Studer (Universities of Lausanne and Geneva) conducted two surveys of workers at five medium-sized manufacturing plants in Switzerland, two and eleven years after mass redundancies. Two years after closure, 69% of the displaced workers had found a new job, 20% were unemployed and 11% had retired. Age and the regional context of the company play an important role in professional reintegration, over and above individual skills and motivation. Overall, post-displacement outcomes in Switzerland have been more favourable than for other plant closures in Europe. These involuntary interruptions to work, and the unstable career paths they can engender, also influence the long-term well-being of workers.
After the Great Recession of 2008, hundreds of employees (mostly men), assembly line workers, technicians, engineers and managers lost their jobs in the manufacturing sector. The researchers focused on the closure of five medium-sized factories in 2009 or 2010 in Geneva, Biel, Solothurn (two factories) and Bern. They surveyed a sample of 1200 displaced workers first in 2011 - two years after the plants closed - and again in 2020, 11 years after the plants closed. Although 69% of them found work again within 2 years, older workers found it difficult to find a new job (57% compared with 88% of younger workers) and often had to accept significant pay cuts and unstable jobs.
Another consequence of age was that many people in their late forties and early fifties were hit hard, because they were too young to take early retirement and too old to start afresh. Active programmes such as job search advice, further education and training, and subsidised employment are therefore crucial for this group of workers.
Local unemployment rate and social conditions
While the economic cycle and regional unemployment determine the difficulty of finding a new job, early retirement schemes determine the career path of many older workers. For example, two years after the closure of the factories, one in five workers was unemployed and one in ten had retired, mainly thanks to the early retirement options included in the companies' social plans. Around five years after plant closure, unemployment had fallen further to around 5%.
However, these figures vary from region to region. In Geneva, two years after closure, the unemployment rate among displaced workers was 40%, while it was 20% in Biel and below 10% in the three other plants in Berne and Solothurn. This contrast is partly explained by the fact that local unemployment rates were more than twice as high in Geneva as in Berne. But above all, the differences in early retirement arrangements weighed heavily in the balance. By offering early retirement to workers aged 57 and over, the Berne plant enabled more than a quarter of its workforce to retire, whereas the bankrupt Biel plant offered no financial assistance for early retirement and less than 5% of the displaced workers were able to retire.
Impact of job instability on overall well-being
The study also measures changes in life satisfaction and examines the impact of plant closure on individuals' non-material well-being over the medium and long term. Using life-course calendars, the researchers went beyond simple snapshots and traced workers' trajectories over a continuous period of 10 years after the plant closure to identify four types of trajectory: retirement (38%), stable or higher wage (36%), lower wage (17%), unstable (8%). They observe that job loss represents a benign transition in the trajectory of many young workers, but constitutes a critical turning point in the lives of many older workers. Despite this, workers in the 'retired' trajectory type are on average the most satisfied. Retirement may therefore have freed many older jobseekers from the labour markets that had relegated them to the back of the queue. People in the unstable trajectory type report much lower levels of satisfaction two years and eleven years after mass redundancy.
Full article
Oesch, D., Köster, F., Studer, M., & Baumann, I. (2023). Employment and well-being after plant closure: Survey evidence from Switzerland on the mid and long run. Economic and Industrial Democracy, 0(0). https://doi.org/10.1177/0143831X231209825