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Pandemic-driven depression is driving labor shortages around the world

Woman experiencing distress
Pandemic-driven depression is driving labor shortages around the world.
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While companies struggle to find employees at a time of peak employment, a COVID-related mental health crisis is putting hundreds of thousands of people out of work and threatening to stunt the global economic recovery.

As the effects of the labor shortages grow increasingly profound, the global cost of addressing this mental health crisis is rising as well. According to a study published on Friday by medical journal The Lancet, mental disorders, which account for 18% of the global disease burden, are expected to rack up an annual bill of $6 trillion a year by 2030.

“The social cost of mental health problems is huge,” Maria Cubel, director of studies in the applied psychology and economic behavior master’s program at the University of Bath, told Fortune. On top of the ballooning bill to pay for the treatment of mental illness, “it causes inefficiencies in the allocation of labor because you have people who cannot work properly.”  

The increased cost of dealing with mental health issues, combined with lower worker turnout, impacts countries’ bottom lines. Official U.K. figures published by the country’s Office of National Statistics on Tuesday found 411,000 working-age Britons dropped out of the workforce between February 2020 and November 2021, with more than half of them leaving the employment pool due to mental-health-related “long-term sick”—now the single largest reason for inactivity in the workforce.

Long-term sick is defined as people with chronic illnesses, which includes physical disabilities, and people with long-term mental health conditions. The data found that around 209,000 people leaving the workforce due to long-term sick had been struggling with depression, anxiety, learning difficulties, and other mental health issues.

The mental health crisis

This isn’t just an U.K. phenomenon. The Great Resignation has U.S. workers quitting their jobs in record numbers, with two-thirds of millennials who left their jobs in 2021 citing mental health as the driver behind their departure, according to a Mind Share Partners survey. The proportion for Gen Z was even higher at 81%. Another survey by business consulting firm McKinsey found that nearly 15% of unemployed people blamed their lack of work on mental health problems. And other wealthy nations are seeing shades of the same trend with Germany, Spain, and Japan all seeing droves of people quit the workforce due to mental strain.

A poll done by NPR found that half of American households report at least one person in the home has had serious problems with depression, anxiety, stress, or sleep in recent months.

Expanded mental health services

In the workforce, this demonstrates the need for better communication and support for mental health. A third of workers said they were considering changing companies for the sake of their mental health, a survey commissioned by Modern Health found.

There are hopeful signs that the growing outcry has led employers to address these questions in the workforce. Around 40% of employers updated their health plans since the start of the COVID-19 pandemic to expand access to mental health services, according to the Kaiser Family Foundation’s 2021 Employer Health Benefits Survey

“The good thing about the current situation, it has made evident that mental health is an issue,” says Cubel. 

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