Have you ever experienced the ticking time bomb of a job lay-off coming your way? Like rearranging the deck chairs on a sinking ship, it can leave you feeling powerless. It doesn’t matter whether the perceived threat is “real” or not. In fact, how likely we feel we are to lose our jobs is a better predictor of poor mental health outcomes than objective ratings of job loss risk.

Job insecurity is, after all, associated with a range of less-than-ideal outcomes. At a personal level, we are more prone to distress, burnout, low self-esteem, and stretched family dynamics. At work, we are less committed, less trusting, more likely to bully, and less likely to collaborate, support, and share knowledge with our teammates. 

If you’re a leader or business owner, this article is to help you understand what’s going on behind the curtains when your team gets the job-loss jitters. And if you are experiencing job insecurity yourself, we hope this article gives a name to the tough feelings you might be experiencing.

What is job insecurity?

First, what is job insecurity? It’s important to know that there are different types. “Quantitative” job insecurity is when we feel concerned that we might lose our job altogether, whereas “qualitative” insecurity is when we feel like we are losing parts of the job that we love (e.g., flexibility, relationships, or working conditions). Whatever it is we are feeling concerned about, the hallmarks of job insecurity are that it is subjective (it’s entirely in the eye of the beholder), it is uncertain (we can’t predict the outcome), and it leaves us feeling vulnerable.

All of this means that job insecurity can often go unnoticed, especially by a manager or business owner who isn’t regularly checking in on team members or making efforts to measure wellbeing across their organisation. 

What’s the current state of job insecurity?

According to recent data out of Massey University, the proportion of working New Zealanders who perceive their job as most under threat has risen from 22% in December 2023 to nearly 50% in April 2024. This reflects the changing job market in Aotearoa New Zealand, and the increasing strain on workers to stay employed while the economic environment shifts. 

Unsurprisingly, according to the same Massey University data, those who perceive that their jobs are least secure in New Zealand are nearly 15 times more likely to be at risk of burnout. Job insecurity takes a massive toll on our wellbeing.

What happens to performance?

When it comes to how job insecurity interacts with performance, research outlines several different ways of coping, resulting in vastly different behavioural responses.

For some people, job insecurity can create what feels like a breach in the psychological contract between the employer and the employee. The psychological contract is different from the employment contract in that instead of objective, defined promises, it includes subjective, implicit promises and represents a set of beliefs and expectations between the two parties. It’s more about the informal and unwritten obligations and, when these are in conflict, employees may become less likely to follow through on their end of the deal (which was to perform at their best). Naturally, the stress that builds from persistent insecurity also results in increased cognitive and emotional strain, leading to less available energy to devote to work-related tasks. Both mechanisms result in decreased performance.

Other workers will be motivated to stay under the radar so as not to arouse attention that might lead to losing their job. This might result in a culture of presenteeism (being visible at work but not working effectively). Concerningly, it may also manifest in a culture where people are reluctant to admit to mistakes, and even more reluctant to seek help or support. 

On the flipside, job insecurity can, in some cases, lead to improved performance. For these people, they feel motivated to out-perform their peers, seeking to demonstrate how valuable they are to the organisation. This might lead to better performance in the short-term, but it is effortful, meaning that it can only very rarely be sustained long-term.

The long and short of it – job insecurity generally results in reduced job performance, if not in the short-term then almost always long-term. 

What helps when leading people through job insecurity?

Naturally, the best remedy for job insecurity is strong, decisive communication that jobs are not at risk of being lost or restructured, or that working conditions are not going to change (for qualitative job insecurity). This is crucial where feelings of job insecurity are rife among employees, without any objective risk to back them up. And if you’re not sure whether job insecurity is a problem for your workforce, get data.

For organisations where job insecurity is a valid threat, adopt best leadership practices. Communicate clearly and transparently about the factors feeding into organisational change decisions. Set regular touchpoints to update on change processes and follow through on these. And, where possible, aim to reduce the period of job insecurity to be as short as possible, knowing that it usually leads to reduced performance as well as poorer wellbeing.

Importantly, some employees may be motivated to fly under the radar and not draw attention to themselves during periods of job insecurity. If you are a business leader or manager, ensure that people know they will not be unfairly treated if they speak up about what’s going on for them or seek support. Remind people that they can access confidential counselling through EAP (if available in your organisation), and that psychological safety is still a top priority in your team.

What helps when coping personally with job insecurity?

If you are experiencing feelings of job insecurity and this is negatively affecting your wellbeing and performance, it’s worth speaking upfront with your manager to gain some clarity about your job and to help reduce your sense of uncertainty.

Focus on what is within your sphere of control. Start with the basics; look after your wellbeing by eating and sleeping well, moving your body, and connecting with the people around you. When you are ready, reach into your toolkit of proactive coping strategies. That might include talking to professionals about how you are feeling (e.g., through EAP), or looking for new job opportunities (e.g., by job hunting or networking).

Whatever you do, practise self-compassion. Research shows that performance often dips during these periods so you shouldn’t hold yourself to your usual standards. Your wellbeing comes first. 

It’s hard to cope with job insecurity once it’s laid its roots, and we know that it’s especially hard to manage a team when significant change is on the horizon. If you want to explore more, our team of psychologists facilitate 60- to 90-minute change readiness sessions for teams and leaders – get in touch for details.