The Redundancy Crisis: Why Losing Your Job Can Feel Like Losing Yourself

Redundancy is one of the most significant life events a working adult can experience. So why do we treat it as a purely financial and administrative process, and almost entirely ignore the psychological devastation it leaves behind?

The United Kingdom is in the grip of a redundancy crisis. In 2025, over 315,000 jobs were flagged for potential redundancy — the highest number since the pandemic. The Liquidation Centre, drawing on official data, forecasts that 2026 could see as many as 327,000 redundancies, a further increase of nearly four per cent. The drivers are relentless: rising employer National Insurance contributions, wage inflation, shrinking margins, and sweeping restructures across both public and private sectors.

The civil service is shedding thousands of roles, with the 2025 Spending Review setting target reductions in departmental administration budgets of at least 11 per cent in real terms by 2028–29. The NHS is undergoing its most significant workforce restructure in a generation, with a 50 per cent reduction in posts across NHS England and the Department of Health and Social Care. Integrated Care Boards have been told to halve their running costs. Local government, already hollowed out by a decade of austerity, continues to cut as it enters another round of local government reforms.

Behind every one of these statistics is a person. A professional who built a career, developed expertise, contributed to something they believed in - and who has just been told that they are no longer needed (or of value). The financial implications are serious. But the psychological impact is something else entirely - and as redundancy becomes all the more common and is “normalised” it is the part of that almost nobody is talking about.

More than a job loss - a grief experience

When we think about redundancy, we tend to think about practicalities. Settlement agreements. Notice periods. Job searches. What we rarely acknowledge is that for many people, redundancy triggers a profound grief response - one that can be as intense and disorienting as bereavement. 

Research published in the Journal of Loss and Trauma explored redundancy as a source of workplace grief and found that the grief process begins before the redundancy is even confirmed. The researchers identified a sequence of experiences: something changed, loss is anticipated (anxiety), loss confirmed (shock), and afterwards reconciliation and recovery - suggesting that the psychological injury of redundancy is not a single event but a prolonged process that erodes wellbeing and emotional resilience over time.

A 2022 study published in Frontiers in Psychiatry introduced a cognitive–behavioural framework for understanding job loss–related complicated grief. The researchers identified three core processes that drive prolonged suffering: negative cognitions about the job loss and misinterpretation of grief reactions; anxious and depressive avoidance strategies; and insufficient integration of the job loss into autobiographical memory. In other words, when people cannot make sense of what has happened to them, the grief does not resolve. It festers. 

The Priory Group, one of the UK’s leading mental health providers, reports that individuals who have been made redundant are twice as likely to develop serious mental health conditions, including anxiety and depression, in the months following the event. The British Psychological Society has described redundancy as carrying a “double jeopardy”: the practical loss of income and the psychological loss of status, identity, companionship, and self-worth.

The Identity Wound

For many professionals, particularly those in senior or long-held roles, work is not simply what they do. It is who they are. Their sense of competence, their social network, their daily rhythm, their contribution to something larger than themselves - all of these are bound up in their professional identity. 

When that identity is removed involuntarily, the impact goes far beyond the loss of a salary. Research on the Job Loss Grief Scale, published in the journal Anxiety, Stress & Coping, found that identity disruption is a central component of job loss grief. The extent of a person’s suffering is closely linked to how much their sense of self was invested in their role. The more meaning someone derived from their work, the deeper the wound when it is taken away. 

This is particularly acute in the public sector, where many professionals chose their careers not for financial reward but for purpose. Teachers, NHS staff, civil servants, social workers — these are people who built careers around service. Being told that your role has been made redundant when you entered that role precisely because you wanted to make a difference carries a particular kind of cruelty, even when the decision is purely organisational. 

The Open University has drawn parallels between job loss and the Kübler-Ross grief cycle, identifying that individuals who lose their jobs pass through stages of denial, anger, bargaining, depression, and acceptance — the same emotional trajectory as those experiencing bereavement. Yet while we would never tell someone grieving a death to simply update their CV and move on, that is essentially what we tell people who have been made redundant.

The Scale of the Problem

The numbers are stark. By the end of 2025, UK unemployment had risen to 5.2 per cent, its highest level in almost five years. The Office for National Statistics reported that redundancy levels increased significantly over the year, with rates climbing to their highest point since the early months of the pandemic. Vacancies have been falling for over a year, remaining well below pre-pandemic levels at approximately 729,000. 

What makes the current wave different from the pandemic-driven redundancies of 2020 is that these job losses are not the result of a single crisis. They reflect structural, ongoing pressures on employers: rising costs, policy changes, and a fundamental reshaping of how organisations are structured. This means the redundancies are unlikely to be reversed quickly. For many affected professionals, the path back into equivalent work will be long, uncertain, and psychologically demanding. 

Research suggests that on average, a person will be made redundant three times during their working life. And yet, despite this near-inevitability, we have almost no infrastructure for supporting people through the psychological impact. Statutory redundancy pay addresses the financial loss. Employment law addresses the procedural requirements. But the emotional devastation — the shame, the self-doubt, the loss of purpose — is left almost entirely to the individual to manage alone.

What coaching offers that a job search can't

The conventional response to redundancy is to focus immediately on finding the next job. Update the CV. Activate the LinkedIn profile. Start applying. And while these steps are necessary, they are not sufficient — and for many people, they are premature. Asking someone to market themselves confidently when their self-worth has just been shattered is like asking someone to run a marathon on a broken leg.

This is where coaching makes a critical difference. Not as a replacement for practical job search support, but as the psychological foundation that makes everything else possible. A good redundancy coach helps a person process the grief, rebuild their sense of identity, and reconnect with their strengths, values, and purpose before they re-enter the job market. 

The evidence supports this approach. Research on outplacement programmes has found that 70 per cent of individuals who receive structured career transition support secure new employment within three months, compared to 50 per cent without support. A survey of career coaching clients found that 85 per cent reported increased confidence in their job search after just a few sessions. And organisations that provide outplacement support see a 35 per cent improvement in retention and engagement scores among remaining staff - because how a company treats people on the way out sends a powerful signal to those who stay. 

But coaching goes deeper than outplacement. It does not just help people find the next job. It helps them find themselves again. It creates the reflective space to ask the questions that no recruitment consultant can answer: What do I actually want from my next chapter? What have I been tolerating that I no longer need to? What would it look like to build a working life around my values and character strengths, not just my skills and past experiences? 

A crisis - and an opportunity

None of this is to minimise the pain of redundancy. It is real, it is significant, and it deserves to be taken seriously. But with the right support, redundancy can also become a turning point. Research consistently shows that when people are given the space and the tools to process the loss, they are capable of extraordinary reinvention. 

One of the most striking findings from the outplacement research is that 77 per cent of people who received comprehensive transition support ultimately felt that losing their job was a positive experience. Not immediately. Not easily. But eventually -  because they were supported to move through the grief and into growth. 

The current redundancy crisis in the United Kingdom is not going to resolve itself quickly. Hundreds of thousands of professionals are facing or will face involuntary job loss in the coming months and years. They deserve more than a statutory payment and a template CV. They deserve support that recognises what they have actually lost - not just a job, but a part of who they are. 

Financial support addresses the practical gap. Coaching addresses the human one. And in a crisis of this scale, both are essential.

If you are facing redundancy, have recently been made redundant, or are supporting someone through this transition, the question worth asking is not just “what will I do next?” but “who will I be next?” 

The answer to that question may be the most important career decision you ever make. Book a free call with Vicky to explore how she can support you through your transition.

References

Liquidation Centre (2026). UK Redundancy Statistics 2026: UK Redundancies Hit Five Year High. liquidationcentre.co.uk HRreview (2026). Redundancies rise as 327,000 job losses forecast for 2026. hrreview.co.uk Office for National Statistics (2025). Employment in the UK: December 2025. ons.gov.uk Institute for Government (2026). Whitehall Monitor 2026: The State of the Civil Service. instituteforgovernment.org.uk NHS England / DHSC (2025–2026). Workforce restructuring communications. Via MIP Health and UNISON reporting. Cairns, D. and Malloch, M. (2009). Journeys Into Grief: Exploring Redundancy for a New Understanding of Workplace Grief. Journal of Loss and Trauma, 14(5), 401–419. Van Eersel, K.A., Taris, T.W., and Boelen, P.A. (2022). Job loss–related complicated grief symptoms: A cognitive–behavioural framework. Frontiers in Psychiatry, 13, 933995. Van Eersel, K.A., Taris, T.W., and Boelen, P.A. (2019). Development and initial validation of the Job Loss Grief Scale. Anxiety, Stress & Coping, 33(2), 193–206. Priory Group (2024). Maintaining your mental health after being made redundant. priorygroup.com British Psychological Society (2020). Double jeopardy: The surreptitious consequences of redundancy. The Psychologist. bps.org.uk The Open University. Job Change and the Grief Cycle. open.edu/openlearn LHH / INTOO (2025). Top 5 Outplacement Trends to Watch in 2025. lhh.com Fair Play Talks (2026). UK Redundancies Surge as Early 2026 Data Signals Another Record Year. fairplaytalks.com