Jane Ferrie, who led the research at the International Centre for Health and Society at University College London, said the root cause of the decline in health was a general feeling of uncertainty and lack of control, which coincided with a time when staff were receiving conflicting messages from their unions, managers and the media.
The PSA employees were monitored before, during and after privatisation. Only 30 per cent of the PSA workforce could find a secure job after privatisation. This group enjoyed significantly better physical and mental health than those people who were still looking for work, or were in insecure employment.
Ms Ferrie said: "The study has provided statistical evidence that major reorganisation can cause a decline in both physical and mental health. Yet this decline is rarely taken into account when the costs of privatisation or `down-sizing' are considered.
"Any deterioration in health has economic and social costs which end up being borne by society. This makes job insecurity an issue of concern to everyone."