Most people with severe mental illness (SMI) may now live in the community, but few have jobs and many are socially isolated. Unemployment rates for people with serious mental health problems range from 60% to nearly 100%, and are particularly high if people have additional disadvantages in the labour market – being a member of an ethnic minority, having poor educational and employment history or possessing a criminal record. Unemployment is a cause of poverty, physical and mental ill health and is a cost to the community. Paid employment is central to human health and offers financial, psychological and social benefits to people with mental health problems: an income not derived from benefits, social contacts, a social role other than that of psychiatric patient, psychological recovery and possibly symptom reduction. These psychosocial and health gains may follow from any work – paid employment, low paid or unpaid work, training or education. Many mental health service users want jobs and alternatives to welfare dependency and traditional day centres. The Government wants to improve health and to reduce welfare spending and social exclusion. For deinstitutionalisation to achieve social integration and employment as well as relocation there is a need for a range of actions; public psycho-education, political reform and development and research of modern alternatives to sheltered work and industrial therapy.