Background: Little is known about the extent to which work contributes to the recovery of people with schizophrenia. There is increasing interest in the subject because of new service models and the economic cost of unemployment in people with severe mental illness. Methods: A literature search was carried out with the aim of investigating: a) employment rates in schizophrenia and first-episode psychosis and the extent to which they have changed over time; b) the barriers to work; c) the factors associated with being employed among people with schizophrenia; and d) whether employment influences other outcomes in schizophrenia. Results: There are wide variations in reported employment rates in schizophrenia. Most recent European studies report rates between 10 % and 20%, while the rate in the US is less clear. There is a higher level of employment among first-episode patients. The employment rate in schizophrenia appears to have declined over the last 50 years in the UK. Barriers to getting employment include stigma,discrimination, fear of loss of benefits and a lack of appropriate professional help. The most consistent predictor of employment is previous work history. Working is correlated with positive outcomes in social functioning, symptom levels, quality of life and self esteem, but a clear causal relationship has not been established. Conclusions: Very low employment rates are not intrinsic to schizophrenia, but appear to reflect an interplay between the social and economic pressures that patients face, the labour market and psychological and social barriers to working.