Work stress is widely thought to be a significant problem in the health and community services sector. We reviewed evidence from a range of different data sources that confirms this belief. High levels of psychosocial risk factors, psychological health problems and workers compensation claims for stress are found in the sector. We propose a multilevel theoretical model of work stress to account for the results. Psychosocial safety climate (PSC) refers to a climate for psychological health and safety. It reflects the balance of concern by management about psychological health v. productivity. By extending the health erosion and motivational paths of the Job Demands-Resources model we propose that PSC within work organisations predicts work conditions and in turn psychological health and engagement. Over and above this, however, we expect that the external environment of the sector particularly government policies, driven by economic rationalist ideology, is increasing work pressure and exhaustion. These conditions are likely to lead to a reduced quality of service, errors and mistakes.