| Abstract: |
"In the Corona crisis, the use of short-time work in Germany reached
unprecedented levels, as during the financial crisis of 2008/2009, proving its
usefulness as key rescue measure for the labor market. Quickly after the start
of the pandemic, the German government had considerably eased the conditions
for firms and employees to receive short-time working benefits, extending the
maximum entitlement period during which the benefits could be drawn and
granting higher benefit levels after longer benefit receipt. In light of the
high level of economic uncertainty, particularly at the beginning of the
pandemic, this gave firms a greater planning security with regard to their
staff. Despite a rapid decline in short-time working as early as summer 2020,
utilization remained at a historically high level up to the year 2022, after a
second temporary peak in winter 2020/21. Germany was no exception among OECD
countries in its heavy use of short-time work. Elsewhere, government measures
to safeguard employment were also implemented on an unprecedented scale during
the Corona crisis. The German model of short-time work has served as a role
model for many countries, since the financial crisis at the latest. The
measures used internationally range from classic short-time work to wage cost
subsidies, subsidies for periods of leave and bans on dismissals in times of
crisis. However, some countries primarily relied on income transfers to
employees. In addition, business aid programs played a major role in
stabilizing firms. At the beginning of the Corona crisis, the use of
employment protection measures in Germany was rather below average compared
with other countries, but it declined much more slowly than in most other
countries. This was partly due to the fact that in many countries, force
majeure measures were activated on a large scale at the beginning of the
Corona crisis, and these measures often expired in 2020 or 2021 at the latest,
i.e., at a time when the economic recovery was on its way faster than
previously expected. This research report investigates the development of the
use of short-time work in Germany and compares it with the use of employment
stabilization measures in the U.S., Australia, France, Italy, and Spain. The
stabilizing effect of short-time work was also evident in the European
countries considered here, France, Italy, and Spain. These countries made it
even easier to use short-time work. It is noteworthy that with the strong use
of short-time work Spain, for example, succeeded for the first time in
noticeably mitigating the effects of a GDP decline on employment, while a
comparable effect of securing employment was not observed in the U.S. A key
reason for this is probably that the U.S. short-time work program - not
applied in all states - could not be scaled up in the same way as in Europe.
In contrast, Australia succeeded in securing employment with an alternative to
short-time work, namely a wage cost subsidy. The use of short-time work in
Germany was made easier because it was possible to build on an established
instrument and the experience gained with it during the economic and financial
crisis. Irrespective of this, the use of short-time work on a massive scale by
local standards has reached its administrative limits, particularly concerning
the high degree of flexibility in the amount of possible work loss of
individual workers compensated for and the multi-stage procedure for applying
for and settling short-time work. In contrast to Germany, countries such as
France, Italy and Spain referred to force majeure when relaxing their
regulations in the context of the Corona crisis. The enormous use of wage
subsidies in Australia was the response to the severe consequences of the
Corona crisis. There are opportunities and risks associated with declaring
such an exceptional situation. If access rules are strongly simplified and
benefits made more generous in such a situation, the likelihood of heavy use
increases. The goal of stabilizing employment and the economy in the short
term can thus be achieved more easily. At the same time, however, the risk of
misaligned incentives, which have been observed in Italy and France and
especially in Australia, increases. The research report also discusses lessons
from the international comparison for the debate in Germany. Basically, in
times of a severe economic crisis, countries face the difficult trade-off
between (desirable) stabilization effects on the one hand and (undesirable)
efficiency losses on the other. The main possible disincentive effects are
high deadweight losses and the risk of maintaining non-viable businesses and
slowing down reallocation processes to new, promising fields of business
activity. As an international comparison shows, there are three approaches to
limiting or compensating for disincentives: Appropriate exit scenarios,
suitable models of co-financing by firms, and incentives to strengthen the
transformation. To take account of the cost efficiency of short-time work, the
OECD favors co-financing by firms, the argument being that a long use of
short-term work can slow down economic transformation processes. Whether and
to what extent this has actually happened cannot be ascertained for the
various countries based on what is known so far. The descriptive evidence for
Germany shows that long periods of use were only observed for a very small
proportion of firms. In order to reduce disincentives for long use, incentives
to end short-time work could be introduced. One possibility is the
introduction of an "experience rating" scheme. Firms that use short-time work
to a large extent and for a long time during difficult times would have to
know in advance that they would then have to make repayments or pay higher
contributions in normal times. The revenues could then serve as a reserve for
future crises. Similar arrangements exist in Italy and under the short-time
work program which is part of the U.S. unemployment insurance system. In order
to further counteract an inappropriate preservation of business models through
short-time work, the scheme could be used to an even greater extent to support
structural change by means of appropriate supplements. Some countries
(especially France and Spain) were more successful than Germany in combining
short-time work with training. Spain is of particular interest in this context
because, in addition to training, incentives were introduced to encourage
workers to leave short-time work. Finally, especially in times of severe
crises, the use of short-time work must take into account distributional
issues. As an insurance benefit, short-time work in Germany, like unemployment
benefits, is subject to the equivalence principle and is restricted to
employees subject to social insurance contributions; mini-jobbers and the
self-employed are not covered by it. In the U.S., for example, the existing
short-time work program, which was only used to a limited extent, was extended
to the self-employed. If in severe and protracted crises special regulations
are used that aim to increase wage replacement rates, one could consider,
instead of increasing rates over the course of the reference period (as has
been done in Germany), focussing on increasing wage replacement rates for
workers with low incomes, similar to the case of France. In the absence of
insurance coverage, as in the case of the self-employed and mini-jobbers,
appropriate income support schemes to compensate for hardship should be
considered in the event of a severe crisis, similar to what has been done in
the U. S. In Germany, this was done, for example, through simplified access to
basic benefits or, most recently, through subsidies in the context of the
energy crisis." (Author's abstract, IAB-Doku) ((en)) |