Short-time work: Firms participate in the costs - and in the returns

Abstract

"In the present recession, temporary short-time work is an alternative to dismissals: firms keep their staff while workers retain their jobs over the cycle. The Federal Employment Agency finances part of the employees' loss of wages during the short-time period and also pays social contributions for hours not worked. Nevertheless firms still have to pay substantial indirect labour costs. On the other hand, firms avoid the opportunity costs of dismissals, human capital leakages, and future recruitment. The remaining costs can also help to avoid substitution effects, moral hazard and structural persistence which may occur with short-time work." (Author's abstract, IAB-Doku) ((en))

Cite article

Bach, H. & Spitznagel, E. (2009): Kurzarbeit: Betriebe zahlen mit - und haben was davon. (IAB-Kurzbericht 17/2009), Nürnberg, 8 p.