20.03.2020

Corona Crisis: Short-time Work is a Suitable Means

First Labour Market Policy Assessment by WIFO Economist Helmut Mahringer

According to WIFO economist Helmut Mahringer, short-time work is a suitable means for the current crisis. It should help companies in temporary and short phases of economic disruption to retain employees. To this end, however, more use must be made of short-time work in small companies in the service sector. So far, it has been used mainly by larger industrial companies.

Short-time work has already made a significant contribution to stabilising employment during the financial and economic crisis of 2008-09. At that time GDP declined by –3.8 percent and employment "only" by –1.5 percent, but the decline in hours worked was much more pronounced (–3.2 percent). The involvement of the social partners (social partner agreement) also served as protection against abuse.

The generous design and rapid administration should now help to better reach service companies particularly affected by the Corona crisis. However, short-time work is not a panacea: as the published data of the Labour Market Service show, many people are nevertheless losing their jobs in the current crisis. Those in unstable employment situations (e.g. seasonal work, own account workers) are particularly affected. "The need for social security and reintegration support will increase", says Mahringer.

Below you can find WIFO publications on the assessment of short-time work during the economic and financial crisis 2008-09.