Short Breaks, Long Shadows. WIFO Study about the Long-Term Costs of Temporary Layoffs

Rainer Eppel

WIFO Senior Economist Rainer Eppel and the President of the Upper Austrian Chamber of Labour Andreas Stangl © AK OÖ/Wolfgang Spitzbart

03.02.2026

Short Breaks, Long Shadows

WIFO Study about the Long-Term Costs of Temporary Layoffs

The long-term effects of temporary interruptions in employment followed by re-employment by the same employer ("temporary layoffs") are analysed in a recent WIFO study commissioned by the Upper Austrian Chamber of Labour (AK OÖ). The results were presented by WIFO Senior Economist Rainer Eppel at a press conference with Andreas Standl, President of the Upper Austrian Chamber of Labour, on 30 January 2026.

"Our study shows that temporary layoffs are not just short-term interruptions, but are associated with long-term employment instability, loss of income and additional fiscal burdens. They are accompanied by a shortened attachment to the original employer and permanently more frequent employment gaps", said Rainer Eppel.

"In the ten years after starting employment – excluding the first year of the interruption – those affected spend around three and a half months less in employment and around three months more in unemployment", said Eppel. Accordingly, their income development also lags permanently behind that of comparable individuals without interruptions. There is no evidence of compensatory wage premiums. At the same time, unemployment insurance benefits increase, while income from wage tax and social security contributions decreases.

The focus was on short, non-seasonal interruptions of up to two months, which companies use to cushion short-term fluctuations in capacity utilisation. Based on linked personal and company data, the study examines the employment development of those individuals who experience such an interruption in their first year of employment. A comprehensive matching approach ensures comparability with continuously employed individuals.