Designing short-time work for mass use

Abstract

In the course of the Covid-19 pandemic, short-time work as an instrument of income replacement once again proved to be an effective means of stabilising employment. However, the very concept, based on individual entitlement, led to its operational limits in respect of mass use. For example, in Germany, the complete processing of all cases in multiple stages can take years, involving corresponding strains and uncertainties for firms and labour administration. Against this background, we discuss the development of variants of job retention schemes compatible with mass use. An international comparison indicates that the legal instrument of force majeure could facilitate access with simplified criteria and procedures. We elaborate on specific proposals for the well-known German system. Going beyond simplifying existing rules, we outline a collective instrument of a wage subsidy increasing with lost revenue or hours. In this respect, drawing on results from the relevant literature, we argue that the need to limit redundancies and the precision of the instrument must be carefully balanced. Particularly in the case of mass use, qualification is indispensable, which is why the need for a concept with flexibly applicable, modular and online-based training formats, incentives and counselling services is essential. Finally, preconditions for the phasing-out of the mass use scheme are outlined. The exceptional situation would have to be officially ended – or extended – at an appropriate time with sufficient notice. Subsequent schemes may provide for transition to regular arrangements, a gradual reduction of wage subsidies, and liquidity support.