Many EU governments have short-time compensation programmes in place whereby employers can apply for temporary state assistance to top up the wages of workers working reduced hours. Generally, these programmes are conditional and negotiated agreements between the social partners, subject to specific market conditions and declines in sales levels. The report outlines the workings of the systems in place in Germany, France, the Netherlands and Austria as well as the bill currently being discussed by the Slovenian government.
Employers are also looking to retain staff through the economic turbulence: one sign of this being the increase in offers of paid career breaks. Such measures are mainly found in the UK and Ireland according to the report, mainly since company-level initiatives involving both wage and time flexibility are more likely in countries where there are no collective frameworks of agreed working time flexibility.
The report also examines why companies prefer to avoid forced job cuts. One reason is certainly the financial cost of redundancies but there is also widespread anecdotal evidence that companies have been chastened by previous experience of downturns where the dismissal of trained and experienced staff undermined efforts to restore levels of production during the recovery phase. In some countries, public schemes to finance temporary layoffs and reduced working times provide an incentive for companies to use these mechanisms. Also, human resource management policy in large firms may be more focused on the medium to long term than previously was the case, where unfavourable demographic profiles in many countries will severely limit labour supply.
The report clearly outlines the risks with measures intended to secure the survival of viable businesses through short-term difficulties, and that these may not be so effective in a protracted slowdown.
