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SHORT-TIME WORK AND RELATED MEASURES TO MITIGATE
THE CONSEQUENCES OF A (PARTIAL) ECONOMIC SHUTDOWN IDEA 2020
advised not to use short-time work programs on a large scale (Cooper et al., 2017) as this can negatively influence the reallocation in the labor market and dramatically reduce the output of firms. Fourth, short-time work can be particularly effective when it is designed to complement other programs such as unemployment insurance, because it can potentially mitigate the excess lay-offs encouraged by generous public unemployment insurance programs (Cahuc and Carcillo, 2011).
To summarize, short-time work programs seem to be more cost-efficient than other job- preserving policies, e.g., wage subsidies, creation of public jobs, or hiring subsidies (Cahuc, Kramarz, and Nevoux, 2018). The negative effects of short-time work may be reduced by appropriate design.
D. Short-time Work Policies Enacted in the Current Crisis
Several countries have introduced or extended short-time work schemes to meet the challenges of the current crisis. Table 4 presents an overview of the basic features of some compensation schemes that had been enacted by the end of March 2020. Many policies were adjusted even in the first few days of their existence, which makes the table likely to be quickly outdated and highlights the fact that quick implementation indeed comes with costs.
Even in a summary table which necessarily simplifies matters, the heterogeneity of the programs stands out. Almost all countries require the recipient to be affected by the current crisis, but the stringency of the requirement ranges from a quick justification to actually being furloughed or proving loss of income or revenue. Most countries determine eligibility at the firm level, but some countries do so at the individual level or have programs for both individuals and firms. Some countries restrict receipt to certain types of enterprises, though they mostly exclude state-run enterprises. Most programs appear to be based on eligibility criteria that are quick and easy to determine, though some include more complicated provisions. For example, some countries require an agreement with workers or their representatives (Austria, Sweden) and others tie eligibility to unemployment insurance eligibility (Ireland).
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