Page 23 - IDEA Kurzarbeit zahranicni zkusenost Covid19 duben2020 13
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SHORT-TIME WORK AND RELATED MEASURES TO MITIGATE THE CONSEQUENCES OF A (PARTIAL) ECONOMIC SHUTDOWN
3. Thoughts on Policy Recommendations A. Some Thoughts on a Desirable Policy Mix
The idea below rests on two basic insights:
i. Short-time work is ideal if and only if three conditions hold:
IDEA 2020
 a. The job/company would still be desirable and viable after the crisis.
b. The job/company would be destroyed without short-time work, but
can be saved by it.
c. The company is hit by a large economic shock.
ii. Short-time work clearly cannot solve the problem for everyone. Severely needy groups are left out (retirees, the unemployed, temporary/informal workers, companies that cannot operate at all in current conditions). Also, the more sharply one cuts the incentives and criteria, the more people and companies will fall through the cracks or find short-time work undesirable. However, so long as we have other means of “catching” these cases, making the short-time work policy better may outweigh the benefits of making it broader (it is a good, but expensive tool).
Short-time work programs would ideally be designed so that they are desirable to both the employer and the employee when the job is likely to still exist after the crisis, and both the employer and the employee would prefer the same person to still hold the job. Given that whether the job will still exist or not is uncertain, the policy should also be more attractive to employers and employees with a high continuation value of the current employer- employee relationship. To keep the policy costs low and the effects well-targeted, it seems desirable to design a self-targeting policy in the sense that both employers and employees have incentives to choose work hours optimally. Making the policy self-targeting and thereby difficult to abuse also allows for a simple policy that neither deters take-up nor burdens bureaucracy with complicated rules. Designed in this way, short-time work becomes the ideal measure to minimize short-term adjustment costs. The next subsection provides advice on specific design choices to meet this goal.
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