Page 22 - 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 IDEA 2020
Similarly, replacement rates vary both in terms of generosity and of the complexity of their determination. Contrary to the short-time work schemes discussed above, no country seems to allow a replacement rate of 100%, i.e. all reductions in work come at some expense to the worker. Most countries also impose caps on the absolute size of the transfer and the duration of receipt, though they vary substantially in how stringent they are. The factors that determine the level of the replacement rate differ between countries. The most common criteria are prior earnings or reduction thereof, as well as prior hours worked or reduction thereof. The differences in design make it difficult to compare the generosity of the schemes, this is also because some countries pay fixed amounts, while others use proportions of prior earnings.
Yet even the few examples in the table show substantial variation in both generosity and flexibility. Some schemes, such as that in Sweden, replace almost the entire salary. At the other end of the spectrum, the subsidy in New Zealand likely only replaces a small fraction of most salaries. Most replacement rates appear to be somewhere between 60 and 80%. The programs also vary substantially in terms of the flexibility they offer recipients and the work incentives they provide conditional on entering into short-time work. Only Sweden (and partly Canada) seem to incentivize smaller reductions in hours worked.
These differences in the complexity of rules, the bureaucratic strain of eligibility determination, the generosity and the flexibility likely have important implications for how many and which employees will actually receive a subsidy. As soon as information on these measures becomes available, we will try to incorporate them into an updated draft. Several countries have already announced adjustments to their policies, which can point to features that are likely better avoided by those who are still engaged in designing policies.
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