Resisting the crisis: short‐time work in Germany

Abstract

Purpose -After a brief glance at the global labour market after the financial meltdown the paper aims to explain some general mechanisms of short-time work in Germany. Furthermore it seeks to present an overview of the costs of short-time work for the establishments with respect to the latest labour market reforms in Germany. In the multivariate analyses with the IAB Establishment Panel the paper aims to identify the determinants of short-time work and its intensity in Germany. Thus it's goal is to contribute to the discussion of the modified and amended legislative framework for short-time work. Design/methodology/approach -The microeconometric analysis is based on data from the IAB Establishment Panel, a representative survey of the labour demand in Germany. With data from the survey waves 2008-2010 the probability of the use of short-time work with probit regression models and its intensity with truncated regression models are explained. Findings -The manufacturing industry as a German key industry was more affected than other sectors and suffered even harder. Despite the fact that the German labour administration has successfully reduced the bureaucracy of short-time work, the programme is still rather adopted by bigger establishments. German establishments have utilized their flexibility reserves and complementary short-time work to protect their core staff during the crisis. There is also some empirical evidence that the establishments tried to avoid brain drains. With the first signs of a recovery of the economy at the beginning of 2010 the establishments benefitted a lot from that strategy as they were instantly able to satisfy increasing demands in their markets again. Empirical evidence is also found that establishments made more intensive use of short-time work the harder they were suffering from the crisis. Originality/value -For the first time the latest data from the survey wave 2010 of the IAB Establishment Panel is used and compared with the 2009 survey wave. The structure of the panel questionnaire allows the implementation of some specific questions concerning the use of short-time work. The IAB Establishment Panel has a sample size of approximately 16,000 cases.

Short‐Time Work and Employment Stability: Evidence from a Policy Change

“…Therefore, firms would use the flexibility devices at their disposal (and STW is one of them) to protect their core staff during crises and to avoid brain drains (Crimmann et al . ).…”

“…To be precise, our results suggest that workers employed in blue-collar less-skilled occupations are the ones who are least likely to continue working with the same employer after the firm has implemented an STW arrangement. Therefore, firms would use the flexibility devices at their disposal (and STW is one of them) to protect their core staff during crises and to avoid brain drains (Crimmann et al 2012).…”

“…Focusing on the last recession, Arpaia et al (2010) and Hijzen and Venn (2011) estimate a model in which the impact of STW is captured with an interaction term between one dummy signalling the 2008-2009 recession and another dummy signalling countries with STW programmes in place. Micro estimates are based on establishment-or firm-level data and exploit the variation between participating and non-participating employers within countries (Calavrezo et al , 2010Crimmann et al 2012;Dietz et al 2011;Duhautois et al 2009). One shortcoming of most studies is that they do not usually take account of the potential endogeneity of STW schemes: in the case of the macro approach, that STW may be endogenous with respect to the role of macroeconomic conditions that affect both employment and STW but is not captured by the change in output; in the case of the micro approach, that there is a selection problem that arises because participant firms in STW schemes also tend to be less competitive than other firms that can be used as a control group.…”

The Challenges of Managing an Organisation during and after the Economic Crisis

“…Consumer spending which is the major driver of the business activities will also decline because of the effects of the recession. Economic crisis acts as an exogenous transitory shock, which mainly reduces the demand for goods and services [7]. Consumers' real income has decreased, prices have gone up, and their spending will also slow down as a result.…”

Economic crisis and labour force transition to inactivity: a comparative study in German rural and urban areas

“…However, average unemployment rates showed a 5 per cent rise in 2009, which was the lowest in Europe (BA, 2009). While studies exist that explain the reasons for this modest increase in unemployment (Faik, 2012) and the stabilising effect of short-time work contracts that avoid fl uctuation in the labour market (Crimmann et al, 2012), not much is known about the labour market in terms of transition to the undesired state of inactivity.…”