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← Overview Database of Innovative Social Policies in Europe

Extension of short-time working schemes

Country of implementation
General short description of the innovation
Allowances for short-time working are a very traditional instrument of labour market policy. In Germany, they are part of the unemployment insurance system. Rather than dismissing workers into unemployment, firms can, under certain conditions, reduce hours worked and paid, and workers will be compensated for their wage loss at replacement rates equal to those of unemployment benefits. The employer still has to pay full social insurance contributions and full wages for paid holidays. Adjustments made in the crisis concerned an extension of eligibility of firms (for the first time, temporary work agencies were included), extension of maximum durations, lowering of costs for the employer and subsidies for training costs. The basic scheme provides income support for workers whose working-time has to be decreased temporarily of economic reasons. Short-time work is designed to finance 60% (if the employee has no children) to 66% (with children) of the emerging earnings gap. The employers, however, are obliged to pay the full social security contributions including the hours not worked which raises the fixed costs of employment, thereby providing some incentive to exit the scheme when it is not needed anymore.
Target group
Total Population
Policy Field
  • employment
  • wage
Type of Policy
  • public
Duration of the policy
2008 - 2010
Scope of innovation
  • Scope: it was a temporary variation of an already existing scheme to cushion the outcom es of the economic crisis on employment
  • Budgets: Not applicable
  • Number of intended beneficiaries: Not applicable
  • Spatial coverage: national
General description of (intended) objectives and strategies
The main objective to cushion the outcomes of the economic crisis by helping companies to retain their qualified and further trained employees and by reimbursing the employees concerned for the loss of income due to reduced working time.
Type of ideal-typical strategy for the innovation
  • typical strategy for the innovation (optional; according to Obinger)-flexicurity
Type of innovation
  • retrenchment or expansion of an existing/earlier policy
New outputs
  • working time
Intended target group
All employees of working age. However, the scheme is primarily designed to retain qualified and further trained workers in times of economic recession. Employees who can easily be replaced by other (e.g. low-skilled) employees are do not necessarily belong to the target group
Working age population
  • main source of income: paid work
Actors involved in policy-making/implementation and/or evaluation
  • making/implementation and/or evaluation-agency or national social insurance body
  • making/implementation and/or evaluation-central state
Clarification of the role of various actors
In Germany, short-time working schemes are generally regulated by law and thus under the responsibility of the federal government. The general rules are laid down in the third book of the social code. The government, however, has delegated their administration to the Federal Employment Agency. On the municipal level the local employment agencies are responsible for the administration of short-time working schemes
Intended output
  • wages (The loss of wages is reimbursed by the unem ployment insurance )
  • working time (Short-time working schemes are used to avoid unemployment, especially of qualified and further trained employees, by reducing weekly working time. )
Did the innovation have any outcome related to job quantity?
Short-time working schemes are used to avoid unemployment, especially of qualified and further trained employees, by reducing weekly working time.
Clarification of outcomes in terms of impacting resilience and labour market inclusion
The extension of short-time working allowances was an important institutional measure to cushion some of the negative effects of the economic crisis on employment. Thus short-time working allowances had a somewhat positive impact on resilience. However, although the number of workers on short-time working schemes soared to historical levels comparable only to the early 1990ies, short-time working schemes are / estimated to have absorbed only between one quarter and one third of the total losses in working hours, which was no larger share than in previous downturns.
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