A joint paper, prepared in collaboration by
Directorate-General for Economic and Financial Affairs
Directorate-General for Employment, Social Affairs and Equal Opportunities
After reviewing the theory of short-time working schemes, this paper reviews and discusses the main characteristics of short-time schemes available in the EU. Empirical evidence shed lights on their importance to minimise wasteful labour shedding during the crisis. While too early to assess their long-term impact, the study highlights the risk that a prolonged use of short-time work supports the demand of declining sectors, eventually delaying their restructuring, especially when the costs of labour reallocation are low and the incentives to restructure high, because the opportunity costs of foregone output is lower in recessions than in booms. By delaying reallocation, short-time work schemes hold back productivity growth and the consequent wage gains.
|ISBN 978-92-79-15077-7 (online)|
Occasional Papers are written by the staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The Papers are intended to increase awareness of the technical work being done by staff and cover a wide spectrum of subjects. Views expressed in unofficial documents do not necessarily reflect the official views of the European Commission.