Social Europe

politics, economy and employment & labour

  • Projects
    • Corporate Taxation in a Globalised Era
    • US Election 2020
    • The Transformation of Work
    • The Coronavirus Crisis and the Welfare State
    • Just Transition
    • Artificial intelligence, work and society
    • What is inequality?
    • Europe 2025
    • The Crisis Of Globalisation
  • Audiovisual
    • Audio Podcast
    • Video Podcasts
    • Social Europe Talk Videos
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Shop
  • Membership
  • Ads
  • Newsletter

Austrian short-time work model: a labour-market policy for the many, not the few

by Matthias Schnetzer, Dennis Tamesberger and Simon Theurl on 6th April 2020 @tamesberger

Share on TwitterShare on FacebookShare on LinkedIn

Job retention plus well-compensated short-time work is better for employers as well as employees than redundancy. Maybe after the crisis we can reopen the debate about working time.

short-time work Austria
Matthias Schnetzer

A growing number of countries are facing unprecedented disruptions to everyday life. The rapid spread of the coronavirus has led to a shutdown of vital functions of economies around the world. While the countermeasures to reduce infections are largely undisputed among experts, the ways to deal with the economic crisis are manifold.

In particular, skyrocketing unemployment poses a major challenge for most countries. But in Austria, the social partners have negotiated a new model of subsidised short-time work which could become an international exemplar.

short-time work Austria
Dennis Tamesberger

Relationship maintained

The short-time work model allows a reduction in working hours while maintaining the employment relationship and granting almost full wage compensation. It even includes the possibility of a temporary reduction to as few as zero hours. Employees only have to carry out on average 10 per cent of their normal working time over a period of three months and it is possible to work that as a block, for instance at the end of the period.

short-time work Austria
Simon Theurl

After these three months, it is possible to prolong short-time work for another three months if necessary. Depending on the former income level, the model grants compensation of between 80 and 90 per cent (including special remunerations).

Thus, the short-time work grant from the Public Employment Service Austria (AMS) is much higher than regular unemployment benefits, which comprise 55 per cent of previous net income. In comparison with other countries, the Austrian short-time work model seems to be very attractive, as the replacement rate is high and the same across all sectors.

Join our growing community newsletter!

"Social Europe publishes thought-provoking articles on the big political and economic issues of our time analysed from a European viewpoint. Indispensable reading!"

Polly Toynbee

Columnist for The Guardian

Thank you very much for your interest! Now please check your email to confirm your subscription.

There was an error submitting your subscription. Please try again.

Powered by ConvertKit

In Germany, the net replacement rate varies between the regular benefit payment of 60 per cent and up to 67 per cent. In Norway, workers can be put on leave and receive full payment for the first 20 days and then between 80 and 62 per cent depending on the salary. In Ireland, the net replacement rate equals 70 per cent, in Denmark 75 per cent and in the United Kingdom about 80 per cent.

Fully insured

Every company in Austria, independent of its size or branch of activity, can implement this short-time work model. The public sector will refund all additional costs and the company will only pay for the actual working time. Employers also benefit because the wages and the social-security contributions for the lost hours are omitted, beginning with the first day of short-time work, while employees continue to be fully insured. To reduce windfall effects and to prevent misuse, all applications to the AMS have to be approved by the social partners.

If there is an elected works council (Betriebsrat) in the applicant company, a plant-level agreement (Betriebsvereinbarung) specifying details of the short-time work is required. Otherwise, employers have to reach an individual agreement with each employee. All agreements on reduced working hours stipulate a minimum retention period of one month after the reduced hours. The retention period after short-time work applies only to those employees who were affected by short-time work, not to all employees of the company.

Let’s take a typical case in Austria: Mr W normally works 38.5 hours per week in the metal industry and his gross monthly salary amounts to €2,651 (€1,829 net). Because of the coronavirus, the firm has received almost no orders and Mr W agrees with his employer to adopt short-time work (STW), based on a social-partnership agreement (the works council co-ordinated the agreement). In detail, they agree on reducing his average working time by about 90 per cent for three months. In April Mr W does not work at all, in May he will work 10 per cent (around four hours per week) and in June 20 per cent (around eight hours per week) of his former working time.


We need your help! Please join our mission to improve public policy debates.


As you may know, Social Europe is an independent publisher. We aren't backed by a large publishing house or big advertising partners. For the longevity of Social Europe we depend on our loyal readers - we depend on you. You can support us by becoming a Social Europe member for less than 5 Euro per month.

Thank you very much for your support!

Become a Social Europe Member

Mr W receives a stable minimum net salary of about €1,555 each month during the STW period (see table). The employer faces total effective labour costs of about €1,045 during these three months. In the event of a dismissal by the employer, the labour costs would be around €3,715 due to the notice period (four weeks), which is much more than the labour costs under STW—meaning that it is much cheaper for the company to retain Mr W than to make him redundant.

short-time work Austria
Sources: AMS STW calculator; gross-net calculator, unemployment benefits calculator

As the STW model proves beneficial for employees and employers alike, as an alternative to unemployment, a number of large Austrian companies have already made use of this policy. Among them are construction companies such as Porr (20,000 employees) and Strabag (11,000), the steel company voestalpine (20,000) and many firms in the automotive sector, such as Porsche (6,400) and BMW (4,500).

Facing rapidly increasing unemployment, the social partners in Austria have negotiated a new and unique STW programme, which is enabling employees to keep their job and sustain consumption levels. The model relies on codetermination at the company level, as elected works councils and employees must agree a specified, plant-level agreement. This strengthens democracy in the workplace, even in a time of deep crisis.

Redistribution of hours

Through short-time work many employees also gain positive experiences of reduced working time, meaning more time for private interests. These experiences could stimulate a general discussion around the redistribution of working hours in society after the crisis. To achieve full employment, the typical working week must be reduced radically, so that work is redistributed to everybody in search of employment.

The economist John Maynard Keynes predicted that in the 21st century 15 hours’ working time per week should be enough, due to increased productivity. With hundreds of thousands of employees in Europe working short time during the crisis, their positive experiences may well be a starting point for finally making this vision a reality.

Share on TwitterShare on FacebookShare on LinkedIn
Home ・ Austrian short-time work model: a labour-market policy for the many, not the few

Filed Under: Politics Tagged With: coronavirus

About Matthias Schnetzer, Dennis Tamesberger and Simon Theurl

Matthias Schnetzer is an economist at the Vienna Chamber of Labour and lecturer at the Vienna University of Economics and Business. Dennis Tamesberger is a labour-market expert at the Upper Austrian Chamber of Labour; he blogs at Arbeit und Wirtschaft (A&W) and is co-editor of the Journal for Societal Progress—Momentum Quarterly. Simon Theurl is a labour-market expert at the Chamber of Labour in Vienna and blogs at A&W; he is chair of Beirat für wirtschafts- und umweltpolitische Alternativen (BEIGEWUM).

Partner Ads

Most Popular Posts

Thomas Piketty,capital Capital and ideology: interview with Thomas Piketty Thomas Piketty
sovereignty Brexit and the misunderstanding of sovereignty Peter Verovšek
China,cold war The first global event in the history of humankind Branko Milanovic
centre-left, Democratic Party The Biden victory and the future of the centre-left EJ Dionne Jr
Covid 19 vaccine Designing vaccines for people, not profits Mariana Mazzucato, Henry Lishi Li and Els Torreele

Most Recent Posts

supply chain,Germany,human rights Germany’s proposed supply-chain law—a glass half-empty Johanna Kusch and Claudia Saller
Myanmar,due diligence Human-rights due diligence and Myanmar Frank Hoffer
Uber,drivers,gig UK gig drivers recognised as workers—what next? Jill Toh
women workers,services Covid-19: a tale of two service sectors John Hurley
European Pillar of Social Rights,social pillar EU credibility as a people’s union rests on the social pillar Liina Carr

Other Social Europe Publications

RE No. 12: Why No Economic Democracy in Sweden?
US election 2020
Corporate taxation in a globalised era
The transformation of work
The coronavirus crisis and the welfare state

Social Europe Publishing book

With a pandemic raging, for those countries most affected by Brexit the end of the transition could not come at a worse time. Yet, might the UK's withdrawal be a blessing in disguise? With its biggest veto player gone, might the European Pillar of Social Rights take centre stage? This book brings together leading experts in European politics and policy to examine social citizenship rights across the European continent in the wake of Brexit. Will member states see an enhanced social Europe or a race to the bottom?

'This book correctly emphasises the need to place the future of social rights in Europe front and centre in the post-Brexit debate, to move on from the economistic bias that has obscured our vision of a progressive social Europe.' Michael D Higgins, president of Ireland


MORE INFO

Hans Böckler Stiftung Advertisement

Renewing labour relations in the German meat industry: an end to 'organised irresponsibility'?

Over the course of 2020, repeated outbreaks of Covid-19 in a number of large German meat-processing plants led to renewed public concern about the longstanding labour abuses in this industry. New legislation providing for enhanced inspection on health and safety, together with a ban on contract work and limitations on the use of temporary agency employees, holds out the prospect of a profound change in employment practices and labour relations in the meat industry. Changes in the law are not sufficient, on their own, to ensure decent working conditions, however. There is also a need to re-establish the previously high level of collective-bargaining coverage in the industry, underpinned by an industry-wide collective agreement extended by law to cover the entire sector.


FREE DOWNLOAD

ETUI advertisement

ETUI/ETUC (online) conference Towards a new socio-ecological contract 3-5 February 2021

The need to effectively tackle global warming puts under pressure the existing industrial relations models in Europe. A viable world of labour requires a new sustainability paradigm: economic, social and environmental.

The required paradigm shift implies large-scale economic and societal change and serious deliberation. All workers need to be actively involved and nobody should be left behind. Massive societal coalitions will have to be built for a shared vision to emerge and for a just transition, with fairly distributed costs, to be supported. But this is also an opportunity to redefine our societal goals and how they relate to the current focus on (green) growth.


REPLAY ALL SESSIONS

To access the videos, click on the chosen day then click on the ‘video’ button of your chosen session (plenary or panel). It will bring you immediately to the corresponding video. To access the available presentations, click on the chosen day then click on the ‘information’ button. Check the links to the available presentations.

Eurofound advertisement

Industrial relations: developments 2015-2019

Eurofound has monitored and analysed developments in industrial relations systems at EU level and in EU member states for over 40 years. This new flagship report provides an overview of developments in industrial relations and social dialogue in the years immediately prior to the Covid-19 outbreak. Findings are placed in the context of the key developments in EU policy affecting employment, working conditions and social policy, and linked to the work done by social partners—as well as public authorities—at European and national levels.


CLICK FOR MORE INFO

Foundation for European Progressive Studies Advertisement

FEPS Progressive Yearbook

Twenty-twenty has been an extraordinary year. The Covid-19 pandemic and the multidimensional crisis that it triggered have boosted existing trends and put forward new challenges. But they have also created unexpected opportunities to set a new course of action for the European Union and—hopefully—make a remarkable leap forward in European integration.

The second edition of the Progressive Yearbook, the yearly publication of the Foundation for European Progressive studies, revolves around the exceptional events of 2020 and looks at the social, economic and political impact they will have in 2021. It is a unique publication, which aims to be an instrument for the progressive family to reflect on the recent past and look ahead to our next future.


CLICK HERE

About Social Europe

Our Mission

Article Submission

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Find Social Europe Content

Search Social Europe

Project Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

.EU Web Awards