A key social security response to the crisis: short-term work and partial unemployment schemes

A key social security response to the crisis: short-term work and partial unemployment schemes

In view of the large reduction in economic activity and disruptions in supply chains in the context of the coronavirus crisis, a number of governments have taken urgent measures to introduce or significantly extend partial unemployment and short-term work schemes.

Not least since the key role played by such schemes during the financial and economic crisis in 2008, these social security measures have been considered one of the most effective responses to reduce both the degree of economic downturns and their labour market and social impacts.

The major objectives of such schemes, which allow employers to flexibly reduce working hours with the income loss being covered by unemployment insurance, are to:

  • Support enterprises to adapt working hours and staff costs to sudden fluctuations in economic activity and demand;
  • Maintain existing employment relations and prevent large job losses;
  • Protect the income of workers, thereby reducing poverty and preserving purchasing power and consumption;
  • Avoid the loss of skilled and experienced workers at company level, and allow for a rapid return to increased activity once demand increases;
  • Increase solidarity by sharing the costs of the crisis across different sectors.

In view of the current sharp decline of economic activity, government emergency measures have extended partial unemployment and short-term work schemes to unseen levels. From a comparative perspective, these measures consist of changing one or several of the following parameters:

  • Substantially increasing the budgetary envelope earmarked for partial unemployment and short-term work;
  • Relaxing eligibility requirements, such as the reduction in the minimum required number of employees on short-term work in a company; the lowering of the minimum required working time reduction; or the reduction or waiving of waiting periods;
  • Extension of eligibility to contract and temporary workers;
  • Increase in benefit levels;
  • Payment of social security contributions for workers on partial unemployment or short-term work by the unemployment insurance or the government;
  • Active promotion of schemes by social security institutions, and flexibility regarding administrative requirements in the application process.

In Germany for instance, which already had one of the most developed short-term work schemes before the coronavirus crisis, the minimum number of workers required to be on short-term in a company to access the scheme has been reduced from 33 per cent to 10 per cent. In addition, short-term work benefits are now also available for contract workers, and social security contributions for workers on short-term work are now fully or partially paid by unemployment insurance.

In France, a massive extension of partial unemployment benefits has been announced by the government. This includes an increase in the benefit levels, which in the past were based on the minimum wage.

Switzerland has announced the facilitation of access to short-term work by reducing the waiting period for benefits. The extension to contract and temporary employees is also being considered. Budgetary means for financing short-term work benefits have been significantly increased as part of an emergency economic support package.

Importantly, social security institutions are at the forefront of the implementation of such emergency measures, and are often the first contact point for affected companies and workers. Responding rapidly, many institutions have increased their capacity to respond to short-term and partial unemployment benefit applications and have launched pro-active information and communication approaches.

The Belgian employment office, for instance, communicates regularly with updates on eligibility requirements and has committed to respond to any applications for partial unemployment benefits within three days.