Work sharing: A strategy to preserve jobs during the global jobs crisis

Work sharing could be a relevant response to the global jobs crisis, according to a new ILO policy brief prepared for discussion at the International Labour Conference in Geneva from 3-19 June 2009. Work sharing policies and programmes can result in a “win-win-win” solution benefiting workers, employers and governments. ILO Online spoke with ILO working time expert Jon C. Messenger.

ILO Online: What is work sharing?

Jon Messenger: Work sharing is a reduction of working time intended to spread a reduced volume of work over the same or a similar number of workers in order to avoid layoffs or, alternatively, as a measure intended to create new employment. The concept of work sharing originated during the Great Depression and is reflected in the spirit of the ILO’s Forty-Hour Week Convention, 1935 (No. 47), adopted at the height of the Depression. In the context of the current global economic recession – and the global jobs crisis that it has spawned – there has been a growing interest in work sharing as a labour market policy tool aimed at preserving existing jobs. (Note 1)

ILO Online: Is it the same as job sharing?

Jon Messenger: Work sharing should not be confused with job-sharing, which refers to a voluntary arrangement whereby two persons take joint responsibility for one full-time job; for example, a common form of job-sharing is to split one full-time job into two part-time jobs. Unlike work sharing, job-sharing is generally not used as a measure to avoid layoffs or create new jobs, and the reductions of hours under work sharing typically do not reduce hours to part-time levels.

ILO Online: Why is work sharing a relevant response to the global jobs crisis?

Jon Messenger: Work sharing is a relevant response to the global jobs crisis because it is a measure designed to share the burdens of a difficult economic situation – not only among workers, but between workers, employers and governments as well. If work sharing policies are properly designed and implemented, the result is a “win-win-win” solution: enabling workers to keep their jobs and even to prepare for the future; assisting companies not only to survive the crisis, but to be well-positioned to prosper when growth returns; and minimizing the costs of social transfer payments and, ultimately, social exclusion for governments and society as a whole.

ILO Online: What are the key elements of work sharing policies and programmes?

Jon Messenger: There are essentially five elements that may be included in work sharing policies and programmes: The reduction of working hours for all workers in a company or a specific work unit within a company, in lieu of layoffs; the reduction in working hours is accompanied by a corresponding pro-rata reduction in wages; the provision of wage supplements to affected workers to “cushion” the effects of temporary reductions in earnings; the establishment of specific time limits on the period of work sharing (such limits are essential to ensure that the work sharing programme is indeed a temporary measure in response to the economic crisis); and the creation of links between work sharing programmes and training / retraining activities.

ILO Online: Has work sharing already been tested in some countries?

Jon Messenger: The vast majority of those countries that possess active work sharing programmes are in the industrialized world: Austria, Belgium, France, Germany, Japan, the Republic of Korea, the Netherlands, Switzerland and a number of individual states in the United States. By contrast, these programmes are quite rare in developing and transition countries. Nonetheless, in the context of the global economic and jobs crises, a few developing and transition countries have begun to discuss and experiment with some basic forms of work sharing, including Chile, Costa Rica and Uruguay in Latin America, and the Czech Republic, Hungary, Slovakia and Slovenia in Eastern Europe.

ILO Online: Do work sharing programmes preserve jobs?

Jon Messenger: Research by the German Institute for Employment Research on the Kurzarbeit scheme – currently the largest work sharing programme in the world – indicates that during 2002-03 two-thirds (67.1 per cent) of all companies participating in the scheme maintained the same level of employment in their establishment, and 7 per cent actually increased employment by hiring new employees. Further, work sharing programmes tend to be highly countercyclical, expanding during economic downturns and then declining as the economy improves.

ILO Online: What are the key factors for achieving an effective work sharing programme?

Jon Messenger: First and foremost, social dialogue, collective bargaining and other forms of negotiations play an essential role in determining the conditions for the implementation of work sharing programmes. Key issues include the specific workers to be covered by the work sharing agreement; the extent of the reduction in working hours; the extent of corresponding wage decreases; the distribution of reduced hours of work over time; the length of the agreement; and the effects on employment – in particular, guarantees that specified levels of employment will be maintained over the period that work sharing is in place.

Work sharing will be discussed during the thematic dialogue on Saturday, 6 June in Session 7 “Policy Packages: Wages and working conditions” at the International Labour Conference.

Note 1 – Work sharing: A strategy to preserve jobs during the global jobs crisis, by Jon C. Messenger, TRAVAIL Policy Brief no.1, International Labour Office, June 2009.