A study by the Institute for Employment Research (IAB) shows that working time accounts were widely exploited by German companies between summer 2008 and autumn 2009 to combat the adverse impact of the economic crisis. Existing working time deposits decreased by 45 hours on average. In addition, a proportion of 60% or more of the employees in the majority of companies surveyed were affected by the use of working time accounts to reduce costs while avoiding redundancies.
Despite the dramatic reduction in production and volume of orders in German companies during the economic crisis, employment remained remarkably stable. As well as the introduction of short-time working, the use of flexible working time accounts is said to be one reason why adverse effects on employment were avoided at both the company and the macroeconomic level (DE0912059I, DE0910039I).
A recent study (in German, 401Kb PDF) by the Institute for Employment Research (IAB) sheds light on the functioning of flexible working time accounts during the crisis. The analysis is based on the regular Works Councils Survey carried out by the Institute of Economic and Social Research (WSI) which covers companies that have a works council and employ 20 or more workers. Responses to the survey are given by works council members about their companies.
Widespread use of working time accounts
Between summer 2008 and autumn 2009, 34% of the companies surveyed either reduced the total number of hours that had been accumulated on existing working time accounts or intended to do so (Table 1).
Companies that had been adversely affected by the crisis by the time of the survey more frequently reported that they exploited working time deposits or even ran up time debts. This applied to 45% of such companies compared with 22% of those companies that had not been affected.
Table 1: Use of working time accounts, summer 2008 to autumn 2009 (%)
| | All companies | Adversely affected companies | Unaffected companies |
| Yes, made use | 20.8 | 29.5 | 11.6 |
| Yes, intended to use | 3.5 | 2.8 | 4.3 |
| Yes, already used and intended to continue exploitation | 9.6 | 12.9 | 6.2 |
| Total | 33.9 | 45.2 | 22.1 |
Source: IAB
Around three out of four companies reported that the reduction of working time accounts resulted directly from the adverse impact of the economic downturn. This holds true even for 43% of those companies that reported not having been directly hit by the crisis.
Large reduction in the volume of accumulated hours
Although many companies took advantage of working time accounts to combat the crisis, the vast majority (around 76%) reported that their working time accounts were still positive at the end of the reference period. Only a very small minority (less than 2%) were forced to accumulate so-called ‘minus hours’, which the employees have to work off when the country’s economic situation improves again.
The number of accumulated hours averaged 60 or more in July 2008 in 50% of the companies that exploited existing working time accounts, but this was true only for one in eight companies in autumn 2009.
The average number of accumulated hours declined from 72 hours in summer 2008 to 27 hours in autumn 2009. In 32% of companies affected by the crisis and that used their working time account, their time deposits decreased by between 20 and 39 hours; in 25% of companies the decrease was by as much as 60 hours or more. The reduction in accumulated working hours was larger in the manufacturing sector than in the services sector (Table 2).
Table 2: Average reduction in working time deposits (%), summer 2008 to autumn 2009
| Length of reduction | All companies | Manufacturing sector | Services sector |
| Up to 19 hours | 20.5 | 17.1 | 25.2 |
| 20–39 hours | 31.9 | 27.1 | 38.4 |
| 40–59 hours | 21.9 | 23.8 | 19.2 |
| 60 hours or more | 25.8 | 31.9 | 17.2 |
Notes: The data refer only to those companies affected by the crisis and that used their working time accounts.
Source: IAB
Majority of employees involved
The study also reveals that, in the majority of companies (roughly 61%) that were affected by the crisis and relied on working time accounts to combat its adverse impact, the working time deposits of at least 60% of the workforce were reduced. In 30% of the companies, the accounts of more than 20% but less than 60% of the employees were involved. Only in 9% of companies was the use of working time accounts restricted to a selected group of workers (20% and less of the workforce).
Reference
Zapf, I. and Brehmer, W., Flexibilität in der Wirtschaftkrise. Arbeitszeitkonten haben sich bewährt, IAB-Kurzbericht No. 22/2010, Nuremburg, Institute for Employment Research, 2010, available online at http://doku.iab.de/kurzber/2010/kb2210.pdf.
Oliver Stettes, Cologne Institute for Economic Research (IW Köln)