EMCC European Monitoring Centre on Change

Work sharing

Denmark
Phase: Management
Veids:
  • Response to COVID-19
  • Income support for workers
  • Working time flexibility
Pēdējoreiz mainīts: 03 August, 2021
Nosaukums lokālajā valodā:

Arbejdsfordeling

Nosaukums angliski:

Work sharing

Coverage/Eligibility

The firm must be part of a collective agreement in order to be eligible for this measure.

Response to COVID-19

A tripartite agreement was established for the private sector in March 2020 with the aim to make work sharing more flexible. Normally, the company must notify the local job center a week before the work sharing can start. This rule is abolished in the framework of the tripartite agreement, in a way that the company can start work sharing the same day the notification is sent. The support measure is open ended.

 

Main characteristics

A work sharing agreement is an arrangement whereby employers and employees agree on reducing working hours, within a limited, low-demand period, in order to avoid redundancies. The agreements do not involve terminating the workers' employment contracts. However, the workers are subject to a pay cut during the work sharing period. A work sharing agreement has to include all employees in a firm, departments or production units. It is a prerequisite of the scheme that firms are part of a collective agreement.

Work sharing is laid down in the Danish collective agreements, such as the trend-setting Industry Agreement, as an option during hard times. However, regulations concerning the payment during periods without work fall under the law on supplementary unemployment benefit financed by the state.

According to the agreements, work sharing can take place over a maximum of 13 weeks. The employees can receive unemployment benefits for a minimum period of two days. Employees can work for one week and receive the unemployment benefit the following week, and so on. They could also, for instance, spend six weeks at work followed by seven weeks on benefits or vice versa.

During the days or weeks of unemployment, the temporarily unemployed workers are subject to the provisions of the law on supplementary unemployment benefit. They must be active jobseekers, prepare a CV and send out job applications. They are obliged to take part in meetings organised by the Public Employment Service (PES) and cannot refuse if they are offered another job. This means that the agreed period of work sharing falls under the responsibility of the parties of the collective agreement, while the payment of the weeks without work falls under the area of responsibility of the Minister of Employment. A paragraph in the pace-setting Industrial Agreement (§ 8 section 7) provides an option for companies to prolong this period with an additional period of 13 weeks. If this is agreed, the company has to apply to the Regional Employment Council, which finances the period of extension.

Response to COVID-19

According to the new tripartite agreement, it becomes possible for companies to switch between types of work sharing time schemes when a cycle of work sharing is completed. As it is, the working hours must be reduced:

  • by at least 2 full days per week or with 1 week of full-time work followed by 1 week of unemployment; or  the distribution can also be arranged with 2 weeks of full-time work followed by 1 week of unemployment or with 2 weeks of full-time work followed by 2 weeks of unemployment.

According to the crisis-related tripartite agreement, the employer can switch the length of the work sharing periods when the one in use expires.

Funding

  • National funds

Involved actors

National government
Funding.
Regional/local government
If the work sharing agreement is to last for more than 13 weeks, the Regional Employment Council must process the firm's application.
Public employment services
The Public Employment Service (PES) has to be informed.
Employer or employee organisations
The possibility of work sharing is laid down in Danish collective agreements.
Cits
If the work sharing agreement is to last for more than 13 weeks, the Regional Employment Council must process the firm's application.

Effectiveness

In 2019 there were 41 cases affecting 1,101 people.

In 2018 there were 52 cases affecting 1,325 people.

In 2017 there were 65 cases affecting 1,093 people (Jobindsats.dk under STAR: Styrelsen for Arbejdsmarked og Rekruttering - The Danish Agency for Labour Market and Recruitment). From 2013 to 2016, the number of work sharing arrangements fell to a minimum level as before the crisis in 2006 and 2007.

In 2011, there were 367 cases of 13-week work sharing affecting 4,435 persons; in 2012 there were 337 cases affecting 3,934 people; and in 2013 there were 217 cases affecting 2,988 people. In 2010, the number of such deals dropped to 838, impacting on 7,458 people. In parallel to a slight improvement of the economy, the use of work sharing dropped. The use of work sharing  increased rapidly during the first quarter of 2009 due to the economic crisis; in this year, 1,925 13-week work sharing deals were announced, which affected 32,364 people. According to the National Labour Market Authority, a total of 200 13-week arrangements were approved during 2008, impacting on 3,718 people. In 2006, there were 33 work sharing arrangements in operation in the country. In 2007, the number fell to 27. Following the beginning of the economic crisis, this number started increasing.  

Response to COVID-19 

In February 2020 there were 19 companies/cases affecting 264 employees in work sharing. In March, after the introduction of the more flexible work sharing scheme, the number of companies increased to 639 cases affecting 5,536 employees. In April 2020 the numbers peaked at 890 cases affecting 8,004 employees. The latest figures (June 2020) show a fall in cases to 589 affecting 5,794 employees. However, the number is still considerably higher than before the COVID-19 outbreak.

Strengths

Subsidisation helps to smooth temporary slumps in labour demand. Besides, by helping employers to retain skilled employees, the scheme allows them to avoid the costly process of recruiting and training new employees when business returns to normal levels. Work sharing also helps employees to maintain their skills and their job. It is a flexible tool that is easy to access for employers.

Response to COVID-19

The government, the parties in the parliament and the social partners are discussing to extend the work sharing scheme to cover companies that are not covered by collective agreements. The aim is to have a more robust scheme in position for the future - and in particular after the termination, scheduled for 29 August 2020of the wage compensation scheme for employees furloughed in consequence of the national closure due to COVID-19 crisis. The scheme was not extended after 29 August 2020.

Weaknesses

The combination of being employed and unemployed is not optimal for the employees. In the weeks of unemployment, the employee is eligible to receive supplementary unemployment benefits, but as such has to follow the rules connected to this status. To the workers, it seems unfruitful to look for jobs while they wait to come back to an employer that counts on them. During the economic crisis beginning in 2008, the unions strongly argued that work sharing schemes need to be combined with targeted training activities. In addition, it could be argued that the maximum period of 26 weeks is too short; unions, employer organisations and large companies as Danfoss tried to persuade the government to extend it, pointing at the example of Germany where the periods of work sharing is much longer. Nonetheless, these efforts were not successful.

As a response to the COVID-19 crisis, the access to targeted further training has been improved in periods of unemployment.

Piemēri

Danfoss, Micotron.
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