EMCC European Monitoring Centre on Change

Short-time working support

Austria
Phase: Management
Type:
  • Response to COVID-19
  • Income support for workers
  • Working time flexibility
Last modified: 03 August, 2021
Native name:

Kurzarbeitsbeihilfe

English name:

Short-time working support

Coverage/Eligibility

The measure covers all companies facing unpredictable and temporary economic difficulties due to external factors (including natural catastrophes, such as avalanches or floods, but also other disasters such as the aftermath of 9/11) leading to a drop in production/supplies or sales/demand. The company must not be affected by economic difficulties due to seasonal variations. Difficulties must be temporary.

Before introducing short-time working, other options need to be used, such as the reduction of overtime, holiday entitlements and working time accounts. A social partner agreement must be established for each company. This must address the terms and conditions of the short-time working arrangement, more specifically, the section of the company that has been affected, the duration of the short-time working, the maintenance of the number of employees, the extent of short-time working payments, the level of decreased working time, and educational measures (if applicable). Additionally, the company has to seek advice from the Public Employment Service (which also requires the presence of the works council).

All employers are eligible except those in the public sector and political parties. Temporary work agencies can only avail of this support if they can prove that workers sent to specific companies cannot be redeployed in other companies and that the company in which the workers have been employed has registered its core staff for short-time working with the Public Employment Service (AMS). In such cases, additional requirements have to be met (for example, special agreements among social partners).

All workers are eligible except for CEOs, board members, apprentices, and employees who work such a low number of hours that they are not obliged to make social security contributions (marginal employees (geringfügig Beschäftigte)).

COVID-19 response

To cushion the labour market impact of COVID-19, the short-time working support has been adapted. The revised regulation is valid from 15 March 2020 to 31 March 2021. Eligible are all employers, except of private households and public employers not actively participating in the economy, as well as insolvent companies in a bankruptcy or restructuring procedure. Employers applying for the support have to show that their economic difficulties are caused by COVID-19. If short-time working affects more than 5 employees, a tax consultant or auditor has to confirm this justification.

Multinational companies are only eligible if they have an establishment in Austria. Seconded or posted worker active in Austria as well as employees of Austrian companies active abroad are not eligible.

The employer is obliged to maintain the employment level of the starting point of the short-time working period. Dismissals for economic reasons are possible on approval of the Public Employment Service, trade union and works council. Dismissals for personal reasons require the recruitment of another worker to maintain the total employment numbers.

For the COVID-19 short-time working support, also apprentices and freelancers in case of standard working time are eligible. Only employees with an employment relationship of at least one full month before short-time working are eligible. Workers who earn more than €5,730 gross per month and marginal employees still cannot be covered by the support.

Main characteristics

Short-time working in Austria refers to the temporary reduction of working hours based on a social partner agreement. Workers receive short-time working support (Kurzarbeitsunterstützung) from their employer for the non-worked hours in order to bring their income closer to their normal wage level. In order to do so, the employer receives a short-time working subsidy (Kurzarbeitsbeihilfe) from the Public Employment Service (AMS). Working hours under the short-time working arrangements were made more flexible during the recession, in that they could range from at least 10% to a maximum of 90% of normal working hours. In 2009, the eligibility period was (temporarily) extended to a maximum of 24 months until the end of 2013. This was extended to the end of 2015 for all cases having been granted before 2012. In 2018, short-time working subsidies were limited to six months. If the overall situation of the company has not changed, the eligibility time can be extended for another six months. Overall the maximum is set to 24 months (starting from 2017).

The short-time working subsidy amounts to the level of unemployment benefits (including social security contributions) for the non-worked hours (about 55% of the net wage); in this way, lump sums per non-worked hours are determined. This lump sum is based on the normal (legal or collectively agreed) working time, the worker’s monthly gross wage (including pro rata holiday and Christmas remuneration up to a maximum of €5,425) and the number of children the worker has to care for. Increased rates are provided if training is conducted while employees are not working.

The employer must pay the employees the total of their normal wage for the hours they do work, along with the short-time working support for the non-worked hours. On a monthly basis, the employer must also report to the AMS regarding the number of non-worked hours per short-time worker and the amount paid to the short-time workers as short-time working support. They must also confirm that no short-time workers have been dismissed.

The social security contributions (and benefits) paid during short-time working are based on the previous full-time wage before short-time working commenced. Periods of short-time working are considered as normal/full-time working time regarding qualification periods for unemployment benefits. Furthermore, if unemployment occurs immediately after short-time working, unemployment benefits are calculated on the basis of the previous full-time wage (rather than the reduced income during short-time working). In most cases, however, the social partner agreement states that companies must not make employees redundant for a stated period following short-time working; this ranges from one to four months. Companies must apply for short-time working support six weeks before they initiate the measure (or four weeks before extending it). They must also take part in a consultancy session (involving the works council) with the aim of identifying potential alternatives to short-time working.

COVID-19 response

Between March 2020 and March 2021, a special 'Corona short-time working scheme' is operational. The reduced working hours must on average be between 10% and 90% of the collectively agreed standard working hours between March and September 2020, but can also temporarily be zero. From October 2020 to March 2021, the working time has to be between 30-80%. Temporarily, during the renewed lockdown starting early November 2020, those companies directly affected by the governmental decree may refer to working time of less than 30%, up to zero.

The subsidy can be granted for 3 months, with a possible extension of another 3 months upon consulation of social partners.

Salaries of apprentices will be subsidised to 100% by the public employment service, monthly gross salaries below €1,700 are subsidised by 90% of the net wage, monthly gross salaries of €1,700-2,684 by 85% and those of €2,685-5,369 by 80%. The employer pays for the actually realised working hours, AMS covers the difference.

The employer's share of social security contributions is also covered by the state. 

Since October 2020, if the employer offers training during short-time working, employees are obliged to participate. AMS supports 60% of the training costs.

Funding

  • National funds
  • Employer

Involved actors

National government
Funding; legal framework.
Public employment services
The employer may receive a special subsidy from the relevant AMS office (Kurzarbeitsbeihilfe). The company must inform the regional PES at least six weeks before the starting date of the planned short-time working and has to undergo a consultation process with the PES, involving the company's work council (if established).
Employer or employee organisations
Eligibility for this subsidy is contingent on the employer and social partner reaching a collective agreement on the payment of a compensatory short-time working support (Kurzarbeitsunterstützung). The amendments for the COVID-19 short-time working support have been designed by the social partners.

Effectiveness

In 2016, public support was extended to 2,400 workers (14% females) - compared with 4,399 people in 2015 - resulting in public subsidies of over €4.6 million. In 2016, the average consumption period of short-time working subsidies is 92 days (Sozialministerium, 2018).

For the COVID-19 short-time working support, a budget of €12 billion is available for 2020, an additional €1.5 billion are budgeted for 2021. As of 30 September 2020, the approved applications (including extensions) amount to €8.4 billion, and € 4.8 billion have been paid. About 1/3 of the approved subsidy volume refers to manufacturing, 18% to trade, and between 6-8% (each) to construction, transport, hotel and restaurants, freelance, scientific and technical services as well as other business services.

As of 30 September 2020, about 168,000 applications (including extensions) have been received, and about 161,000 (96%) approved. About 1/5 of the approved applications are from the trade sector, around10-15% from hotels and restaurants, freelance, scientific and technical services, construction and manufacturing, each.

The share of workforce covered by approved applications increased steadily from March to late May 2020, where it reached more than 1.3 million employees (about 37% of the workforce). Until late September, the numbers have been decreasing to about 300,000 (8% of the workforce). Almost 30% of workers for whom short-time working was approved are in manufacturing, about 20% in trade, about 10% in construction and hotels and restaurants (each), and about 6% each in transport and other business services.

Of the employees who received the subsidy, 57% are male, 14% are younger than 25 and about one quarter are aged 50 or older.

A simulation model finds a decrease of available annual household income of workers on short-time working of €39 (median) or 0.2% in the lowest income quintile and €681 or 1.5% in the highest income quintile. On average, the model finds a median decrease of annual available household income of €390 (1.1%). In all income groups the simulated loss is substantially lower as if the affected person had experienced unemployment. The study concludes that short-time working is an important instrument to cushion labour market shocks in the short run, while at the same time flags that long-term effects like potential tax increases or the reduction of social benefits caused by the costs of the instrument would require consideration for a full assessment of the measure.

Strengths

It is a cheaper option for the state than unemployment. The employer avoids 'firing-and-rehiring' costs and is given some time to develop strategic considerations. The wage decrease is lower than the proportion of working hours lost, and the income replacement rate is higher than in many other countries. Moreover, employees avoid unemployment and they also maintain their social security level. It is available to many employees and also represents a comparatively fast response to crisis situations.

Social partner negotiations contribute to the fairness of the system, such as more support for low earners than for high earners.

In the context of COVID-19, simplification of the administrative and application process, including standardisation of the social partner agreement and automated handling of applications.

Weaknesses

It is a costly and complex instrument.

The Austrian Federal Economic Chamber (WKO) notes that short-time working is mostly applied by production companies. It also concludes that both service companies and smaller enterprises find it difficult to access the programme, due to the complex preconditions and administrative burden involved. Issues are also present in terms of its administration and calculation of pay; the latter requires a software programme as soon as a certain number of employees are affected.

The necessity of involving different stakeholders can also pose a barrier for some companies. Not all associated costs, for employers and employees, are covered by the subsidies; dismissal protection can be a significant burden for the employers. Finally, it can be difficult to arrange training during short-time working as meaningful training might not be available during the short-time working period and employees might prefer leisure time to training.

Workers at the margins of the labour market, such as marginal employees and more precarious workers, are  not or less covered.

In the context of COVID-19, staff bottlenecks in AMS and among social partners for assessing the applications can result in delays as well as deadweight loss. All workers receive the same income replacement rate, irrespective of the number of hours worked. This can have negative impact on the corporate climate.

Examples

Magna, Opel, GM, VoestAlpine, Böhler-Uddeholm, Infineon.
Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment