Short-time working rules amended

On 26 February 2009, the Austrian parliament endorsed an amendment to the short-time working rules, with the aim of making them more flexible and prolonging their maximum term for adoption. This move is due to a continuously growing demand by employers for short-time working arrangements to cope with the current economic downturn. Employers and trade unions, which had been the driving forces behind the legislative initiative, have largely welcomed the decision.

Against the background of the current global economic recession, which has also substantially hit Austria, many companies facing financial difficulties have initiated restructuring measures. As a consequence, a still growing number of businesses have closed or reduced their scale of operations, resulting in numerous job losses. According to the most recent data provided by the Labour Market Service (Arbeitsmarktservice, AMS), in April 2009 the overall unemployment rate increased by 1.4 percentage points compared with the previous year (according to the national mode of count).

In order to prevent large-scale job losses as a result of the current downturn in economic activity, the Austrian social partners, in early 2009, launched a joint initiative to render the short-time working rules more flexible and practicable for companies and workers, in particular for small and medium-sized enterprises (SMEs). The focus on amending the legislation on short-time working can be explained by the fact that both employers and trade unions have deemed flexible short-time working arrangements the most appropriate means of retaining workers in employment. Therefore, in January 2009, the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB) and the Austrian Federal Economic Chamber (Wirtschaftskammer Österreich, WKÖ) presented a joint draft amendment to the short-time working rules, which was eventually endorsed by parliament on 26 February 2009.

Provisions of short-time working rules

In general, short-time working in Austria may be introduced by collective agreement, works agreement or individual agreement between an employer and employee. In cases where short-time working is arranged due to a fairly long-term, serious disruption of the national economy, the employer may receive from the competent AMS office a special subsidy (Kurzarbeitsbeihilfe). This subsidy is intended to offset part of the pay loss suffered by employees as a result of short-time working, provided that the local branch of the AMS has been informed in good time and, in particular, that the competent bargaining parties on the employer and employee sides have concluded a collective agreement on the payment of a compensatory short-time allowance (Kurzarbeitsentschädigung) during a period of short-time working. This allowance for the hours not worked by the employee has to amount to at least the corresponding fictional unemployment benefit. Moreover, the collective agreement has to stipulate that no employee will be dismissed at least during the period concerned.

New provisions

The amendment to the existing legislation, which came into effect retrospectively on 1 February 2009, provides for the following core features:

  • greater flexibility in terms of working time – working hours under short-time working arrangements may range from at least 10% to a maximum of 90% of normal working hours;
  • the reference period for these working time arrangements corresponds to the whole period for which the AMS grants the subsidy for short-time working instead of the previous four-week reference periods;
  • the maximum term for adoption of short-time working arrangements is extended from one year to 18 months, with the possibility of further prolonging this period under certain circumstances;
  • the introduction of a new short-time working scheme in combination with further training – employers may receive a special training subsidy (Kurzarbeitsbeihilfe mit Qualifizierung) if they offer their employees, during the hours not worked, training courses that are intended to improve the workers’ future employability in the labour market;
  • AMS is obliged to elaborate clear criteria for eligibility to the subsidy for short-time working for employers.

Effectiveness and response of social partners

The effectiveness of the amended short-time working rules is not yet visible, since the take-up rate of the scheme had already increased considerably from virtually zero in the autumn of 2008 to about 150 companies employing about 27,600 workers in mid February 2009. This was the situation before the introduction of the new scheme. Since the parliament endorsed the amendment, the number of employees affected almost doubled until the end of April 2009. The highest take-up rates of short-time working are recorded in the automotive and its supplier industry, metalworking, as well as wood and plastics industries. In light of this, the social partners have largely deemed the introduction of more flexible short-time working rules a success. The business side argues that the new scheme enables many employers to retain highly-skilled workers in the company, whom they would have had to dismiss otherwise and whom they will urgently need once the economy begins to recover. For the trade unions, short-time working is in any case the lesser of the two evils compared with unemployment – the latter, moreover, being three times more expensive for the public.

Georg Adam, Department of Industrial Sociology, University of Vienna

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