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Work-Sharing Programs Get a Closer Look, Could Help Stem Layoffs

March 31, 2009
Related Topics: Work/Life Balance, Latest News

Greater use of government work-sharing programs could help limit layoffs, according to a new report from an advocacy group.

The report released Friday, March 27, says just 17 states have work-sharing programs, which allow employers to reduce work hours instead of jobs. States that have the programs have seen a spike in use, according to the study from the Center for Law and Social Policy (CLASP).

The concept of work sharing, also practiced in Germany, is becoming a topic of greater debate globally as companies, workers and political leaders wrestle with the economic slowdown.

“Work sharing benefits employees and employers,” Neil Ridley, CLASP senior policy analyst and study author, said in a statement. “It allows employees to retain their jobs and benefits during tough economic times, it allows employers to retain their trained employees, and it reduces the number of people out of work.”

Work-sharing programs within the unemployment insurance system allow an employer to cut costs temporarily by decreasing the number of regularly scheduled work hours for the entire workforce or business unit, the report says.

For example, a firm faced with declining demand for its products or services could trim the hours for all workers by 20 percent instead of laying off 20 percent of its workforce. In a typical state program, employees work four days a week, receive unemployment insurance benefits for the fifth day and retain employer-provided health and retirement benefits, the CLASP study said.

The report found that between 2007 and 2008, the number of companies using New York's Shared Work Program increased by 60 percent, and the number of companies using a similar Rhode Island program increased by 119 percent.

Use of work sharing has soared in states hit hard by the housing market collapse, the study said. It said that from 2007 to 2008, initial claims under work sharing rose by 171 percent in Arizona, 78 percent in California and 272 percent in Florida, according to data compiled by the U.S. Department of Labor.

Greater use of work-sharing programs comes amid a deteriorating job market. The U.S.unemployment rate jumped from 7.6 percent in January to 8.1 percent in February, while employers cut 2.6 million payroll jobs from November to February.

The international employment situation also is dire. The Organisation for Economic Co-operation and Development research group has called for governments to take quick and decisive action to prevent the financial crisis from becoming a “fully-blown social crisis.” Among the steps it called for Friday is one similar to the idea of work sharing: “Short-time working subsidies or reduction in social security contributions will help preserve viable jobs, if they are well-targeted on firms facing a temporary fall in demand and workers who will find it difficult to get another job if made redundant.”

Another related idea is a tax credit for paid time off.

In a March report the Center for Economic and Policy Research said the paid time off can take the form of paid family leave, paid sick days, paid vacations, shorter standard workweeks or some combination of those elements.

“This tax credit can both provide short-term stimulus and also provide an incentive to restructure workplaces in ways that are more family friendly,” the Center for Economic and Policy Research said.

—Ed Frauenheim

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