worksharing

Worksharing is a labor market arrangement in which employers divide work among several workers to avoid layoffs during downturns or periods of fluctuating demand. It often involves reducing each worker’s hours, with corresponding partial wage replacement, rather than terminating employees. The approach can be formalized through legislation, collective bargaining agreements, or company policies, and may take forms such as short-time work, job sharing, or staggered shifts.

Key features typically include pay proportional to hours worked, continued access to employer-provided benefits, and opportunities for training or skill development during the reduced-hours period. Programs commonly provide government subsidies or unemployment benefits to offset the diminished earnings, helping to stabilize income and preserve employment relationships.

Rationale and benefits: worksharing aims to preserve human capital, reduce turnover, and maintain relationships between workers and employers, which can lower recruitment and training costs and shorten recovery times after a downturn. For workers, it can safeguard income and reduce the likelihood of total unemployment. For society, it can lessen unemployment and social welfare costs and support quicker macroeconomic stabilization when demand rebounds.

Limitations: the approach is not suitable for all industries or business models and requires supportive legal and administrative frameworks. It can lead to lower earnings for workers, potential misalignment with demand if not well coordinated, and added complexity in managing schedules and benefits.

Examples and history: Germany’s Kurzarbeit is a well-known worksharing model; during economic crises in the 2000s and 2020s, many countries expanded similar short-time or shared-work programs. In the United States, Shared Work programs allow partial unemployment benefits if hours are reduced; other nations employ comparable schemes with varying designs.