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Abstract
We analyse the use of short-time work (STW) by Luxembourg firms during the years of economic and financial crisis (2008–2009) and the subsequent European sovereign debt crisis (2010–2013). The economic and financial crisis saw a surge in the number of firms using short-time work. We find that the likelihood that a firm applied for or used short-time work increases with demand volatility, the degree of firm-specific human capital and is higher for firms that cannot shift workers between establishments or that are more export oriented. Firms reported that 20–25% of jobs in short-time work were saved by this measure.
Highlights
After a long period of sustained growth, Luxembourg was severely affected in the initial phase of the global economic and financial crisis in 2008–2009
While short-time work is largely a sector-specific phenomenon, concentrated especially in the manufacturing sector, we find that the likelihood of a firm using shorttime work generally increases with demand volatility, the share of workers with permanent contracts, the extent of firm-specific human capital, the degree of export orientation and with the inability to shift workers between establishments
While the following depiction of short-time work arrangements generally is true for all types of arrangements, we focus on the two short-time work arrangements related to economic fluctuations
Summary
After a long period of sustained growth, Luxembourg was severely affected in the initial phase of the global economic and financial crisis in 2008–2009. The paper contributes to the literature by presenting the first analysis of STW in Luxembourg using micro data.2 It employs a unique firm-level survey that allows us to study the impact of shocks on firms’ decision to apply for STW we compare our surveybased results to results derived from macro data for Luxembourg. Direct answers from human resources managers and and/or companies’ CEOs suggest that short-time work may have saved 20–25% of jobs involved corresponding to 2400 jobs in 2008–2009 and 921 jobs in 2010–2013 if extrapolated to the whole economy. This corresponds to 0.7% and 0.3% of employment in the respective sub-periods.
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