1. Short-time work: the ultimate flexibility measure or just a springboard to unemployment?
Dimitris Pavlopoulos
(Vrije Universiteit Amsteram)
Katja Chkalova
(University of Amsterdam and Statistics Netherlands)
Dimitris Pavlopoulos

2. Short-time work: deeltijd-WW
(temporary) Unilateral reduction of working hours
Companies could use it for up to weeks
Workers could be set to deeltijd-WW for up to 52 weeks (4x13 or 2x26)
Training agreements
Consent of employment agency and works council was necessary
Partly laid off workers could use unemployment insurance
In the Netherlands: temporary measure (April June 2011) for the unemployment effects of the crisis
In other countries (e.g. Belgium): structural measure
Internal flexibility measure
Dimitris Pavlopoulos

3. Aim of short-time work in the Netherlands
Reduce unemployment
Part-time lay offs as an alternative!
Help firms to preserve highly skilled workers in times of low demand
Consequence: group of workers in short-time rather homogeneous:
Prime age males, highly skilled/specialized in specific sectors (mainly metal industry, wholesale and retail)
Dimitris Pavlopoulos

4. Some numbers The arrangement was used: By 7.836 companies
For workers, 0.99% of the workforce on average for 70% of their time
The peak was workers (October 2010)
Cost for the government: €360 million
Dimitris Pavlopoulos

5. Previous findings
Research only at the company level (Hijzen and Venn, 2011; de Groot et al, 2012) !
Main results from estimation:
Reduction of the unemployment rate by %
To put this in perspective: unemployed in February 2010
Perceptions:
Different perceptions between employers and workers.
78% of employers (34% of workers) thought that there would have been more lay offs without deeltijd WW
Dimitris Pavlopoulos

6. The whole story remains unknown…
The arrangement was meant to save jobs
But, how did it really work?
How does it relate to the use of other flexible arrangements by the firm?
Moral hazard – misuse was possible
What if companies wanted to get rid of certain workers?
Short-time work would be the first step
Possible negative effects on the individual worker
Dimitris Pavlopoulos

7. Aim of the paper
Does participation in deeltijd-WW protect from unemployment or leads to job change?
How is deeltijd-WW related to the use of flexible contracts by the company?
Dimitris Pavlopoulos

8. Data and method
Data from the CBS ( ): 33,980 in the experimental group, 31,948 control group 1 and 26,345 in control group 2
Control group: (1) workers from companies using deeltijd-WW and (2) companies not using short-time
Selection at the peak of short-time
Stratified sample with firm size
Method: competing risks discrete duration model
Risk set: workers excluding companies that went bankrupt
Short-time workers included only after leaving short time
Competing risks: unemployment and job change
Unobserved heterogeneity: 2 mass points
Dimitris Pavlopoulos

9. Descriptives 12.4% 29.3% 20.5% 10.7% 35.7% 44.7% 1.4% 5.8% 3.3% 13.5%
Short-time workers
Non-participant colleagues
Non-participant non-colleagues
Temporary contract
12.4%
29.3%
20.5%
Female
10.7%
35.7%
44.7%
younger than 26
1.4%
5.8%
3.3%
26-35 years
13.5%
16.8%
17.0%
36-45 years
28.4%
26.9%
26.8%
46-55 years
35.9%
29.9%
30.8%
older than 55
20.8%
20.6%
22.1%
Less than €1927
7.5%
29.4%
25.3%
€1928-€2640
26.7%
18.0%
€2641-€3138
30.6%
16.5%
15.4%
€3139-€3984
21.1%
17.5%
19.0%
More than €3984
14.1%
19.7%
22.2%
Dutch
77.9%
81.1%
82.9%
Europe, North America, Oceania, Indonesia or Japan
10.0%
9.6%
7.1%
Africa, South America, Asia (rest)
8.2%
8.1%
9.0%
Unknown
3.8%
1.3%
1.1%
Dimitris Pavlopoulos

10. Results Model 1 Model 2 Unemployment Duration dependance (logarithmic)
0.338***
0.354***
[0.019]
Control group 1: same firm – no STW worker
0.010
-0.742***
[0.046]
[0.082]
Control group 2: firm not using STW
0.147*
-0.745***
[0.081]
[0.263]
Control group 1 *
0.503***
0.573***
Temporary contract
[0.099]
[0.098]
Control group 2*
0.321**
0.423***
[0.126]
[0.125]
Average % of hours in short time in the firm
0.013**
[0.006]
Share of STW workers in the firm
-0.027***
[0.002]
0.001
0.019***
* significant at the 10% level, ** significant at the 5% level, *** significant at the 1% level
Results
Control variables: gender, age, age squared, wage, ethnicity, firm size, industry, revenue change
Dimitris Pavlopoulos

11. Model 3: share of temporary contracts
Duration dependance (logarithmic)
0.354***
[0.020]
Control group 1: same firm – no STW worker
-0.493***
[0.090]
Control group 2: firm not using STW
1.422***
[0.265]
Interactions with
Control group 1
Control group 2
Low share of temporary contracts in the firm
(ref almost zero)
0.482***
0.180
[0.106]
[0.164]
Medium share of temporary contracts in the firm
0.409***
0.111
[0.115]
[0.170]
High share of temporary contracts in the firm
-0.120
-0.514***
[0.134]
[0.191]
* significant at the 10% level, ** significant at the 5% level, *** significant at the 1% level
Results
Control variables: gender, age, age squared, wage, ethnicity, firm size, industry, revenue change
Dimitris Pavlopoulos

12. Model 3: share of temporary agency workers
Results
Model 3: share of temporary agency workers
Duration dependance (logarithmic)
0.356***
[0.020]
Control group 1: same firm – no STW worker
-0.587***
[0.075]
Control group 2: firm not using STW
0.984***
[0.271]
Interactions with
Control group 1
Control group 2
Low share of temporary agency workers in the firm (ref 0)
0.629***
0.435***
[0.084]
[0.144]
Medium share of temporary agency workers in the firm (ref 0)
0.455***
0.467***
[0.093]
[0.149]
* significant at the 10% level, ** significant at the 5% level, *** significant at the 1% level
Control variables: gender, age, age squared, wage, ethnicity, firm size, industry, revenue change
Dimitris Pavlopoulos

13. What do we learn?
Short-time work has a more positive effect than we thought!
A firm-level explanation is not enough
STW participants are worse out within the firm
The use of external flexibility is relevant
Especially when talking about really external flexibility
Positive effects of STW stronger when firm has external flexibility
Negative (within firm) effects of STW smaller when firm has external flexibility
Dimitris Pavlopoulos