Building effective short-time work schemes for the COVID-19 crisis

Published on 1 April 2020

Short-time work is a subsidy for temporary reductions in the number of hours worked in firms affected by temporary shocks. Evidence suggests that it can have large positive effects on employment and can be more effective than unemployment insurance or universal transfers. This column discusses how the COVID-19 crisis – with its mandated reduction in hours of work and massive liquidity crunch for firms – is a textbook case for the use of short-time work. Taking into account available evidence and the current situation, it proposes guidelines to effectively implement short-term work.

Short-time work is a subsidy for temporary reductions in the number of hours worked in firms affected by temporary shocks. Evidence suggests that it can have large positive effects on employment and can be more effective than unemployment insurance or universal transfers. This column discusses how the COVID-19 crisis – with its mandated reduction in hours of work and massive liquidity crunch for firms – is a textbook case for the use of short-time work. Taking into account available evidence and the current situation, it proposes guidelines to effectively implement short-term work.

    Authors

    Camille Landais
    Camille Landais

    Research Fellow London School of Economics and Political Science

    Camille is a Research Fellow at IFS, a Director of the CEPR Public Economics Program and a Professor of Economics at the London School of Economics.

    Giulia Giupponi
    Giulia Giupponi

    Research Fellow Bocconi University

    Giulia, an Assistant Professor of Economics at Bocconi University, studies the employment and welfare effects of social insurance and minimum wages.

    Report details

    DOI
    10.1920/re.ifs.2024.0411
    Publisher
    IFS

    Suggested citation

    Giupponi, G and Landais, C. (2020). Building effective short-time work schemes for the COVID-19 crisis. London: IFS. Available at: https://ifs.org.uk/publications/building-effective-short-time-work-schemes-covid-19-crisis (accessed: 15 January 2025).

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