Short-Time Compensation and Job Preservation

Research Report

Short-Time Compensation and Job Preservation

June 26, 2013


This paper examines recent labor market trends responsible for increased unemployment duration. It then introduces and describes short-time compensation (STC) programs as a way to preserve jobs and prevent unemployment. STC provides partial unemployment insurance (UI) benefits to eligible workers placed on short work schedules. These UI benefits provide partial compensation for the reduction in hours worked. STC programs cause hours reductions to be spread more widely within the workforce when compared to reductions through layoffs and help to maintain employment. The paper examines STC programs in the United States and in Belgium, Canada, Germany and Italy. It describes recent STC legislation in the United States and discusses way to increase STC utilization.

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