![]() This strengthens incentives to use subsidies for jobs that are viable after the crisis and to increase working hours as soon as possible. Gradually increase firms’ contribution to the costs of hours not worked as the health and economic situation improves. Governments have a number of levers that they can use to adapt support as they start re-opening their economic sectors: ![]() Going forward, job retention schemes need to adjust their focus to targeting jobs that are likely to be viable in the short- to medium-term and may also need to be differentiated between sectors whose activity remains legally curtailed and those where activity is resuming. Moreover, JR schemes tend to provide stronger support than unemployment benefits to workers who are temporarily not working, mitigating financial hardship for many workers and supporting aggregate demand. In most countries, these schemes allow firms to adjust working hours at zero costs, greatly reducing the number of jobs at risk of termination as a result of liquidity constraints and preventing a surge in unemployment. Across the OECD, they supported over 50 million jobs, ten times as many as during the global financial crisis of 2008-09. The objective of this Brief is to discuss the main features of JR schemes deployed by countries during the COVID‑19 lockdown, and how they should be adjusted as restrictions to economic activities are gradually being withdrawn to continue to protect viable jobs without hindering the reallocation of employment towards expanding firms and sectors.ĭuring the early stage of the COVID‑19 crisis, countries have acted decisively to save jobs by scaling up existing job retention schemes or introducing new ones. However, as countries move out of the strict confinement phase, policy makers have to strike the right balance between ensuring adequate support for jobs that are temporarily unviable and limiting the extent to which subsidies reach jobs that would be preserved anyway or that are unviable in the long term. These schemes provide the necessary liquidity to firms to hold on to their workers, including their talent and experience, and allows them to ramp up operations quickly once economic activity recovers, without having to go through the process of hiring and training new workers. To maximise take up, many governments have modified existing JR schemes or introduced new ones. ![]() In the early stages of the COVID‑19 crisis, the overriding concern for governments has been to help firms and workers deal with the sudden and unpredictable decline if not full shut-down in business activity resulting from the government-imposed restrictions to contain the spread of the COVID-19 virus. A crucial aspect of all JR schemes is that employees keep their contracts with the employer even if their work is suspended. They can also take the form of wage subsidy (WS) schemes that subsidise hours worked but can also be used to top up the earnings of workers on reduced hours, such as the Dutch Emergency Bridging Measure ( Noodmatregel Overbrugging Werkgelegenheid, NOW) or the JobKeeper Payment in Australia. They can take the form of short-time work (STW) schemes that directly subsidise hours not worked, such as the German Kurzarbeit or the French Activité partielle. JR schemes seek to preserve jobs at firms experiencing a temporary reduction in business activity by alleviating firms’ labour costs while supporting the incomes of workers whose hours are reduced. By May 2020, JR schemes supported about 50 million jobs across the OECD, about ten times as many as during the global financial crisis. ![]() ![]() Job retention (JR) schemes have been one of the main policy tools in many OECD countries to contain the employment and social fallout of the COVID‑19 crisis. ![]()
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