While most of the developed countries are struggling to cope with large-scale layoffs, Germany has been actually busy creating for its people. An puts this near-miraculous drop in Germany’s unemployment rate largely down to Kurzarbeit or short work.
Basically, what this means is that when business is slow, companies cut workers’ hours instead of firing them straightaway and the government makes up for some of the lost hours’ wages. Thus, it actually creates a sort of a win-win situation for everyone involved: the employees don’t lose their jobs and the company doesn’t have to go looking for skilled workers when the economy bounces back. Of course, it’s not as ideal a situation as full employment, but you know what I mean.
This got me thinking about whether such a practice could be adapted to the US small business scene at all and how it would work out. Small businesses were long thought to be more self-sustaining than their larger counterparts and though this is still largely true, they haven’t been spared of the bad times, either. Increasingly, they have had to let people go, too.
So, would Kurzarbeit work for smaller companies? What can it mean for them and their employees? Some thoughts:
Time-off for an overworked country: Americans are a notoriously overworked people and they could perhaps do with some extra hours to catch up with family and friends and also on the things generally squeezed out of busy work days. They could use the extra time to do some stress-busting activities like yoga, learn music, or read.
Time enough for another job: This directly contradicts what I have said above. But both of them do translate positively. If you are lucky enough to get another job, you have the chance to make up for the lost income from the first job; else you already know what you can do with your free time.
Need to plan ahead and come clean: Though Kurzarbeit sounds neat, actually implementing it may be dicey for small business owners. Unlike big corporations that have the resources to help them predict when the next surge in business may come (not that their predictions come true all the time), small businesses may have times when there’s some increase in activity followed immediately by a lull. How do employers cope with such volatility? Can they tell their employees that they will be needed for 20 hours this week and for 30 hours the next? Nah, we didn’t think so either: it’s quite guaranteed to rub staff the wrong way.
Will Uncle Sam pay? The concept of Kurzarbeit comes from a country with a much wider social security net than that of the US. One big reason why it worked in Germany is that the government made up for the lost wages. So, it follows that the success of Kurzarbeit in the US depends largely on whether we can hope for similar generosity from the government.
And, there’s no reason why the government won’t bite. After all, it already doles out unemployment benefits, doesn’t it? Bearing part-time wages may, in fact, be profitable to the government than paying for total unemployment.
Letting people go is often the last resort and if Kurzarbeit can at all be implemented, it will help entrepreneurs from burning a lot of bridges that they may find difficult to build later.