According to a report released by Eurofound, the Dublin-based EU social policymaking agency, there are signs that EU governments and companies are opting for employment-maintaining initiatives - as opposed to redundancies and lay-offs - as they look to ride out the current storm of financial chaos.
Many employers across Europe are reportedly laying off workers as a last resort, opting instead for three types of initiative: short-term work, paid or unpaid sabbaticals and 'pay for jobs' clauses in restructuring agreements. Negotiated reductions of working time are also balanced by increased training opportunities.
The rationale for such measures, Eurofound has stressed, is that upskilling during a period of reduced demand retains qualified staff, enhances human capital and preserves internal flexibility schemes in anticipation of a recovery, expected in 2010-2012.
'Time banking' arrangements
The automotive and steel sectors have been adjusting to the downturn by announcing temporary plant closures in 2009. According to Eurofound, Honda opted to close its UK plant in Swindon for four months from February to May this year, while Renault Trucks will close three of its French plants for three months in 2009.
At Honda, the closure will affect 2,500 of its 3,700 employees, who will receive their full basic pay for the first two months and around 60% for the remainder. When the plant reopens in June, employees will have to work unpaid overtime equal to the amount they have been paid for over the four-month period. Similar 'time banking' arrangements are also in place at Bentley and Aston Martin.
Short-term work schemes
Faced with different national labour laws and collective bargaining agreements, other member states are opting for short-term work schemes.
The Netherlands, Austria, Germany and France, for example, have put in place short-term compensation programmes, whereby employers can apply for temporary state assistance to top up wages for reduced hours, pointed out the Eurofound report.
The European Commission is encouraging the use of EU structural funds to support training during reduced working hours. "In normal times, this money would be considered state aid, incompatible with EU law," said Commission President José Manuel Barroso last week. But by doing so, he said, "we are keeping workers in their jobs, working less and investing in their own training and in their own future".
'Sabbaticals' instead of lay-offs
Another means of retaining staff and seeing out the crisis is offering paid career breaks. Such initiatives seem particularly prominent in the banking and insurance industries.
The Eurofound report quotes two examples. IrishLife & Permanent's banking unit offered two and three-year paid breaks. Since October 2008, when the plan was launched, 140 of the bank's 2,500 employees – primarily young staff - have applied to take up the firm's offer of 20,000 euro for a two-year break and up to 35,000 euro for a three-year break.
The UK's KPMG has also offered a similar sabbatical, although for a shorter period of time. "Employers support any kind of flexibility to retain skilled work-force in very difficult times," noted BusinessEurope President Ernest-Antoine Seillière.
