Work Share Programs – An Alternative To Layoffs

 Oregan has incorporated a state program that provides an alternative to laying off workers.

The Work Share Program

How the Program Works:

Under the Work Share program, you reduce the workweek of your staff by 20% to 40% percent.  Workers who qualify for unemployment insurance benefits receive both wages and Work Share benefits.  Workers receive a percentage of Unemployment Insurance benefits equal to the percentage of the reduction in their workweek.

Example:  an employer needs to reduce work hours by 20%. Instead of letting go one fifth of the work force, the firm reduces the hours of work for all its workers by 20%.  An employee who works five days a week and earns $500 would now work four days per week and earn $400.  If the employee in this example is normally eligible for $275 a week in unemployment insurance benefits, the person would receive $400 in wages and $55 in Work Share benefits for the week (20% of the $275 weekly benefit).

Advantanges and Disadvantages

For Employers
Advantages

  • Maintains existing productivity and quality levels since the same employees are doing the same jobs.
  • The capability to expand business rapidly with a fully trained work force when economic conditions improve.
  • Reduces training costs because a company’s work force remains intact. Workers do not have to be reassigned and retrained for new duties.
  • Reduces administrative costs. Work Share avoids changing work schedules, transfers, bumping and downgrading common in layoffs.

Disadvantages

  • Increased overhead costs if fringe benefits stay the same.
  • Employers who have higher tax rates will have to make additional payments to the Unemployment Trust fund.  How the Work Share plan affects your tax charges can be discussed with an Employment Department Work Share representative.

For Employees
Advantages

  • Employment skills are maintained.
  • Newly hired workers remain employed rather than being laid off.
  • Reduces fringe benefit loss (primarily life and health insurance and pension rights) associated with unemployment.

Disadvantages

  • Senior workers may see a loss of income if their workweek is reduced. This might not occur if the employer laid off workers with less seniority.
  • Fringe benefits may be reduced along with the workweek.
  • Unemployment insurance benefits, which may be needed later in the event of a total lay off, are being used now.

A 2009 report in Workforce:

The report released Friday, March 27, says just 17 states have work-sharing programs, which allow employers to reduce work hours instead of jobs. States that have the programs have seen a spike in use, according to the study from the Center for Law and Social Policy (CLASP).

The concept of work sharing, also practiced in Germany, is becoming a topic of greater debate globally as companies, workers and political leaders wrestle with the economic slowdown.

“Work sharing benefits employees and employers,” Neil Ridley, CLASP senior policy analyst and study author, said in a statement. “It allows employees to retain their jobs and benefits during tough economic times, it allows employers to retain their trained employees, and it reduces the number of people out of work.”

Work-sharing programs within the unemployment insurance system allow an employer to cut costs temporarily by decreasing the number of regularly scheduled work hours for the entire workforce or business unit, the report says. (full story).

Just maybe if more states look into this program there may be a possibility that the unemployment figures may decrease while at the same time provide families a way to stay employed during this economic crisis.

 


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One Response to Work Share Programs – An Alternative To Layoffs

  1. I honestly knew about a lot of this, but with that said, I still believed it had been useful. Fine job!

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