The Importance of Temporary Layoffs in Austria

In order to compensate short-run fluctuations in labour demand, some firms temporarily lay off workers when facing a decline in product demand and rehire them later when demand for labour rises again. They shift part of their labour costs to social security, since many of the dismissed workers receive unemployment insurance benefits during layoff. This flexibilisation strategy constitutes an important feature of the Austrian labour market: recalls within a time span of six months – after a temporary layoff with unemployment – accounted for 11.8 percent of all employment take-ups and for 6.5 percent of the annual average stock of employment episodes in 2013. Registered unemployment during temporary layoffs amounted to 12.7 million days, which corresponds to one-eighth of the total amount of registered unemployment. The associated costs were roughly € 360 million.