The introduction and/or extension of short-time work (government programmes that subsidised the salaries of workers whose hours were temporarily reduced for economic reasons) is a distinctive feature of this crisis (Box D) but all governments have gone further. Their action includes providing easier access to regular support instruments in the event of unemployment or sickness, a stronger emphasis on safety and health protection at workplaces, increased support for parents staying at home or additional child/family allowances. In addition, housing has emerged as a key area in limiting the negative social impact of the pandemic, with policymakers introducing measures to protect tenants and mortgage holders, such as support for payment moratoriums, suspension of evictions, or subsidies for rent and utility bills.
The pandemic highlighted some of the existing gaps in social protection systems. A lack of access can reduce their effectiveness in protecting people when they lose their jobs and income, fall sick or experience poverty. Typically, unemployment benefits and short-time work tend to be geared towards those on full-time permanent contracts. In contrast, non-standard workers, including the self-employed or those on part-time or fixed-term contracts, may lack adequate income protection and often face a higher risk of losing their jobs. Pre-crisis estimates suggest that non-standard workers are 40-50% less likely to receive income support during the periods they are out of work, and even if they do, the benefits tend to be less generous (OECD, 2019). Incentives for employers to use short-time work for non-standard staff are likely lower, particularly if firms expect some of the impact on employment to be permanent (see analysis in Chapter 2).
The prevalence of non-standard work differs across EU countries but is particularly frequent in certain sectors hit hard by the pandemic, such as hotels and restaurants or the arts and entertainment. Challenges for social policy mount in countries in which employment in these sectors is higher and non-standard employment more prevalent. Several Southern European countries appear to have a particularly high share of vulnerable workers (Figure C.1, upper-right quadrant). By socio-demographic group, women and younger workers seem more vulnerable and have a higher probability of being non-standard workers. Moreover, informal workers are a particularly vulnerable group with few entitlements and often have limited scope for claiming benefits.
Figure C.1
Total employment and non-standard employment in activities most affected by the pandemic
Source: OECD (2020a), OECD Annual National Accounts; EU Labour Force Survey Database; and OECD calculations, EIB Economics Department.
Note: Black lines indicate the EU average. Non-standard workers include those on temporary contracts or in part-time jobs, and the self-employed. Activities affected most by containment measures include wholesale and retail trade, accommodation and food services, real estate services and construction, professional service activities, other service activities and the arts, entertainment and recreation. See OECD (2020a) for further explanation.
Strengthening non-standard workers’ access to regular benefits and facilitating their inclusion in short-term work schemes have been a feature of COVID-19 policy responses, as a result of the spotlight cast by the pandemic on the existing gaps. Some countries have introduced special sectoral support and/or targeted measures for vulnerable groups. In Spain, for example, temporary workers whose contracts expired during lockdown before they reached the minimum contribution period for unemployment benefits received provisional allowances (ECIJA, 2020). Moreover, several countries have acted to support freelance workers and the self-employed. Relatively few actions have focused on informal workers (Table C.1).
Table C.1
Support for non-standard and vulnerable workers in the pandemic: Income replacement and support measures in EU Member States
Source: OECD (2020a).
Note: 1 Includes lump sum or temporary income replacement schemes; 2 access relative to standard workers assessed on the basis of the gap in the probability of benefit accessibility.
The pandemic is affecting social protection systems in the short term and may have long-term effects. Some of the measures introduced to protect workers are temporary, such as support for the self-employed via lump sum transfers, “employer salaries” or sectoral aid packages (such as for hospitality and the arts and entertainment). Other changes, for example improved access to benefits for temporary or part-time workers, might become permanent. They could be a step towards a gradual “update” of social protection systems to respond to more structural shifts in employment patterns linked to factors including developments following the global financial crisis and digitalisation. Closing some gaps could help to address the issue of rising inequalities that predated the pandemic, and prevent a further widening in its aftermath.
For housing, measures such as eviction suspensions or payment moratoriums are temporary and geared towards protecting vulnerable parts of the population. However, the pandemic has increased awareness of imbalances in this area. Inequalities in access to affordable, quality housing have widened in recent years, with rising housing costs contributing to the financial vulnerability of many households. Demand for housing is widely expected to receive a structural boost from the pandemic. Against this background, housing policy measures aiming to improve supply and guarantee well-functioning housing markets remain a key area for addressing inequalities.
Box D
How significant are the benefits of short-time working schemes for firms?
Participation in short-time work (STW) increased sharply as economic activity collapsed in the second quarter of 2020. STW schemes are part of a series of measures that provide support to firms (such as grants, equity injections, and loan guarantees) and households. At the end of May 2020, about one-third of employees participated in STW schemes in Austria, France and the Netherlands, and one-fifth in Germany, Spain and Ireland (OECD, 2020c). As economies recovered, participation declined (Figure D.1).
Figure D.1
Participation in short-time working schemes peaked during the lockdowns, percentage of employees
Source: For total employment (2019), OECD (2020b). Country-specific sources are Nombre de salaries effectivement places en activité partielle; DARES (2020), Situation sur le marché du travail durant la crise sanitaire au 29 septembre 2020 for France; Empfänger von Kurzarbeitergeld, Bundesagentur für Arbeit (2020), Monatsbericht zum Arbeits- und Ausbildungsmarkt, September for Germany; Personas incluidas en un Expediente de Regulación Temporal de Empleo (ERTE), end of month, Gobierno de Espana (2020), Afliliacion a al seguridad social, Balance mensual de la afiliación, 2 October for Spain; N. salariali Covid-19 erogate direttamente dall’INPS (CIGO, fondi di solidarieta, CIGD), Instituto Nazionale Previdenza Sociale (2020): “Integrazioni salariali Covid-19 erogate direttamente da INPS,” 1 ottobre for Italy.
The benefit that a firm derives from an STW scheme depends on how it would have behaved had the scheme not been offered. A key question is whether a firm only retained staff because it participated in the scheme or whether it would have retained the staff anyway. One factor influencing a firm’s response is the availability and cost of other mechanisms for adjusting its payroll. A firm operating under stringent employment protection laws and with contracts allowing it to adjust