The Connecticut DOL describes it as:
a voluntary program providing an alternative to layoffs for employers faced with a temporary decline in business. Rather than laying off a percentage of the work force to cut costs, an employer may reduce the hours and wages of all or a particular group of employees. The employees whose hours and wages are reduced can receive partial unemployment insurance benefits to supplement their lost wages. These partial benefits are made possible through special eligibility regulations governing the Shared Work Unemployment Compensation Program.
On Tuesday, The New York Times profiles the Connecticut program and others saying that "many are turning to a novel but unheralded program that cuts their costs while sparing their workers’ jobs."
Putting aside for the moment the specious claim of "many", the article does say that as many as 5000 Connecticut employees are in the program, up from just 250 a year ago.
So, does it work? Well, the answer is not that clear cut yet, at least according to the article. But some executives believe in the benefits:
Several executives that use work-sharing explained companies’ choices. Needing to cut payroll by 10 percent for six months, recession-plagued managers could lay off 10 percent of their workers, perhaps incurring anger and heavy severance payments. Or they could use work-sharing, avoiding severance payments and the expense of rehiring and retraining later.
“Just the ability to hang on to people in tough times and not force them out the door is good for morale,” said David Edgar, vice president for human resources at Reflexite, a manufacturer based in Avon, Conn., that makes reflective material for highway signs, motorcycle helmets and roadwork vests.
The Connecticut DOL does indicate that it believes employers can recognize the following advantages to using the program:
- Retain all workers
- Maintain the continuity in your skilled work force.
- Be prepared for business upswings because your work force remains in place.
- Avoid the time and expense of training new employees when business turns around.
- Foster better morale in your employees because you avoid the insecurity, unrest, and bumping characteristic of most layoffs.
For employers who are continuing to struggle through this recession, having more options is never a bad thing.