Shared work compensation -- a way to limit layoffs?
To millions of workers and thousands of company executives, the problem is all to familiar: The factory is producing more than it can sell. Production must be cut. Eventually, workers must be laid off.
Now, after a brief trial in California, an alternative that could prevent many layoffs is being examined by employment officials in several states. Called "shared work compensation," the concept started in mid-1978 in California as an experiment will be continued until at least the end of 1982. And recently , state officials indicated it will be made permanent, says Fred Best, who is evaluating the program for the state Department of Industrial Relations.
One of the idea's busy advocates, C. F. Koziol, corporate director of personnel administration at Motorola Corporation, gave a simplified example of shared work compensation in practice:
If a company has 500 employees and had to reduce its work force by 20 percent , it might normally lay off 100 people. with shared work compensation, everyone would simply work fewer hours -- the equivalent of a four-day week. Thus all workers, regardless of seniority, would bear the burden brought on by an economic downturn. In addition, the state would compensate the workers for the time they were not at the job. This is what separates shared work compensation from ideas such as "job sharing" or "work sharing," which do not include unemployment benefits, Mr. Koziol pointed out.
It is also the reason companies like Motorola cannot go ahead and start such schemes on their own. Because almost all state unemployment programs require the recipient to be totally laid off before he or she can receive compensation, individual state laws will have to be rewritten to permit benefits for partial layoffs. So far California is the only state to have made this move.
Mr. Koziol believes there are several advantages to the shared work compensation plan. For one thing, instead of being laid off, the employee keeps his job, along with his seniority, fringe benefits, and job classification. Also, recently hired workers, usually the first to be laid off, have more job security.
For the employer, the plan cuts down the number of employees -- many of whom might have been expensive to train -- who go out and find new jobs. Thus it keeps them available for the day economic conditions improve enough to put them back on a full-time basis.
So far, labor unions have been somewhat lukewarm toward the idea. Feeling that seniority and the maintenance of wage levels are too fundamental to be compromised, they have urged states not to be too hasty in adopting shared work compensation.
"Why does the government spend money to make it easier for people to be out of work when we should really be working to provide jobs?" asked Jesse Baptista, business agent for the International Association of Machinists local in San Francisco. Shared work compensation should be used only as a "last-resort," Mr. Baptista said. Under the California program, some businesses have laid off several workers and put the rest on shared layoffs, he charged.
The next state to implement shared work compensation may be Arizona. Mr. Koziol has been spending a lot of time traveling between Motorola's Schaumburg, Ill., headquarters and that state, where the company is the largest employer. The state recently completed a survey of executives, union officials, unemployment compensation claimants, and the general public to see if the idea would be acceptable.
"The results were quite favorable," reported Robert St. Louis, an official of the Arizona Department of Economic Security. In the survey 67 percent of the union leaders, 63 percent of the employers, and 74 percent of the workers approved of the idea.
"On the basis of the survey, a group within the state [the Arizona Association of Industries] will propose legislation" that would permit such a program to be started there, Mr. St. Louis said.
Motorola's Mr. Koziol is also doing some traveling to Washington, where Congress has been examining bills that would help states start shared work compensation programs.
While California is the only state to have a full-scale shared work compensation program, other states, are trying to find ways to "share the misery" of an economic downturn.
In Michigan, all state employees will take six days off without pay this year , an effort that will save the state some $23 million in salaries, says Lt. Gov. James H. Brickley, who, along with Gov. William G. Milliken, is included in the unpaid day-off plan. The first employees in the state to work under this system , Mr. Brickley said, were the state police, who volunteered to take a 5 percent cut in the number of hours they worked, rather than see 5 percent of their members laid off.
"I don't believe we've lost very much in protection," he noted.
Coming from a state with the highest unemployment rate in the nation at 12.2 percent the lieutenant governor favors the shared work compensation idea, if it can put some of the state's jobless back to work -- even if on a part-time basis.
Mr. Brickley testified before the House Ways and means Committee last year in support of a bill sponsored by Rep. Patricia Schroeder (D) of Colorada. The bill would provide technical assistance and information to states that want to start shared work compensation programs of their own. The bill would also have provided "a small appropriation to assist states with some of the additional costs" incurred in starting the program, said Linda Ittner, an aide to Representative Schroeder.
While the bill introduced in the last Congress did not survice the crush of election-year business, Representative Schroeder is sponsoring a similar bill this year, Ms. Ittner said.