The “parking” of employees at the Public Employment Service (AMS) during off-seasons in tourism or during lulls in the construction sector causes annual costs of 600 to 700 million euros. These costs are for unemployment benefits, emergency assistance, and social security contributions that the AMS must pay for the job seekers. This is the finding of a current study by the Austrian Institute of Economic Research (WIFO), commissioned by the Upper Austrian Chamber of Labor (AK OÖ).
“Instead of employment income, the affected individuals only receive unemployment benefits or emergency assistance, while businesses save on all personnel costs during this time and are not required to make any compensation payments to the AMS,” criticized the AK OÖ in a press release on Thursday. Too many companies, it said, are shifting their entrepreneurial risk and personnel expenses onto the public.
AK: Temp Agencies Use “Parking” as a Business Model
Among temporary employment agencies, this “parking” practice is “obviously part of the business model.” “Profits are privatized while the public bears the costs. Many rehires by the same employer occur after just a few weeks,” the Chamber of Labor warned.
The practice of “parking” employees at the AMS across all industries increases Austria’s unemployment rate by about one percent. “Instead of 6.9 percent, we would be just under six percent without this practice,” the Chamber calculated. It also warned: “This system has severe consequences for the affected workers, who suffer significant income losses and often find themselves stuck in a recurring cycle of unemployment and short-term rehiring,” said AK Upper Austria President Andreas Stangl.
Massive Income Losses for Employees
The Chamber further stated: Around 47,000 companies rehire former employees after up to one year of unemployment. Looking only at short breaks of up to two months, the share was still 12.1 percent. “Over 82,000 workers suffered up to two months of massive income loss, since unemployment benefits cover only 55 percent of net income. For another 88,000 workers, the income loss lasted between two and twelve months,” the Chamber said, citing the WIFO study.
Stangl is calling for companies to contribute to “the costs they cause” through these “temporary layoffs.” Additionally, he said short-time work should be reestablished in companies’ thinking as a viable alternative to layoffs, and that enforcement of the early warning system should be tightened.
