Who Benefits Politically From Short-Time Work Policy? Evidence from Germany

This blog is based on an article in the Journal of Social Policy.  Click here to access the article.

In times of crisis, for example during a financial crisis or pandemic, governments use short-time work policies to avoid rising unemployment rates. These measures are wage subsidies for workers, paid by the state to companies during a limited period. In exchange, companies will not lay off employees.

Short-time work programmes seem to be a low-hanging fruit for governments as they promise an effective solution in times of crisis and thus promise electoral credit. Therefore it is important to find out whether parties in government actually profit from short-time work policies on election day. Notably, it is interesting whether such policies reward left parties, which are traditionally advocating the rights of workers.

We conducted empirical research using data from the 2009 federal elections in Germany. Prior to this election, the national government had augmented short-time work to cushion the impact of the financial and economic crisis 2007-2009. The prevalence of short-time work varied across different regions in Germany. We use this regional variance to assess whether differences in short-time work rates can explain the results of the federal election. The general expectation was that in regions where short-time rates are higher and thus workers benefit from government intervention, voters would overall be more satisfied with the government and support it on election day.

Prior to the 2009 elections, a grand coalition of the Christian Democrats (CDU) and Social Democrats (SPD) was in government. The SPD was in charge of the ministry of labour that administered the short-time work programme. Theoretically, we expect that voters either reward both governing parties for short-time work measures, or that they support especially the social democrats in government as they are considered competent and responsible for policies preventing unemployment, such as short-time work.

Figure: Short-time work and electoral returns for parties in government

Picture 1 

Our results show a mixed picture. If we look at the link between short-time work rates at the regional level, both governing parties, but especially the SPD, seem to profit in regions where the share of short-time work is higher on election day. Nevertheless, if we take a look at the individual level and assess whether those voters who actually received short-time work are more likely to vote for a governing party or the left party in opposition, the results are different. In this instance, we do not find that short-time work increases the likelihood to vote for one of the governing parties or for the social democrats only.

We interpret this finding as follows. Left parties, especially social democrats, can profit electorally from introducing short-time policies. Voters seem to reward these parties for their policy efforts in constituencies where short-time work take up is high. Nevertheless, these positive rewards for moderate left parties were not enough to avoid high losses for the social democrats during the national elections of 2009. Thus, even against the background of an economic crisis, voters did not consider effective anti-crisis labour market policies sufficient to reward the social democratic parties with an overall electoral victory.

What are the implications of our results for political parties, and especially for left parties? On the one hand, our findings fit those results in the literature that argue that social democrats have faced declining voter shares amongst their traditional blue-collar constituency, who likely benefitted the most from short-time work. According to this story cultural policies, such as migration, freedom of movement, abortion rights and other post-materialist issues, have substituted the conflict between capital and labour. Thus social democrats should focus their political agenda more on the so-called cultural dimension.

On the other hand, our findings also show that social democratic parties benefit from labour market policies, such as short-time work, to a larger extent than conservative parties. Given that social inequality within and across nations is increasing, it is possible that economic issues will gain importance again.

The covid-19 pandemic has triggered demands for short-time work and interventions to absorb the negative economic impacts of this crisis. If the crisis has lasting effects on economic growth and the job market, there is an opportunity for left parties to regain influence in advocating social protection in times of global turbulence.

This would give these parties an opportunity to regain more political influence through a narrative that focuses mainly on the traditional agenda of left parties’ economic policies and workers’ rights and protection in particular. Furthermore, restructuration trends in the context of the digital revolution might be a window of opportunity for these parties as well. Notably, the digitalization of the labour market, and in particular the increasing share of precarious and self-employed workers with few rights in the gig-economy, will create new losers who will demand social and labour market protection.

As our analyses show, left parties are still perceived as credible advocates for groups that are vulnerable to economic and social change.

About the authors

Flavia Fossati is Assistant Professor at the University of Lausanne.

Philipp Trein is Senior Researcher at the University of Lausanne.


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