ABSTRACT
The quantitative importance of obligatory social welfare taxes and their role in influencing firms’ employment decisions render them potentially important policy instruments to governments. Of particular interest in this direction is the feasibility of altering the structure of labour costs to the firm in order to encourage ‘worksharing’. By worksharing is meant spreading the existing work available among more workers with the aim of reducing the actual, or potential, rate of unemployment. Interest in worksharing has been rekindled in recent times not only because of the severe nature of the current recession but also because of the political climate prevailing in several major OECD countries under which economic solutions have been sought. The picture is one of unemployment rates, accounted for mainly by relatively long spell-lengths, that have reached post-1930s record levels but that have also coincided with the emergence of a more conservative strain of economic and political ideology within government. Towards the late 1970s, inflation, like unemployment, reached record postwar levels and became the preoccupation of finance ministers throughout the OECD. Their weapons have been controlled real money growth, balanced budgets, high interest rate policies-the very antithesis of expenditure-led recovery. The subject of worksharing has returned to the fore because, whatever the existing counter-arguments, it seems to provide a non-expansionist solution, albeit partial, to the problems of high and long-term unemployment.
