A Theoretical Review of Work Sharing: An Analysis of the Nigerian Economy

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A Theoretical Review of Work Sharing: An Analysis of the Nigerian Economy

Following economic recessions which increase the rate of unemployment among nations of the world, with Nigeria having an increase from 5.8 per cent in 2008 to 19.7 percent in 2010, several measures are put in place to check such an economic menace. Among these, work sharing has received significant attention in the literature especially in the developed world. This paper reviews the concept ofwork-sharing and how it is applied to reduce unemployment during economic downturn with a view to assessing work-sharing as a possible solution to unemployment during economic recessions. It concluded that, work sharing in Nigeria would not have prevented the job loss of all, or even most, of the workers who have lost their jobs since the start of the recession. However, it can save some jobs and thus have a positive effect on the financial well-being of those who would otherwise be out of work.

Introduction

Work sharing is an approach to avoiding layoffs during economic downturns that reduces work hours in a firm and spreads the remaining work among employees who might otherwise be let go (ILO, 2004). It is a reduction of working time intended to spread a given volume of work over a larger number of workers in order to avoid layoffs or increase employment. Work sharing spreads the burden of a downturn more evenly across more workers than does a layoff, which typically targets fewer employees who suffer much larger losses in income. For example, rather than terminate 20 percent of a firm, division, or department in response to reduced demand, an employer might scale back the hours of some or all employees by 20 percent - shifting perhaps from a fiveday to a four-day week - to accomplish the same 20 percent reduction in hours worked.

The promise of work-sharing rests on the belief that firms, compelled to reduce their employees' hours of work through either union contract or government regulation, will replace the lost hours of current employees with new employees. On the assumption that marginal increases in hours of work are valued more by the jobless than the employed, initiatives to encourage such a redistribution of work are seen as having the potential to reduce unemployment rates and raise social welfare (Skuterud, 2007).

The decrease in working hours is mostly coupled with cuts in wages and benefits, which, in turn, may be partially compensated by government wage subsidies or often social benefits (e.g. unemployment compensation). The extent of the reduction in workers' wages and benefits may or may not be proportional to the extent of the reduction in working hours (Oladele, 2008).

What Work Sharing Is Not

Work sharing is not the same as job sharing, although the terms are often confused. For example, a United State National Public Radio blog was titled "Cure for U.S. Unemployment Could Lie in German-Style Job Sharing" (James, 2009). This blog was actually referring to work sharing, which, as noted above, is a temporary arrangement that reduces the work hours of employees to save jobs during periods of reduced business demand. Job sharing is a flexible work arrangement under which workers (usually two) share a full-time job, enabling each of them to better balance their paid work and non work responsibilities and interests. Job sharing can be a temporary or permanent arrangement. Also, work sharing does not refer to any cut in hours resulting from structural changes in the economy and a corresponding longer term decline in the need for labour (AARP, 2010).

Job-sharing, by contrast, refers to a voluntary arrangement whereby two persons take joint responsibility for one full-time job and divide the time they spend on it according to specific arrangements made with the employer. A common form of job-sharing is to split one full-time job into two part-time jobs. Unlike work-sharing, job-sharing is generally not used as a measure to avoid layoffs or increase employment (ILO, 2004). …