This research studies the impact of the Belgian short-time work (STW) compensation scheme (known as “temporary unemployment”) on economic and psychological outcomes in the short and longer term. STW is a policy instrument installed at the federal level to avoid the costly process of separation and re-hiring during the temporary reduction in production and demand and may thereby also avoid the bankruptcy of firms. From the employees’ perspective it avoids the social cost of unemployment and reintegration into the labour market.

Our main objective is to assess the effectiveness of STW from both an economic and psychological perspective. From an economic viewpoint, the effectiveness of the scheme will necessarily decrease over time and even can become an obstacle to economic recovery: Worker reallocation from declining to expanding firms is likely to be postponed and the (re)allocation of unprotected groups may be hampered by the extension of STW. From a psychological viewpoint, STW may have, though unintended by employers, a dark side. STW may feed employees’ feelings of job insecurity and organisational dehumanization (to feel treated as an instrument by the organisation). Conditional upon the way STW is introduced and communicated, this may have negative consequences for employees’ health and well-being, attitudes towards work and the employer, and behaviour at work. As well, it could lead to career penalties in the longer term.

In the research, we will pay specific attention to (1) the heterogeneity across workers (e.g. by gender and age) and firms (e.g. by size and sector); and (2) differences between regular vs COVID 19-related STW; and (3) effectiveness relative to other schemes (e.g. standard unemployment insurance). Supported by a sound theoretical approach in labour economics and work and organisational psychology, the analysis will be based on both micro-econometric evaluation methods using register files and on longitudinal cross-lagged surveys. We also aim at integrating the two main disciplinary perspectives in some specific research questions which focus upon career outcomes. In the final stage of the research, we will bring together the findings from the two disciplines and the existing literature. Based on this integrated view, we will formulate guidelines for the design of STW policy in Belgium.