Business-related Service Providers React to Fluctuations in Demand by Offering Overtime and Short-time Work

Business-related service providers make overwhelming use of overtime and short-time work as a solution for cyclical and seasonal changes in demand. Working lifetime accounts and part-time work play a fairly insignificant role.

This is the result of the latest representative survey carried out by the Centre for European Economic Research (ZEW) in Mannheim, in collaboration with the "Verband der Vereine Creditreform" in Neuss, in the fourth quarter of 2000, amongst business-related service providers. This survey is carried out quarterly, and concerns approximately 1,100 businesses in the following sectors: tax advisors and certified accountants, business consultants, architects, technical planners, vehicle rental companies, machine rental companies, cargo handling and logistic firms, software providers, advertising agencies and waste disposal firms.

The survey reveals that business-related service providers most commonly respond to changes in demand by making use of overtime and short-term work. Companies relatively frequently employ new personnel or train staff so that they are able to take on new or different tasks. The automation of services through new technologies and the use of informal networks are also fairly common. In contrast, business-related service providers rarely respond to fluctuations in demand by imposing staff redundancies. Also, they rarely opt to employ staff with very few hours. The fact that these two instruments play a fairly insignificant role in this context is undoubtedly the result of institutional regulations. Alongside protection from dismissal, other regulations such as the 630-DM-Jobs regulation, may also play a role. In view of such regulations, business-related service providers prefer to employ self-employed staff or conclude time-limited contracts.

Although working life accounts or part-time work are often proposed as policies to tackle unemployment, these two instruments actually play an insignificant role amongst business-related service providers. In 2000, business-related service providers were more greatly affected by cyclical fluctuations in demand than they were by seasonal fluctuations in demand. The main cause for fluctuations was these businesses' close cooperation with firms in the manufacturing industry. They are therefore significantly affected by the business cycle in the manufacturing industry.

Companies in East Germany are still more frequently affected by fluctuations in demand than their West German counterparts. Architects and technical consultants and planners are more affected by fluctuations than average. This is due to the fact that construction firms are generally independent and therefore vulnerable to fluctuations in demand. In contrast, the demand for services offered by tax advisors and accountants, business consultants and waste disposal firms has remained fairly constant.

Contact

Prof. Dr. Alexandra Spitz-Oener, Phone: +49(0)621/1235-293, E-mail: spitz@zew.de