Service Providers in the Information Industry: Overtime and Short-time Work Popular Solutions for Dealing with Changes in Demand

Service providers in the information industry overwhelmingly use overtime and short-time work as a solution for cyclical and seasonal changes in demand. Theoretical judgements, as well as actual implementation, indicate that this instrument is among 15 other measures, which might be used by businesses to deal with changes in demand in the first instance.

Approximately 60 per cent of service providers in the information industry consider overtime and short-time work to be theoretically suitable solutions for dealing with changes in demand. Around 50 per cent of these businesses also make actual and frequent use of these measures. Overtime and short-time work are used to the greatest extent by architects offices, advertising agencies and technical advisors and planners.

These are the findings of an economic survey of service providers in the information industry, carried out between November and December 2003, by the Centre for European Economic Research (ZEW), Mannheim, in cooperation with Creditreform, Neuss. Approximately 1,000 businesses took part in the survey. Service providers operating in the information industry include those active in information and communication technology (ICT) (businesses providing or leasing computer software, specialist ICT services and telecommunications service providers) and knowledge-intensive services (businesses providing tax consultancy and auditing, architects offices, technical consultancy and planning, research and development as well as advertising).

In order to deal with marked changes in demand, service providers require flexible work employment conditions. These conditions must allow work to be increased in periods of high economic demand, but they must equally allow work, and therefore operation costs, to be reduced in periods of lower demand. After overtime and short-time work, time-limited employment is the second most popular measure which employers say they would use to adapt to changes in demand. When it comes to which measures are actually implemented, this measure ranks in third place, just behind sub-contracting to third-party firms. It is particularly common for businesses involved in research and development and in technical consultancy and planning to conclude fixed-term employment contracts. Sub-contracting to third-party businesses is a measure favoured by advertising agencies, technical consultancies and planners, as well as service providers in the telecommunications industry.

Of those measures which may be used by businesses to deal with changes in demand, service providers in the information industry consider the employment of low-paid workers (325-euro jobs) to be the least suitable solution. Accordingly, this measure is that which is most infrequently used. This may be due to current regulations which protect workers from unfair dismissal; a relaxation of these regulations may thus lead to an increased use of this measure.

Contact

Dr Margit Vanberg, E-mail: vanberg@zew.de