Furloughs are a labor cost reduction strategy that involve restricting employees’ work in order to also restrict employee pay. In response to recent economic downturns, many organizations were forced to consider ways to reduce labor costs. The uncertainty of the specific effects on their organization led many organizations to focus on shorter term, flexible labor cost management solutions. In several cases, particularly in government contexts, those solutions involved furloughs of employees.

Types and Implementation of Furloughs

Most of the furloughs in recent years have involved public-sector (government) employees. They have tended to take two forms, as defined by the U.S. Office of Personnel Management. Administrative furloughs are planned in advance as a result of known budget restrictions placed on a government agency. For example, if a specific ...

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