That's why it's bad - with a four day week some workers might at least consider second jobs, small businesses or other sources of income.

Perhaps, but not a large share of them. After all there is the assumption, that this is a temporary thing. One has to resort to other measures, if the workers can't go back to full hours in a couple of months. More over even with high unemployment European countries have managed to stay out of deflationary spirals for the last decades.

With the same hours being worked for less cash, spending drives off a cliff and demand falls even further, while unwanted products continue to pile up, because buyers can't afford them.

That would be a catastrophe. If workers are responsible they will refuse to work for lower hourly wages, even if they get laid off otherwise. If I have understood Starvid correctly (not in the diary, but in the comments below), there is no reduction in hourly wages in Sweden. Workers in highly unionised branches should even demand increases of at least 2.5% in hourly wages. An hourly wage reduction is only a beggar your neighbour policy, and Sweden is already highly competitive.

The UK solution has been to temporarily lay off workers, sometimes with minimal pay, sometimes with nothing at all. That doesn't work any better.

That is at least partially a problem of the gov't. Until the current turmoil is over, it would be useful to increase and prolong unemployment benefits.

But the problem is strategic. It's not that there isn't useful work these people could be doing, and being paid for.

But not currently in the production of cars. So it is not useful to have these workers working in the company and produce for stock piling.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers

we continentals are boring people sticking to jobs, hoping for better times.
I really don't think that a lot of people working shorter are changing their jobs. Industry jobs are relatively well paid. It doesn't necessarily pay more to switch job, when you have some qualifications for what you do, and the most likely employers for you all have the same collective bargaining agreement with the unions. And if the economy goes up, an increase in worked hours is easier to reestablish, than a fight on higher hourly wages won - plenty of examples for that.

More over, who is going to offer you any job in these times? There are few corporations, that suffer from undercapacity. They are happy, when they have work for the people, that they already have.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers