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HEALTH-VIRUS-GERMANY-ECONOMY
Germany extends shorter work hours scheme
BERLIN, Aug 26, 2020 (BSS/AFP) – A German scheme that tops up pay for
workers who lost work hours because of the coronavirus pandemic has been
extended by another year to stave off mass job losses.
Chancellor Angela Merkel’s ruling coalition of conservatives and centre-
left Social Democrats agreed on Tuesday to allow the programme to run for 24
months for any firm that applies by the end of the year.
It also resolved to extend financial assistance to small businesses until
the end of the year and relax insolvency laws in an effort to avoid cascading
bankruptcies.
The shorter-hours programme, known as Kurzarbeit, sees the German
government cover around two-thirds of workers’ wages when employers slash
their hours to save costs.
The scheme was widely used during the 2008-09 financial crisis and
credited with saving tens of thousands of jobs.
The programme is one of the main tools used by Berlin to shield Europe’s
top economy from the pandemic-induced downturn, accounting for a key part of
the government’s trillion-euro ($1.1 trillion) coronavirus support package.
At the height of the coronavirus lockdowns in April, some 6.8 million
Germans received money through the scheme, the federal employment agency
said.
To ease access to the programme, ministers reduced the requirements that
companies need to meet in order to qualify for assistance.
German giants like Lufthansa, Volkswagen and BMW are among the many firms
to have tapped the scheme.
Before the pandemic, German unemployment hovered at a record-low level of
around five percent. It has since risen to 6.4 percent.
Other European economies, including France and Britain, introduced similar
short-time working programmes to battle the economic consequences of the
pandemic.
The scheme does not come cheap. When German economic output contracted
five percent in 2009, an average of 1.1 million workers were placed on the
programme, costing Berlin around 10 billion euros.
After maintaining a balanced budget for years, the German government has
said it plans to borrow around 218 billion euros this year to help pay for
its pandemic response.
BSS/AFP/MSY/0818 hrs