German firms apply for Kurzarbeit for nearly 12 million workers during coronavirus pandemic

German firms apply for Kurzarbeit for nearly 12 million workers during coronavirus pandemic
An application form for the Kurzarbeit process. Photo: DPA
The coronavirus crisis has prompted German firms to seek government-backed shorter hours schemes for a total of 11.7 million workers since March, official data showed Wednesday.

Known as “Kurzarbeit”, the measure – which has been widely copied abroad – tops up from government coffers the pay of workers placed on shorter hours by their employer, preserving the contractual relationship for the time when activity rebounds.

The government covers around two-thirds of the salaries of workers whose employers slash their hours after an agreement with the company's works council.

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Companies must apply for the aid at their local branch of Germany's Federal Agency for Employment (Bundesagentur für Arbeit), which oversees the scheme.

In May, German companies applied to the Kurzarbeit scheme for a further 1.06 million people, the the BA Federal Labour Agency said. That adds to the 10.66 million people who were already registered on the programme since the start of the crisis.

Experience shows, however, that the number of people actually working reduced hours is significantly lower, because companies often seek to enter the scheme as a precautionary measure.

According to projections, 2.02 million people received payouts through the scheme in March alone – the month when the coronavirus lockdown began. This is the highest figure ever measured. The previous record dates back to May 2009, when 1.44 million people had taken advantage of short-time working during the financial crisis at the time.

READ ALSO: How to apply for Kurzarbeit in Germany when working hours are reduced

Unemployment up

Meanwhile the unemployment rate rose to 6.3 percent in May, the equivalent of some 2.8 million people, from 5.8 percent in April, the Federal Agency said.

Before the coronavirus outbreak, German unemployment had held steady at around 5.0 percent for a long time.

“The labour market is under severe pressure because of the corona pandemic,” said Detlef Scheele, Chairman of the Executive Board of the Federal Agency. “Kurzarbeit has clearly exceeded the level of 2009.

“Companies' demand for employees remains on a downward trend, but is no longer in freefall,” he added.

The shorter hours scheme is part of a trillion-euro economic support package decided as the pandemic broke over the country in March.

This week, Chancellor Angela Merkel's coalition government is hammering out details of a post-coronavirus relaunch plan expected to offer tens of billions of euros of new cash.

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