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Germany agrees €130 billion package to kick-start economy hit by coronavirus pandemic

Germany will plough €130 billion into a stimulus package to kick-start an economy severely hit by the coronavirus pandemic, Chancellor Angela Merkel said late on Wednesday.

Germany agrees €130 billion package to kick-start economy hit by coronavirus pandemic
Angela Merkel on Wednesday. Photo: DPA

Under the wide-ranging measures outlined in a 15-page document, value-added tax (VAT) will be temporarily slashed, families will receive €300 for each child, while those who purchase electric cars will see a government rebate doubled to €6,000.

“The size of the package will reach €130 billion for 2020 to 2021, €120 billion of which will be borne by the federal government,” said Merkel.

Noting that millions of employees in Germany have been put on shorter working hours (Kurzarbeit), Merkel said that “shows how fragile the whole thing is, and why we must succeed in giving the economy a push so that jobs can be secured.”

“We need to get out of this crisis with an oomph,” said Finance Minister Olaf Scholz.

The fresh stimulus comes on top of a massive €1.1 trillion rescue package already agreed in March, comprising loan guarantees, subsidies and a beefed-up shorter-hours programme to avoid job cuts.

To fund the unprecedented package, parliament had approved new borrowing, marking a sea change in German economic policy, upending a financial-crisis-era constitutional rule drastically limiting budget deficits.

READ ALSO: Germany divided over new coronavirus stiumlus package

'Find its feet'

With borders slamming shut, employees kept home, and shops and restaurants forced to close to halt transmission of the coronavirus, Germany is headed for the worst recession in its post-war history.

Disruptions to trade and travel have also weighed on the export powerhouse.

Latest data released earlier Wednesday showed that the unemployment rate rose to 6.3 percent in May, the equivalent of some 2.8 million people, from 5.8 percent in April.

With new infections sharply dropping, Europe's biggest economy began easing social restrictions in early May, allowing shops to reopen while restaurants and tourist businesses are taking the first tentative steps.

Factories too are restarting their production lines.

Merkel has said the support programme will help “the economy to find its feet and grow again”.

To boost consumer spending, VAT will be cut from 19 to 16 percent from July 1st to December 31st this year.

But a controversial plan for a cash-for-clunkers scheme that also covers petrol and diesel cars did not materialise after noisy environmental protests.

The youth environmental movement “Fridays for Future” had organised some 60 protests nationwide on Tuesday, with demonstrators asked to wear masks and keep their distance in line with coronavirus-fighting measures.

Bavaria state premier Markus Söder, who had pushed for help to the automobile sector, defended the package, saying the VAT cut will benefit sales of all classes and types of vehicles.

READ ALSO: Which German industries have been hardest hit by the coronavirus crisis?

The increased rebate for electric cars is aimed meanwhile at giving consumers the incentive to switch to cleaner vehicles, said Söder, whose state hosts BMW and Audi.

Meanwhile, companies in sectors hardest hit by the crisis — including hospitality, tourism and entertainment – will receive “bridging help” worth €25 billion in total from June to August.

Under the measure, restaurants, hotels or event management companies could get up to 80 percent of their fixed operating costs reimbursed if revenues had plunged by more than 70 percent compared to a year ago.

By Hui Min Neo

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HEALTH

EXPLAINED: The new rules around getting a sick note over the phone in Germany

Due to high Covid infection numbers throughout the summer, it’s now possible to get a sick note from a doctor over the phone again for some illnesses. Here’s what you need to know.

EXPLAINED: The new rules around getting a sick note over the phone in Germany

What’s happened?

In spring 2020, German authorities changed the law so that people with a mild upper respiratory tract illness, such as the common cold, were able to get an incapacity to work certificate or AU-Bescheinigung by simply calling and speaking to their GP.

The rule was extended several times and finally reversed on June 1st this year due to falling infection figures. Since then people have had to go back to the practice – or do a video call if the doctor’s office has that system in place – to get a sick note.

Now, due to a decision by the Joint Federal Committee, the regulation has been reintroduced and patients can call their GP again for a sick note.

Can I get a sick note over the phone for any illness?

No. As before, the regulation only applies to patients suffering from a mild upper respiratory tract illness. Though Covid has not explicitly been named in the announcement, it seems that it is intended to be covered by the regulation.

If the doctor is convinced that the patient is unfit for work after a telephone consultation, then they can issue a sick note for up to seven days.

READ ALSO: EXPLAINED: The changes around doctor’s notes in Germany you should know

If the symptoms persist after seven days, the certificate can be extended once more for another week.

Why now?

According to the Chairman of the G-BA, Josef Hecken, the regulation has been introduced now as a response to rising Covid numbers and in anticipation of the cold and flu season in the coming months: “We want to avoid full waiting rooms in doctors’ offices and the emergence of new infection chains,” he said.

The telephone sick leave rule is a simple, proven and uniform nationwide solution for that, he said. The rule is also necessary because video consultation hours are not yet available everywhere.

What else should I know?

The health insurer DAK is calling for telephone sick leave in the case of light respiratory diseases to be made possible on a permanent basis in Germany. DAK’s CEO Andreas Storm said that this should “not always be up for debate, because it has proven itself.” 

READ ALSO: Everything you need to know about making a doctor’s appointment in Germany

The social association VdK also welcomed the reintroduction of the rule. The VdK’s President Verena Bentele said that the regulation would help to protect high-risk groups in particular from potential infections.

What are the rules to know about sick notes in Germany?

Germany has a strict system in place. If you are sick, you need to give your employer a Krankmeldung (notification of sickness) before the start of work on the first day (of your illness).

However, you also need to hand in a Krankschreibung (doctor’s note) on the fourth day of your illness. Some employments contracts, however, require you to submit a sick not earlier than the fourth day so check with your boss or HR on that point. 

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