Kurzarbeit: German minister plans to extend reduced working hours scheme

Kurzarbeit: German minister plans to extend reduced working hours scheme
Lots of people were placed on the Kurzarbeit scheme when businesses had to shut during lockdowns, like this one in Munich. Photo: picture alliance/dpa | Sven Hoppe
Germany's Labour Minister plans to push for an extension of the reduced working hours scheme - Kurzarbeit - until the end of 2021.

The shorter-hours programme, known as Kurzarbeit, sees the German government cover around two-thirds of workers’ wages when their employers cut their hours to save costs.

At the start of the Covid crisis, the government made it easier for firms to apply for the benefits for staff. The scheme was set to expire on September 30th.

But Labour Minister Hubertus Heil, of the Social Democrats (SPD), said Friday he wants to extend it until the end of the year. The tool is crediting for helping to stave off mass job losses during the crisis. 

“Kurzarbeit was and is our stable bridge over a deep economic valley,” Heil told the Rheinische Post.

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Unemployment is declining, Heil said. “But in view of the fact that there are still economic disruptions in a number of industries, I think it makes sense to extend the existing regulations for Kurzarbeit until the end of the year as a precaution.”

At the weekend German Finance Minister and SPD candidate for chancellor Olaf Scholz expressed similar views to Heil.

Both the reduced hours working scheme, and economic aid for struggling companies, should be extended until the end of the year, he told the newspapers of the Funke-Mediengruppe.

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However, some have questioned if the government needs to provide this support given the improving jobs situation. 

Extending access to Kurzarbeit would be “completely premature,” German economist Lars Feld told the Rheinische Post.

A company can register for Kurzarbeit if at least 10 percent of its employees are affected by the loss of work. Outside of crisis times, at least 30 percent of the workforce has to be affected to allow firms to apply. Temporary workers can also receive short-time benefits.

The scheme was widely used during the 2008-09 financial crisis and credited with saving tens of thousands of jobs.

In 2020, 16 percent of the German workforce were on Kurzarbeit for a period of time as a result of the pandemic – that’s around 7.3 million people.

READ ALSO: Why people on Kurzarbeit in Germany need to prepare for a tax surprise

German firms like Lufthansa, Volkswagen and BMW are among the many firms to have used the scheme at the peak of the crisis.

In later lockdowns, many companies in the hospitality, leisure and culture industries applied for Kurzarbeit benefits for staff who were unable to work.

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