German employment agency sets asides funds for another wave of Kurzarbeit

Bartender in Berlin pub
A bartender pours a beer in a Berlin pub. Photo: picture alliance/dpa | Christoph Soeder
The German government has enough funds to subsidise another phase of reduced working hours over winter under the 'Kurzarbeit' scheme, the Federal Employment Agency revealed on Wednesday.

According to its CEO Detlef Scheele, the Federal Employment Agency is prepared for a possible new wave of employees on reduced working hours – a scheme known as Kurzarbeit – should the Covid pandemic develop problematically.

There is a sufficient cushion in the new budget to cover Kurzarbeit until March 31st, Scheele told the Deutsche Presse-Agentur in Nuremberg on Wednesday.

After being widely used in the early months of the pandemic, the number of people working reduced hours declined over 2021, but according to Scheele, it has once again been rising steeply since November. 

“We therefore have to redeploy staff again to cope with the volume, but we hope that this will be over by the end of March,” he said. 

The switch to shorter working hours is primarily likely to affect people in the hard-hit hospitality and cultural sectors, particularly in high-incidence regions like Bavaria and Saxony where bars and restaurants have been subject to curfews and closures. 

In a crisis meeting held before Christmas, the states also agreed to order the closure of nightclubs ahead of New Year’s Eve. States like Mecklenburg Western-Pomerania have opted to go further, ordering blanket closures of many public venues like cinemas, theatres and museums.

READ ALSO: Multiple German states tighten Covid rules ahead of New Year

With the highly transmissible Omicron variant expected to become dominant in Germany in the coming weeks, a larger numbers of workers could find their working hours reduced. However, Scheele said there was no reason to believe the Kurzarbeit allowance would not be paid – in his view, the new government is set to stick to a similar policy to the previous administration. 

He said it was conceivable that the federal government’s spring forecast would look different from the autumn forecast, on the basis of which the new budget had been calculated.

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“If something comes up after March, we may have to readjust again,” Scheele said, adding that access to government subsidies when working hours were slashed was a legal right during the Covid pandemic.

As things stand, the federal agency will be able to build up a reserve again from 2023 onwards – after the contribution rate for unemployment insurance has risen again by 0.2 percentage points, as previously planned, and this will flush an additional €2.6 billion into the Nuremberg agency’s coffers.

READ ALSO: Kurzarbeit: Everything you need to know about paying taxes on reduced working hours

According to current estimates, the federal agency will spend €38 billion in the coming year – €1.7 billion of which will be used to subsidise short-time work. This is considerably less than in the current year, when about €20 billion was spent on short-time work and related social benefits.

Particularly in the lockdown phases of the previous Covid crisis, the short-time work scheme contributed significantly to the number of people who were able to keep their jobs. 


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