economic crisis
Longer short-time work is intended to secure employment during the crisis
More and more companies are slipping into crisis. Shortly before the end, the federal government is extending an instrument that is intended to help. It has already proven itself.
The federal government is counteracting the economic problems in Germany with more short-time work. The employees should be secured their threatened jobs. The aim is to make it easier for companies to retain their long-standing, proven workforce. The Federal Cabinet decided to extend the period of receipt of short-time work benefits to up to 24 months.
Government decision after vote of confidence
Two days after the vote of confidence from Chancellor Olaf Scholz (SPD), the round of ministers gave the green light for a regulation that was quietly introduced by Federal Labor Minister Hubertus Heil (SPD). The regulation changes current law. The regulation and thus the extension of the subscription period apply until December 31, 2025.
Heil’s favorite instrument
Heil is using the instrument that helped save thousands of jobs during the Corona crisis – stimulated by appropriate regulations: short-time work. Short-time work means that all or only some of the employees in a company work fewer hours than they would normally have to work. The payment of short-time work benefits by the employment agency is intended to relieve employers of costs and prevent dismissals.
Heil referred to major challenges currently in the economy. Companies in an export-oriented country like Germany in particular often have to overcome problems at the moment. Heil: “Now it’s about securing skilled workers.”
More and more companies are implementing short-time work
There has been a significant increase in short-time work in Germany in recent weeks. The aim of the extended subscription period is to give companies more planning security in difficult times. The labor department said that the experienced and trained employees in particular should be able to be retained.
In September 2024, according to preliminary data, the number of short-time workers was around 268,000, according to the ministry. That is 76 percent more than in the previous year – and almost three times as many as in September 2022.
Most affected: Germany’s mechanical engineering companies
The manufacturing industry is currently showing the greatest use of short-time work, with 143,000 employees affected in August alone. The focus was on mechanical engineering, the production of metal products, data processing equipment, electronic and optical products as well as the production of motor vehicles and motor vehicle parts.
Heil said: “By extending the economic short-time working allowance, we are building bridges: for companies, large and small, to come out of the crisis stronger, and for employees to keep their jobs.” In addition, the training money provides an instrument that can support the modernization of companies. This instrument is used to finance work and further training. Heil said this is always better than paying unemployment.
Review: Short-time work during Corona
During the Corona crisis, entire areas were suddenly affected by a lack of orders. In the catering industry, trade fair construction and the entire cultural and leisure industry, there was an open-end lull almost from one day to the next. In many industries, entire workforces went on short-time work. The number of employees affected rose to around six million at the peak of the corona pandemic – and then initially fell sharply. State Corona subsidies also helped at the time.
Short-time work regulations have been extended again and again, with reduced quotas of employees who must be affected by loss of work before short-time work can take effect. “Short-time work remains a stable bridge over a deep economic valley,” Heil said back then.
What those affected should consider
The short-time working allowance is based on the net loss of wages. Rule of thumb: The employee receives 60 percent of the lost flat-rate net salary. In addition to the reduced income, those affected must consider whether there may be possible reductions in vacation pay or later tax payments.
Federal Employment Agency on short-time working benefits Calculating the amount of the KuG (finance tip)
dpa
Source: Stern
