Short-time work allowance until the end of 2021: Government agrees to extend Corona aid

Short-time work is one of the measures to cushion the consequences of the Corona crisis. The short-time allowance is now to be paid by the end of 2021. That should be expensive.

• In the Corona crisis , companies and employees in Germany can hope for a significant extension of the short-time allowance .
• Labor Minister Hubertus Heil (SPD) wants to bring the plans to extend the simplified short-time work to up to 24 months into the federal cabinet this Wednesday.
• The short-time work allowance * has played a key role in ensuring that Germany has withstood the global crisis relatively well so far.

Short-time work allowance: Extension until the end of 2021 with the help of taxpayers' money

Update from August 26, 2020 : Companies in Germany can continue to secure jobs in the Corona crisis through simplified short-time work. The heads of the Union and SPD agreed on Tuesday evening to extend the simplified short-time work from the regular 12 to up to 24 months . Labor Minister Hubertus Heil (SPD) wants to bring the plans to the federal cabinet this Wednesday.

The extended period is to apply to companies that have introduced short-time work by December 31, 2020 . At the longest, the short-time allowance should be extended until December 31, 2021. So that the Federal Employment Agency (BA) can shoulder the billions in costs for short-time work, the coalition wants to make tax money loose - as a grant and not as a loan.

Extension of short-time work allowance until the end of 2021: incremental increase

The short-time work allowance will be increased further to 70 or 77 percent from the fourth month and to 80 or 87 percent from the seventh month . These rules are to be extended to December 31, 2021 for everyone who is entitled to short-time work benefits by March 31, 2021. The regular short-time allowance amounts to 60 percent of the lost net wage, 67 percent for working people with children.

Short-time work allowance provides a lot of discussion material

The rule that mini-jobs up to 450 euros are generally free of credit will be extended from existing additional earning opportunities . The possibility that temporary workers can receive short-time work allowance is extended. Applicable tax relief for employer subsidies on short-time work allowance is granted until December 31, 2021. And depending on the development of the pandemic, a further possible extension should be decided later.

The Union recently opposed what it considered to be an overly generous extension of the instrument. For example, the CDU labor market expert Weiß criticized the fact that, according to Heil's original plans, companies should receive full reimbursement of social security contributions from employees on short-time work by March 2022.

IG Metall boss Jörg Hofmann had demanded as a condition for the reimbursement of social security contributions for employers that companies refrain from redundancies for operational reasons . Further qualification should also be necessary for a complete reimbursement. The Institute for Employment Research (IAB) had also advocated that an extension of short-time work should usually be linked to using the time for professional qualification.

Critics had warned that short-time work should not be mixed with short-time work in structural change due to the Corona lull. Businesses shouldn't be artificially preserved.

Corona crisis: extend short-time allowance to 24 months

Original article dated August 18, 2020 : Thanks to short-time work benefits, millions of jobs have been saved, said Seibert. A possible extension of the subscription period in the Corona crisis will have to be discussed within the federal government. The coalition partners wanted to discuss in a coalition committee how this should be structured. Vice Chancellor and Federal Minister of Finance Olaf Scholz (SPD) had told "Bild am Sonntag" that he wanted to extend the period for which short-time work benefits were paid to 24 months. The corona crisis will not suddenly disappear in the next few weeks. "Companies and employees need a clear signal from the government: We are going with you all the way through the crisis, so that no one is laid off without an emergency."

Basically, there is currently a maximum period of twelve months for short-time work benefits . When the corona crisis arose, however, the access conditions for companies had been eased. In certain cases , the duration of the benefits can already be extended to up to 21 months. In June, the economic ministers of the federal states had already spoken out in favor of extending the short-time working allowance to 24 months . Business associations welcomed the plans. Scholz is on the right track if he wants to extend the duration of the short-time work allowance to 24 months, said Ralph Wiechers, chief economist of the mechanical engineering association VDMA, on Monday. The corona crisis, trade barriers and structural change in the auto industry had cost mechanical engineering in Germany 32,000 jobs in the first half of the year. "In view of the immense stresses that our industry is exposed to, this remains a moderate reduction," said Wiechers. Above all, the instrument of short-time work helps.

Read here: Effects of short-time work: How Corona changes the salaries of Germans.

The demand for an extension of the period of entitlement from CDU / CSU parliamentary group vice Carsten Linnemann (CDU) met with criticism . Scholz's move is "impressive evidence of what is in store for us before next year's general election," he told the Frankfurter Allgemeine Zeitung on Monday. “Money is being redistributed as if there was no tomorrow.” Instead of more and more transfer payments from the state, Linnemann demanded “a smart procedure that brings endangered companies and their creditors to the table”. It is necessary to tackle structural reforms instead of preserving standstill - even if there is less short-term applause for it.

Read here : Child bonus of 300 euros decided: When and how will the money be paid out to parents?

Corona crisis leads to unprecedented levels of short-time work

As a result of the Corona crisis, the economy in Germany collapsed. The worst
recession in post-war history to date is expected for the year as a whole . This has led to an unprecedented level of short-time work. According to the latest official figures from the Federal Employment Agency, the number of people on short-time work rose to 6.7 (April: 6.1) million in May. The instrument of short-time work is one of the decisive stabilizers for the labor market in an economic
crisis situation. It prevents layoffs on a broad front and helps companies to keep their qualified workforce together so that they can get started again after the crisis. In this way, in Germany - unlike in the USA - not millions of people have fallen into unemployment .

The short-time work allowance is usually 60 percent of the missing net wage - 67 percent for parents with children. But
from the fourth month onwards there is 70/77 percent, from the seventh month 80/87 percent. Social security contributions are fully reimbursed by the Federal Employment Agency. The Federal Agency had to spend 7.85 billion euros in the first six months for short-time working allowances, including social benefits. According to previous scenarios, the reserve of almost 26 billion euros will be used up in 2020, the agency's chief executive, Detlef Scheele, said. The federal government must therefore step in. (sca / afp / dpa) * Merkur.de is part of the nationwide Ippen digital editorial network.

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