Kurzarbeit

Last updated

Kurzarbeit is the German name for a program of state wage subsidies in which private-sector employees agree to or are forced to accept a reduction in working hours and pay, with public subsidies making up for all or part of the lost wages. [1]

Contents

Several Central European countries use such subsidies to limit the impact on the economy as a whole or a particular sector from short-term threats such as a recession, pandemic, or natural disaster. The idea is to temporarily subsidize companies to avoid layoffs or bankruptcies during a temporary external disruption. Most notably, such subsidy programs were used to offset the effects of the COVID-19 pandemic and recession starting in 2020.

Austria

In Austria, the introduction of Kurzarbeit requires a special arrangement between what are called the "social partners" of Austrian collective bargaining—the Chamber of Commerce representing employers and the labor unions representing employees—on the scope and duration of the Kurzarbeit arrangement, the conditions for any layoffs during the arrangement, and the extent of any professional development or retraining courses included. [2]

Czech Republic

Amid the COVID-19 pandemic in the Czech Republic, the government of Czech Republic Andrej Babiš announced plans to partially subsidize salaries of employees on reduced work schedules, covering 50–70% of pay for 1, 2, or up to 4 days per week that employees are at home due to shocks to companies coming from pandemics or natural disasters. Employers have to cover health and social insurance for the days when workers are at home, and employees contribute by the partial reduction in their pay. [3]

Germany

It was in Germany that a system of "Kurzarbeitergeld" (Kurzarbeit benefits) was first introduced, on May 25, 1910, to address a downturn in the potash mining and fertilizer industry. It became fully established in 1924 in response to the first economic crisis of the Weimar Republic. [4] Under the scheme, temporarily laid-off workers receive payments, now from the Federal Employment Agency (BA), the agency that is also responsible for issuing unemployment benefits. The companies pay the hours actually worked at the original salary, while the state (or the BA, precisely) compensates 60 percent of the original pay for each hour not worked. [5] This means that an individual might work 30 per cent less while experiencing only a 10 per cent loss in income.

In 2009, the German government had budgeted 5.1 billion euros for the program, which replaced some of the lost income of over 1.4 million workers. The program was favorably cited in a 2009 Organisation for Economic Co-operation and Development (OECD) report, which stated that it had saved nearly 500,000 jobs during the recession. [6] [7] It is "widely considered the gold standard of such programs", according to the IMF. [8] Besides helping to avoid mass layoffs, proponents of the program also cite its keeping skilled work groups together and avoiding the atrophy of their skills during extended layoffs, while critics have expressed concerns about its expense and that it might prop up non-viable firms. [9] [ original research? ]

During the COVID-19 pandemic, the level of the compensation for cut hours was raised. If working hours are reduced by at least 50%, the Kurzarbeitergeld covers 70% of the lost salary from the 4th to 6th month, and 80% from the 7th month onward. This change to the original scheme is applicable until December 31, 2021. The maximum duration was also extended to 24 months through December 31, 2021, if the Kurzarbeit had already started in 2020. [10] [11]

Romania

Due to the economic difficulties due to the COVID-19 pandemic, the Romanian government is considering adopting a measure based on the German model of Kurzarbeit. [12]

See also

Related Research Articles

<span class="mw-page-title-main">Unemployment benefits</span> Payments made by authorized bodies to unemployed people

Unemployment benefits, also called unemployment insurance, unemployment payment, unemployment compensation, or simply unemployment, are payments made by governmental bodies to unemployed people. Depending on the country and the status of the person, those sums may be small, covering only basic needs, or may compensate the lost time proportionally to the previous earned salary.

A layoff or downsizing is the temporary suspension or permanent termination of employment of an employee or, more commonly, a group of employees for business reasons, such as personnel management or downsizing an organization. Originally, layoff referred exclusively to a temporary interruption in work, or employment but this has evolved to a permanent elimination of a position in both British and US English, requiring the addition of "temporary" to specify the original meaning of the word. A layoff is not to be confused with wrongful termination.

<span class="mw-page-title-main">Consolidated Omnibus Budget Reconciliation Act of 1985</span> U.S. Law

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) is a law passed by the U.S. Congress on a reconciliation basis and signed by President Ronald Reagan that, among other things, mandates an insurance program which gives some employees the ability to continue health insurance coverage after leaving employment. COBRA includes amendments to the Employee Retirement Income Security Act of 1974 (ERISA). The law deals with a great variety of subjects, such as tobacco price supports, railroads, private pension plans, emergency department treatment, disability insurance, and the postal service, but it is perhaps best known for Title X, which amends the Internal Revenue Code and the Public Health Service Act to deny income tax deductions to employers for contributions to a group health plan unless such plan meets certain continuing coverage requirements. The violation for failing to meet those criteria was subsequently changed to an excise tax.

A full-time job is employment in which workers work a minimum number of hours defined as such by their employer.

Job security is the probability that an individual will keep their job; a job with a high level of security is such that a person with the job would have a small chance of losing it. Many factors threaten job security: globalization, outsourcing, downsizing, recession, and new technology, to name a few.

A furlough is a temporary cessation of paid employment that is intended to address the special needs of a company or employer; these needs may be due to economic conditions that affect a specific employer, or to those prevailing in society as a whole. Furloughs may be short-term or long-term. They are also known as temporary layoffs.

<span class="mw-page-title-main">Canadian Federation of Independent Business</span> Non-profit business organization

The Canadian Federation of Independent Business (CFIB) is a non-profit business organization representing Canadian owners of small and mid-size enterprises (SMEs). The CFIB advocates on behalf of small business to improve tax policy, laws, and regulation. It also provides advice and support to its members on regulations and human resource issues.

Gravity Payments is a credit card processing and financial services company. It was founded in 2004 by Lucas and Dan Price. The company is headquartered in the Ballard neighborhood of Seattle, Washington and employs 240 people. As of November 2021, Dan Price is the only shareholder and the only member of the board of directors.

Job losses caused by the Great Recession refers to jobs that have been lost worldwide within people since the start of the Great Recession. In the US, job losses have been going on since December 2007, and it accelerated drastically starting in September 2008 following the bankruptcy of Lehman Brothers. By February 2010, the American economy was reported to be more shaky than the economy of Canada. Many service industries have reported dropping their prices in order to maximize profit margins. This is an era in which employment is becoming unstable, and in which being either underemployed or unemployed is a common part of life for many people.

Haken is the Japanese term for temporary employees dispatched to companies by staffing agencies.

<span class="mw-page-title-main">Unemployment insurance in the United States</span> Overview of unemployment insurance in the United States

Unemployment insurance in the United States, colloquially referred to as unemployment benefits, refers to social insurance programs which replace a portion of wages for individuals during unemployment. The first unemployment insurance program in the U.S. was created in Wisconsin in 1932, and the federal Social Security Act of 1935 created programs nationwide that are administered by state governments. The constitutionality of the program was upheld by the Supreme Court in 1937.

<span class="mw-page-title-main">COVID-19 recession</span> Economic downturn, primarily due to the COVID-19 pandemic

The COVID-19 recession was a global economic recession caused by COVID-19 lockdowns. The recession began in most countries in February 2020. After a year of global economic slowdown that saw stagnation of economic growth and consumer activity, the COVID-19 lockdowns and other precautions taken in early 2020 drove the global economy into crisis. Within seven months, every advanced economy had fallen to recession.

<span class="mw-page-title-main">Impact of the COVID-19 pandemic on journalism</span> Consequences of COVID-19 outbreak for media and publishing

The COVID-19 pandemic has strongly impacted the journalism industry and affected journalists' work. Many local newspapers have been severely affected by losses in advertising revenues from COVID-19; journalists have been laid off, and some publications have folded. Many newspapers with paywalls lowered them for some or all of their COVID-19 coverage. The pandemic was characterized as a potential "extinction event" for journalism as hundreds of news outlets closed and journalists were laid off around the world, advertising budgets were slashed, and many were forced to rethink how to do their jobs amid restrictions on movement and limited access to information or public officials. Journalists and media organizations have had to address new challenges, including figuring out how to do their jobs safely and how to navigate increased repression and censorship brought on by the response to the pandemic, with freelancers facing additional difficulties in countries where press cards or official designations limit who can be considered a journalist.

The Emergency Measures in the Public Interest (COVID-19) Act 2020 was an Act of the Oireachtas which provided for additional powers for the state in the extraordinary circumstances of the spread of the COVID-19 pandemic.

<span class="mw-page-title-main">Economic impact of the COVID-19 pandemic</span>

The COVID-19 pandemic caused far-reaching economic consequences including the COVID-19 recession, the second largest global recession in recent history, decreased business in the services sector during the COVID-19 lockdowns, the 2020 stock market crash, the impact of COVID-19 on financial markets, the 2021–2023 global supply chain crisis, the 2021–2023 inflation surge, shortages related to the COVID-19 pandemic including the 2020–present global chip shortage, panic buying, and price gouging. The pandemic led to governments providing an unprecedented amount of stimulus, and was also a factor in the 2021–2022 global energy crisis and 2022–2023 food crises.

<span class="mw-page-title-main">Economic impact of the COVID-19 pandemic in the United States</span>

The economic impact of the COVID-19 pandemic in the United States has been widely disruptive, adversely affecting travel, financial markets, employment, shipping, and other industries. The impacts can be attributed not just to government intervention to contain the virus, but also to consumer and business behavior to reduce exposure to and spread of the virus.

<span class="mw-page-title-main">Federal aid during the COVID-19 pandemic in Canada</span> National economic response to the COVID-19 pandemic

The Government of Canada introduced multiple temporary social security and financial aid programs in response to the economic impacts of the COVID-19 pandemic in Canada. The initial CA$82-billion aid package was announced on March 18, 2020 by Justin Trudeau.

<span class="mw-page-title-main">July 2020 United Kingdom summer statement</span>

The July 2020 United Kingdom summer statement was a statement from the British Government, or mini-budget statement, delivered on 8 July 2020 by Rishi Sunak, the Chancellor of the Exchequer. It followed the budget delivered earlier in the year, and preceded the Winter Economy Plan. The purpose of the statement was to announce measures aimed at helping to promote economic recovery following the impact of the COVID-19 pandemic. The statement was delivered to the House of Commons, where Sunak unveiled a spending package worth £30bn. Concerns were subsequently raised by organisations including HM Revenue and Customs and the Institute for Fiscal Studies about the statement's impact, as well as its cost-effectiveness, while at least one major retailer declined to take advantage of a financial bonus scheme intended for rehiring employees placed on furlough during the pandemic.

This is an economic history of the 2020s. Economic history refers to the study of economies or economic events of the past, including financial and business history.

<span class="mw-page-title-main">Great Resignation</span> 2021–2023 surge in job quits

The Great Resignation, also known as the Big Quit and the Great Reshuffle, was a mainly American economic trend in which employees voluntarily resigned from their jobs en masse, beginning in early 2021 during the COVID-19 pandemic. Among the most cited reasons for resigning included wage stagnation amid rising cost of living, limited opportunities for career advancement, hostile work environments, lack of benefits, inflexible remote-work policies, and long-lasting job dissatisfaction. Most likely to quit were workers in hospitality, healthcare, and education. In addition, many of the resigning workers were retiring Baby Boomers, who are one of the largest demographic cohorts in the United States.

References

  1. ↑ "Kurzarbeit: Germany's Short-Time Work Benefit". IMF. Retrieved 2021-01-12.
  2. ↑ Jakob Widner (2009). "Kurzarbeit: an Alternative to Lay-Offs". International Law Office. Archived from the original on 2009-12-16. Retrieved 2010-09-20.
  3. ↑ Czech PM Babis: new Kurzarbeit law should take effect from November Reuters , September 7, 2020.
  4. ↑ "A labour market instrument with a history" (PDF). Retrieved 2020-09-25.
  5. ↑ Guy Chazan in Berlin and Richard Milne (March 23, 2020), Kurzarbeit: a German export most of Europe wants to buy Financial Times .
  6. ↑ "Archived copy" (PDF). Archived (PDF) from the original on 2015-09-24. Retrieved 2014-02-26.{{cite web}}: CS1 maint: archived copy as title (link)
  7. ↑ "Germany's 'Kurzarbeit' program a possible role model for other countries". German Information Centre. 2009. Archived from the original on 2010-01-30. Retrieved 2010-09-24.
  8. ↑ "Kurzarbeit: Germany's Short-Time Work Benefit". IMF. Retrieved 2021-01-12.
  9. ↑ "Reduced hours save jobs, for now". German Information Centre. 2009. Archived from the original on 2010-09-08. Retrieved 2010-09-24.
  10. ↑ "Kurzarbeitergeld Arbeitnehmer". Arbeitsagentur (in German). Retrieved 2021-02-21.
  11. ↑ "Kurzarbeitergeldbezugsdauerverordnung". Buzer Bundesrecht (in German). Retrieved 2021-02-21.
  12. ↑ "Ordonanţa de urgenţă privind programul Kurzarbeit, din nou pe masa Guvernului - 31.07.2020 | BURSA.RO". www.bursa.ro. Archived from the original on 2020-08-01.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.