Background information

The short-time work allowance according to the German Social Code III can be used in the case of a temporary reduction of regular working hours in a company due to a significant reduction in production or services.

Reduction of working time needs to be temporary and unavoidable. For example, it must be due to economic conditions (that is a sharp decline in demand), unforeseeable accidents, force major, or structural changes. With a few exemptions, the company must have exhausted all other options that might help to avoid using short-time working.

All workers who pay social security contribution are entitled to short-time work allowances. The application must concern at least one third of all employees of the company (or one or several specific unit(s)). Moreover, the wage cut has to amount to more than 10% of their monthly gross wage.

Content of measure

Three short-time working arrangements exist: 

• short-time working due to economic reasons/temporary shortfall of orders (konjunkturelle Kurzarbeit); 
• seasonal short-time working (Saisonkurzarbeit); and,  
• short-time working in the event of restructuring (Transferkurzarbeit).  

​As laid down by Social Security Code III, the employer pays for the effective working time and the Federal Employment Agency contributes a short-time working allowance of 60% of the missing net wage (or 67% if the worker has children). In 2024, this allowance is provided for monthly wages that do not exceed €7,550 in Western Germany and €7,450 in Eastern Germany. 

Introduction of short-time working has to be agreed upon by management and the works council. If no works council exists, all affected employees have to grant their approval. 

The maximum duration of state-funded short-time working allowances is six months. According to the legislation, this maximum duration can be extended by ministerial decree to up to 12 months in cases of exceptional circumstances in the labour market in specific industries or regions. It can be extended even up to 24 months in cases of exceptional circumstances on the general labour market. 

Use of measure

In the wake of the COVID-19 crisis, many companies applied for short-time work due to economic reasons. According to the monthly statistics of the German statistical office (destatis 2023), the absolute numbers of workers in short-time work developed as follows (from 2019 to 2023):

March 2019: 245,800 April 2019: 48,700 March 2020: 2,834,300 April 2020: 6,006,800 March 2021: 3,015,900 April 2021: 2,583,300 March 2022: 888,100 March 2023: 397,600 December 2023: 395,100

Target groups

Workers	Businesses	Citizens
Employees in standard employment	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Public employment service	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Unknown	Unknown
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Unknown

Involvement

Unknown

Views and reactions

Both the German Trade Union Federation (DGB) and the German Employers' Association (BDA) support the measure.

Sources

• 19 October 2022: Social Code III (www.gesetze-im-internet.de)
• 09 November 2022: Federal Employment Agency (Short-time working allowances explained) (www.arbeitsagentur.de)
• 18 July 2024: destatis (2024) - Statistik Kurzarbeiter (www.destatis.de)