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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure DE-2020-10/541 Updated – measures in Germany

Easier access to short-time work

Verbesserter Zugang zur Kurzarbeit

Country Germany , applies nationwide
Time period Temporary, 01 March 2020 – 30 June 2022
Context COVID-19
Type Legislations or other statutory regulations
Category Employment protection and retention
– Income support for people in employment (e.g., short-time work)
Author Sandra Vogel (IW)
Measure added 13 April 2020 (updated 31 May 2022)
Related ERM support instrument

Background information

The Federal Government eased up rules on short time work, in order to support workers and companies alike during the COVID-19 crisis. Employees on short-time work will receive public money to support their livelihood when not working. Companies on the other hand will not have to pay wages for hours not worked and still be able to keep their workers on board and not lay them off. Changed rules on short time work were implemented by a government ordinance based on the act to enhance the regulations governing short-time work allowance for a limited period as a result of the crisis (Gesetz zur befristeten krisenbedingten Verbesserung der Regelungen für das Kurzarbeitergeld). The improved short-time working scheme is part of a broader rescue package adopted by the Federal Government at the end of March 2020, in order to cushion the negative economic impact of the COVID-19 outbreak and the closure of many businesses. The rescue package also includes other measures, such as easier access to loans for companies, eased up tax and insolvency rules, financial assistance for solo- or micro-entrepreneurs, support for hospitals and other critical infrastructure.

Content of measure

The new rules took effect in retrospect on 1 March 2020. Companies that are faced with a decline in orders due to the negative impact of the COVID-19 outbreak and shut-down of businesses, can apply for short-time work, if at least 10% of its workforce could be affected by the lack of work. This limit was lowered from 30%. Before short-time work can be granted, any remaining hours on workers' working time accounts have to be depleted. If short-time work is granted, employees will receive 60% of their net income (67% if having children) for all hours not worked. The short-time working allowance is paid by the local employment agency for a maximum of 12 months. To lower the remaining costs, the federal government also decided that social insurance contributions usually paid by employers for their employees, will be fully reimbursed by the Federal Employment Agency. The new rules apply to dependent employees and will also be made available to temporary agency workers.

Updates

The following updates to this measure have been made after it came into effect.

18 March 2022

The Federal Government prolonged easier access to short-time work until 30 June 2022. However, though companies can apply for short-time work longer, not all related-measures were extended. The reimbursement of social security contributions ran out on 31 March 2022.

10 December 2021

On 10 December 2021, the Federal Government announced to continue with the eased rules regards the short-time work scheme and its heighten amounts until the end of March 2022.

15 September 2021

On 15 September 2021, the fourth amendment on short-time work was implemented. The eased access to short-time work has been extended to 31 December 2021, including the full reimbursement of social security contributions, which previously was only accessible to business which had introduced short-time work prior to 30 September 2021.

22 June 2021

On 22 June 2021, the third amendment regarding short-time work was published. As already announced in January 2021, measures for easier access are prolonged until December 2021. However, the full reimbursement of social security contributions was only prolonged by 3 months until 30 September 2021. Furthermore, the new amendment makes access to short-time work easier by reducing the minimum number of employees not able to work to 10% (replacing the former minimum of one third of workers needing to be affected).

01 January 2021

On 1 January 2021, the Federal Government confirmed that the new rules on short-time work will be in place in 2021 (see update from 6 October 2020 for the new rules). Some slight changes affect the reimbursement of social security contributions paid by employers. Whilst the employer's share will be reimbursed fully by the local employment agency in the first half of 2021, this ratio will drop to 50% in the second half of 2021. However, if employers train their workers during short-time work, the level of reimbursed social security contributions can be raised to 100% in the second half of 2021.

06 October 2020

The maximum duration of receiving the short-time working allowance has been extended to 24 months, for businesses, which applied prior to 31 December 2020. The short-time working allowance is paid until the 31 December 2021 at the latest.

Additionally, the full reimbursement of social insurances by the Federal Employment Agency has been extended to the 30 June 2021. Between the 1 July 2021 and the 31 December 2021 the reimbursement of social insurances will drop to 50%.

08 July 2020

The maximum duration of receiving the short-time working allowance has been extended to 12 months (in specific cases to up to 21 months), and employers' contribution to social insurance are fully reimbursed by the public employment service.

Furthermore, the short-time working allowance has been raised to 70% or 77% after the 4 month of short-time work and to 80% or 87% after the 7 month of short-time work.

Use of measure

First projections regarding the usage of the measure are available. The Federal Employment Agency estimates that in March 2020 over 322,000 establishments ran short-time work affecting nearly 2.5 million workers. Estimated figures rise to over 565,000 establishments affecting nearly seven million workers in April 2020. These figures are first estimates.

Information from 6 October 2020:

The Federal Statistical Office estimates that in March 2020 344,020 establishments ran short-time work affecting 2.6 million workers. In April figures rose to 613,149 establishment with 5,979,148 affected workers. In May numbers started to decrease with 532,428 establishments in short-time work, affecting 5,818,432 workers. In June, 411,793 establishments and 5,355,874 workers were affected by short-time work.

Information from 5 January 2021:

In its annual report for 2020, the Federal Employment Agency estimates that around 2.9 million workers were on short-time work in 2020 (or 8.7% of all employees in a job liable to social security contributions). This compares to only 145,000 workers in 2019 (or 0.4% of all employees in a job liable to social security contributions). Given these first estimates for annual averages in 2020, the COVID-19 pandemic had a much harsher effect on the German labour then the global economic and financial crisis in 2008/2009. In 2009, some 1.14 million workers had been on short-time work on average (or 4.1% of employees in a job liable to social security contributions).

Information from 31 March 2021:

The Federal Statistical Office has made all numbers on short-time working for 2020 available. With the start of the pandemic in 2020, the number of workers affected by short-time working rose to an all-time high of 5.99 million in April with 7ers affected by short-time work rose to 3.29 million in January with 421,052 establishments affected. Those numbers have decreased significantly between February and April to 2.34 million people and 338,688 establishments affected by short-time work.

Information from 30 September 2021:

Since February 2021, the number of workers affected by short-time work has constantly decreased. While in February 3.36 million workers and 431,241 establishments were affected by this measure, this number decreased to 1.54 million workers and 228,888 establishments in June 2021.

Information from 4 January 2022:

At the beginning of January 2022, the Federal Employment Agency estimated that the average number of short-time workers was with around 1.85 million persons affected much lower in comparison to the previous year. In 2020, around 2.94 million person had been affected by short-time work.

Target groups

Workers Businesses Citizens
Employees in standard employment
Workers in non-standard forms of employment
Applies to all businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
Company / Companies
Public employment service
Social insurance
National funds

Social partners

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

Trade unions Employers' organisations
Role Consulted Consulted
Form Direct consultation outside a formal body Direct consultation outside a formal body

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

  • Social partners jointly
  • Main level of involvement: Company level

Involvement

Social partners are on board of the Federal Employment Agency and consulted on such issues as prolonging the short-time working duration or other changes to the scheme.

Views and reactions

German social partners are usually consulted by the Federal Government on broader measures, though no formal tripartite social dialogue structure exists in Germany at the federal level.

Sources

Citation

Eurofound (2020), Easier access to short-time work, measure DE-2020-10/541 (measures in Germany), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/DE-2020-10_541.html

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