(Reuters) – European policymakers are pushing short-time work schemes as a way to mitigate the fallout from the coronavirus, emulating a policy tool which helped Germany, Europe’s largest economy, recover from the 2009 economic crisis.
GERMANY
Germany’s short-time work scheme, known as Kurzarbeit, allows companies to rapidly reduce personnel costs on a temporary basis by reducing regular working hours.
Employees tap an unemployment insurance fund overseen by the Federal Employment Agency which gives them at least 60% of their basic pay, with employers often topping that up to 80% with a stipend.
At least 10% of the workforce must be affected by a loss of earnings of more than 10% of their gross salary due to lack of work for a company to be able to apply for Kurzarbeit.
A pre-requisite for the introduction of short-time work is the approval of the works council.
ITALY
The government announced a freeze on any worker lay-offs for
two months starting from Feb 23. It has also authorised firms to use an existing temporary lay-off and wage support scheme, Cassa Integrazione Guadagni (CIG).
This is available to firms with at least 15 employees and is financed by companies and the state, through workers contributions.
It is administered by the National Institute of Social Insurance (INPS) and is used to finance up to 80% of lost pay for employees sent home for a maximum of 52 weeks.
It has three pillars: the CIG Ordinaria (CIGO), the CIG
Straodinaria (CIGS) and CIG in Deroga or (CIGD). CIGO is applied
in case of temporary reduction of activities related to
short-term company problems.
CIGS is used for the restructuring of plants, the
re-organisation of production, prolonged crisis or bankruptcy
procedures. The CIGD is available for some firms that do not meet the eligibility criteria for CIGO and CIGS.
For smaller firms, which cannot use the CIG, the government has promised to increase financing for a separate scheme called the Salary Integration Fund.
SPAIN
The Spanish government has extended and simplified the use of its Expedientes de Regulacion de Empleo Temporales (ERTE) partial unemployment shorter hours scheme.
Workers can tap unemployment insurance irrespective of their employment history. Companies triggering ERTE are exempted from 75% of employer social contributions and up to 100% for companies with less than 50 employees.
The payments to workers put on partial unemployment scheme are based on the normal unemployment insurance benefit scheme based on 70% of previous earnings. The unemployment benefit is at minimum 502 euros a month.
BRITAIN
Britain has said it will pay companies 80% of the salary costs of staff they put on temporary leave, up to a limit of 2,500 pounds per month per worker. The scheme runs from March through May, and will be extended if needed. Businesses are not obliged to make up the difference in pay.
Businesses which only reduce staff hours, rather than putting workers on leave, are not eligible, though low-paid workers may be eligible for some welfare benefits.
Self-employed workers who lose profits due to the coronavirus can claim government support of up to 2,500 pounds a month if they filed an income tax return for the 2018/19 tax year and had annual trading profits below 50,000 pounds.
FRANCE
France has extended the generosity and simplified the
procedures of its partial unemployment scheme.
Workers earning up to 4.5x the minimum wage would get 84% of the net salary paid by their employer who then gets reimbursed by the State within 10 days. Some employers may have to make up for part of the 16% of net wages lost. This will depend on pre-existing company or sectoral agreements.
Source: Deutsche Bank Research and Reuters bureaux
(Reporting by Edward Taylor in Frankfurt; Additional reporting by David Milliken in London; Andrei Khalip in Lisbon; Richard Lough in Paris; Madeline Chambers in Berlin and Gavin Jones in Rome; Editing by Alexander Smith)
