60 percent of normal net pay: With the previous short-time work benefits, many employees can barely make ends meet. IG Metall and works councils have therefore negotiated top-up payments in many places, either through collective bargaining agreements or company agreements.
But in some industries, collective bargaining agreements and works councils are few and far between. In those cases, employees need help from policymakers.
Following a weeks-long campaign by IG Metall, the federal government has responded: Short-time work benefits are being increased. The Bundestag and Bundesrat have now approved the corresponding legislation.
Here’s what’s changing with short-time work benefits:
- For the period between March and the end of December 2020, short-time work benefits (KuG) will increase for those receiving them over an extended period: Starting in the fourth month of receipt, they rise to 70 percent of the lost net pay (77 percent for households with children); starting in the seventh month, they rise to 80 percent (87 percent for households with children). However, this is contingent on the loss of pay in the respective month of receipt amounting to at least 50 percent. The calculation does not use the “normal” net pay from the pay stub, but rather a so-called flat-rate net pay. The Employment Agency provides a table for this purpose.
- Expanded opportunities for supplementary income: In the future, workers on short-time work in all occupations will be allowed to earn supplementary income up to the full amount of their previous monthly income. This regulation applies from May 1 through December 31, 2020.
Here’s what’s changing with unemployment benefits:
- Under the new law, the duration of unemployment benefits is extended for those whose entitlement to unemployment benefits would otherwise end between May 1 and December 31, 2020. They will receive unemployment benefits for three additional months.
Preventing financial hardship
For Jörg Hofmann, President of IG Metall, the decisions represent a necessary and important step: “IG Metall has been pushing hard for weeks to increase short-time work benefits in order to protect many affected workers from financial hardship.”
Hofmann also welcomes the extension of unemployment benefits, as finding new jobs on the labor market is currently virtually impossible. “It is therefore crucial that those affected do not now fall back on Hartz 4.”
Securing Income, Rewarding Responsibility
The statutory top-up will partially relieve the burden on employers who demonstrate social responsibility and voluntarily supplement short-time work benefits.
Above all, however, it helps the many workers on short-time work who have not received any top-up benefits to date. In Germany, this currently accounts for about three-quarters of those affected.
And last but not least, the top-up to short-time work benefits also serves as an economic stimulus package. Private consumption has been a mainstay of economic growth in recent years. If millions of workers lose large portions of their income, this pillar collapses. That would massively exacerbate and prolong the COVID-19 crisis.
Company agreements or collective bargaining agreements regarding the top-up of short-time work benefits remain valid and continue to be important. The exact amount of the top-up depends on the specific agreement.
Note: This article was first published on April 23, 2020. We have updated it.
