Germany is in a recession. Short-time work is the bridge that safeguards employment. To ensure this bridge continues to hold, IG Metall has made numerous proposals to extend and improve short-time work.
The Federal Cabinet has now approved many of these improvements and set the legislative process in motion.
“We very much welcome the extension of the regulations regarding the duration of benefits and the top-up to short-time work benefits; this is an indispensable building block for overcoming the acute COVID-19 crisis,” says Jörg Hofmann, President of IG Metall. At the same time, he calls for further steps: “Workers and companies need planning certainty. The federal government should decide on a further extension of the short-time work regulations by June 2021 at the latest.”
The decisions in detail—and what they mean for workers:
- The eligibility period for short-time work benefits is being extended to 24 months, through December 31, 2021, at the latest.
IG Metall’s assessment: That’s good ! However, it would be even better if the extension were to apply beyond 2021. Short-time work should be able to run for 24 months from the respective start date.
- The simplified access to short-time work introduced in the wake of the COVID-19 crisis remains in effect: through December 31, 2021, for all companies that began short-time work by March 31, 2021. Simplified access means that employees do not have to accumulate negative hours. Furthermore, short-time work is possible as soon as 10 percent of the workforce is affected by a loss of work.
IG Metall’s assessment: That’s a good thing!
- Temporary agency workers can receive short-time work benefits through December 31, 2021.
IG Metall’s assessment: Good move!
- The increase in short-time work benefits will continue, also through December 31, 2021. This means that starting in the fourth month of short-time work, the benefit rises to 77 percent of lost wages (70 percent for those without children), and starting in the seventh month, to 87 percent (80 percent for those without children).
IG Metall’s assessment: Many employees can barely make ends meet on the standard short-time work allowance (60 or 67 percent of lost wages). The statutory top-up is therefore important. However, IG Metall is primarily counting on employers to provide additional top-ups agreed upon at the company level and through collective bargaining agreements.
- Tax breaks continue to apply to employer contributions to short-time work benefits (through December 31, 2021).
IG Metall’s assessment: IG Metall and its works councils have secured employer supplements in numerous companies. These supplements ensure that many employees retain a large portion of their income. The fact that these supplements remain tax-free is fair and in line with our demands.
- Currently, the Federal Employment Agency pays the full amount of social security contributions for employees on short-time work. This saves employers a significant amount of money. Starting in July 2021, full reimbursement will only be available if companies use short-time work to provide training for their employees.
IG Metall’s assessment: By reimbursing social security contributions through July 2021, the government is once again providing employers with significant support. This support should be tied to a ban on layoffs for operational reasons. In the long term, it is appropriate to make full reimbursement of social security contributions contingent on short-time work being combined with employee training.
- The Federal Employment Agency receives federal subsidies so that it can continue to finance short-time work without jeopardizing its ability to act.
IG Metall’s assessment: A federal subsidy that does not have to be repaid is the right approach. It ensures the Federal Employment Agency’s ability to act. Without this subsidy, the agency’s leeway—for example, in the area of continuing education—would be significantly more limited.
What still needs to be done:
IG Metall is advocating for further improvements to the short-time work program. Our demand remains the same: Receiving short-time work benefits and supplements to those benefits must not result in any tax disadvantages for employees. Currently, employees face the risk of having to pay back taxes.
In addition, we want to extend the duration of the transfer short-time work allowance (Transfer-KuG) to 24 months. The Transfer-KuG helps when employees cannot be retained at their companies despite all efforts. Only if it is paid out over the long term can many colleagues complete viable training or retraining programs.
Fundamentally, IG Metall is calling for greater reliability in short-time work policies, rather than discussing adjustments on a semi-annual basis. The federal government should decide on the continued implementation of short-time work well in advance of the expiration of the temporary regulations, but no later than June 2021.
A detailed assessment of the government’s decisions is available here
