is the German name for a program of state wage subsidies in which private-sector employees agree to or are forced to accept a reduction in

working hours Working time or laboring time is the period of time that a person spends at paid labor. Unpaid labor such as personal housework or caring for children or pets is not considered part of the working week. Many countries regulate the work wee ...

and pay, with public subsidies making up for all or part of the lost wages. Several Central European countries use such subsidies to limit the impact on the economy as a whole or a particular sector from short-term threats such as a

recession In economics, a recession is a business cycle contraction that occurs when there is a period of broad decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be tr ...

, pandemic, or natural disaster. The idea is to temporarily subsidize companies to avoid

layoff A layoff or downsizing is the temporary suspension or permanent termination of employment of an employee or, more commonly, a group of employees (collective layoff) for business reasons, such as personnel management or downsizing an organization ...

s or

bankruptcies Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the deb ...

during a temporary external disruption. Most notably, such subsidy programs were used to offset the effects of the

COVID-19 pandemic The COVID-19 pandemic (also known as the coronavirus pandemic and COVID pandemic), caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), began with an disease outbreak, outbreak of COVID-19 in Wuhan, China, in December ...

and

starting in 2020.

Austria

Austria Austria, formally the Republic of Austria, is a landlocked country in Central Europe, lying in the Eastern Alps. It is a federation of nine Federal states of Austria, states, of which the capital Vienna is the List of largest cities in Aust ...

, the introduction of requires a special arrangement between what are called the "social partners" of Austrian collective bargaining—the

Chamber of Commerce A chamber of commerce, or board of trade, is a form of business network. For example, a local organization of businesses whose goal is to further the interests of businesses. Business owners in towns and cities form these local societies to a ...

representing employers and the

labor union A trade union (British English) or labor union (American English), often simply referred to as a union, is an organization of workers whose purpose is to maintain or improve the conditions of their employment, such as attaining better wages ...

s representing employees—on the scope and duration of the ' arrangement, the conditions for any layoffs during the arrangement, and the extent of any professional development or retraining courses included.

Czech Republic

Amid the

COVID-19 pandemic in the Czech Republic The COVID-19 pandemic in the Czech Republic was a part of the COVID-19 pandemic, worldwide pandemic of coronavirus disease 2019 () caused by severe acute respiratory syndrome coronavirus 2 (). On 12 January 2020, the World Health Organiza ...

, the government of

Czech Republic The Czech Republic, also known as Czechia, and historically known as Bohemia, is a landlocked country in Central Europe. The country is bordered by Austria to the south, Germany to the west, Poland to the northeast, and Slovakia to the south ...

Andrej Babiš Andrej Babiš (; born 2 September 1954) is a Czech businessman and politician who served as the Prime Minister of the Czech Republic, prime minister of the Czech Republic from 2017 to 2021. He previously served as the Finance Minister of the Cze ...

announced plans to partially subsidize salaries of employees on reduced work schedules, covering 50–70% of pay for 1, 2, or up to 4 days per week that employees are at home due to shocks to companies coming from pandemics or natural disasters. Employers have to cover health and social insurance for the days when workers are at home, and employees contribute by the partial reduction in their pay.

Germany

It was in Germany that a system of "Kurzarbeitergeld" ( benefits) was first introduced, on May 25, 1910, to address a downturn in the potash mining and fertilizer industry. It became fully established in 1924 in response to the first economic crisis of the Weimar Republic. Under the scheme, temporarily laid-off workers receive payments, now from the Federal Employment Agency (BA), the agency that is also responsible for issuing unemployment benefits. The companies pay the hours actually worked at the original salary, while the state (or the BA, precisely) compensates 60 percent of the original pay for each hour not worked. This means that an individual might work 30 per cent less while experiencing only a 10 per cent loss in income. In 2009, the

German German(s) may refer to: * Germany, the country of the Germans and German things **Germania (Roman era) * Germans, citizens of Germany, people of German ancestry, or native speakers of the German language ** For citizenship in Germany, see also Ge ...

government had budgeted 5.1 billion euros for the program, which replaced some of the lost income of over 1.4 million workers. The program was favorably cited in a 2009

Organisation for Economic Co-operation and Development The Organisation for Economic Co-operation and Development (OECD; , OCDE) is an international organization, intergovernmental organization with 38 member countries, founded in 1961 to stimulate economic progress and international trade, wor ...

(OECD) report, which stated that it had saved nearly 500,000 jobs during the recession. It is "widely considered the gold standard of such programs", according to the IMF. Besides helping to avoid mass layoffs, proponents of the program also cite its keeping skilled work groups together and avoiding the atrophy of their skills during extended layoffs, while critics have expressed concerns about its expense and that it might prop up non-viable firms. During the

, the level of the compensation for cut hours was raised. If working hours are reduced by at least 50%, the covers 70% of the lost salary from the 4th to 6th month, and 80% from the 7th month onward. This change to the original scheme is applicable until December 31, 2021. The maximum duration was also extended to 24 months through December 31, 2021, if the had already started in 2020.

Romania

Due to the economic difficulties due to the

, the Romanian government is considering adopting a measure based on the German model of Kurzarbeit.

References

External links