Kurzarbeit Scheme

Explanation :

• Kurzarbeit is Germany’s existing scheme that provides for partial compensation for a worker’s earnings in adverse situations.
• Kurzarbeit is German for “short-work”. The policy was rolled out during the 2008 economic crisis while its origins date back as far as the early 20th century, before and after World War I.
• Germany’s use of Kurzarbeit during the 2008-2009 economic crisis has been cited as one of the reasons why the country was able to hold its unemployment rate to within 7.5 per cent even during the recession.

Mode of Working

• The policy provides for a short-time work allowance, called kurzarbeitgeld, which partially compensates for lost earnings during uncertain economic situations.
• They can apply for short-term work benefits under the scheme, with the government stepping in to pay employees a part of their lost income.
• This helps the companies retain their employees instead of laying them off, and allows the latter to sustain themselves for a period of up to 12 months.
• Payment under Kurzarbeit is calculated on the basis of net loss of earnings. As per Germany’s Federal Agency for Work, short-time employees generally receive about 60 per cent of the flat-rate net wage, In case there is at least one child in the house of the short-time worker, he/she receives 67 per cent of the flat-rate net wage.