From UPSC perspective, the following things are important :
Prelims level : Kurzarbeit Scheme
Mains level : Strategies to prevent job losses during economic fallouts
Amid the all-round disruption caused to the economy by the novel coronavirus outbreak, a concern across the world is the possibility of a loss of jobs. Various governments have unveiled various measures to address such concerns, and one of the most talked-about is Kurzarbeit.
- Kurzarbeit is German for “short-work”.
- The policy provides for a short-time work allowance, called kurzarbeitgeld, which partially compensates for lost earnings during uncertain economic situations.
- 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.
How it works?
- When companies face a loss of earnings due to unforeseen economic situations, they often need to cut back on their working hours or send some of their employees’ home.
- It aims to address workers who are impacted by the loss of income due to shortened work hours during such times.
- 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.
Quantum of payment
- Payment under Kurzarbeit is calculated on the basis of a 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.
- This scheme 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.