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Federal government plans to increase short-time work compensation
14. April 2020
In the wake of the Corona crisis, the federal government decided to relax the regulations for short-time work compensation. Now it seems that there is going to be an improvement: the federal government plans to increase the short-time work compensation for low-income earners.
In a blog, we classified short-time work compensation as a useful tool for companies in crisis, but pointed out that some employees may face drastic cuts.
Consequences for workers in the low-wage sector
Finally, employees receive in principle 60% of their net salary. 67% if they have to care for children.
Of course, people with low net incomes are particularly hard hit. After all, the relative losses are the same for everyone, but the absolute incomes of low earners may be so low that running costs such as rent could put them in a position of destitution.
Now changes are obviously imminent. The federal government plans to increase the short-time work compensation for low-income earners.
New Corona aid package: German government plans to increase short-time work compensation
Low-income earners are to receive top-ups with the help of a new package of measures. It has not yet been decided exactly what the top-up should look like.
The SPD proposes a 20% increase for employees. These would thus receive 80% of their usual net wages. Employees with children would be paid 87% of their net wages.
The coalition partner CDU has made an alternative proposal. The CDU/CSU would like to pay the legal minimum wage for every hour lost due to short-time work. This is currently at 9.35 euros.
An agreement is expected shortly. We will keep you informed at this point.
The measure of a topping up is indispensable from our point of view, not only from a social policy point of view. It also helps to calm the situation in the current crisis from an entrepreneurial perspective.
After all, many entrepreneurs are dependent on the use of short-time work compensation to secure liquidity. If, however, the private livelihoods of parts of the workforce are put at risk during implementation, these measures can hardly be implemented. An increase would cushion the economic consequences and thus also give companies more acceptance for their unpopular decisions.