COVID furlough: How long can it last?
Germany pioneered so-called reduced-hours working (kurzarbeit) during the 2008/09 financial crisis. Other countries have adapted the model during the COVID-19 pandemic to avoid mass layoffs. Kurzarbeit permits companies to reduce the hours of their workers and claim wage subsidies of up to 60% (more for workers with families). The employee receives more than half of their salary for those hours that are cut and 100% for those they continue to work. The government has extended the program several times already, the latest extension runs until September. Labor Minister Hubertus Heil says it could be kept running until the end of the year, if required. At the height of the first wave of the pandemic, more than 6 million German workers from more than 600,000 firms were on the program at a cost of at least €35 billion ($41.5 billion). The number fell to 2.6 million by March this year and 2.3 million by May. A study by the Hans Böckler Foundation has calculated that kurzarbeit has saved 2.2 million German jobs.
A similar short-time working scheme is to be extended into 2022. However, the government has split the program into two. Severely affected industries such as gastronomy, hotels and aviation can apply for a subsidy of up to 90% of a worker’s wage. At the height of the pandemic, more than 40 million American workers were laid off at least temporarily. To read the full article please visit: https://www.dw.com/en/covid-furlough-how-long-can-it-last/a-58156310?fbclid=IwAR3E7zj7f5FIc3pn8aEvvReNQIpGUTEmRtOZ1QKrBZdfZYS-wXlLkuh96ec
Twenty-six states, making up about 70% of the US population, run their own version of Germany’s short-time work scheme. However, its use is much more limited than in Europe due to a lack of awareness of the program and administrative hurdles.
The federal government, instead, launched the Paycheck Protection Program (PPP), which offered loans to small firms of a 50% tax credit of workers’ wages whether they worked or not. Larger firms could only apply if they had cut workers’ hours.
Grounded Lufthansa planes
The aviation sector has been hit hard by the pandemic, forcing many employees into part-time work
PPP closed to new applications at the end of May as funding dried up.
The program made 11.6 million PPP loans totaling roughly $796 billion (€671 billion).
In addition, the government hiked unemployment payments for the first four jobless months by $600 per week.
The UK government was paying 80% of laid-off workers’ wages under the Coronavirus Job Retention Scheme.
Last week, the subsidy was reduced by 10%. Next month, the subsidy will be cut by another 10% and by the end of September, the program is due to end altogether.
Official figures suggest about 1.5 million workers were still receiving the wage top-ups from the government at the beginning of June.
Since March 2020, almost 12 million jobs have been covered by the scheme at one point or another, costing about £66 million (€76.9 billion) $90 billion).
Economists have been encouraged by the fall from 4 million workers in March and think the furlough reduction won’t lead to a big jump in unemployment.
France has extended its Chomage partiel (partial unemployment) program until the end of October.
From July 1, the government cut the compensation from 70% of a workers’ gross salary to 60%.
Employees in sectors still affected by the pandemic, including tourism, culture, events and sport, can still enjoy the higher amount until the end of August.
France’s unemployment rate hit 8.1% or 2.4 million people in the first quarter.
Spain had more than 3.6 million enrolled in its ERTE (temporary labor force adjustment plan) program at the height of the pandemic.
Today, the number is less than half a million.
Even so, the government has extended the program until the end of September.
ERTE subsidizes companies up to 70% of workers’ net salary for the first six months, before dropping to 50%.
Despite falling jobless rates due to seasonal labor demand from the tourism sector, more than a million more people are unemployed now than before COVID struck last year, according to official figures.
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Author Nik Martin
Related Subjects Coronavirus
Keywords furlough scheme, COVID-19 pandemic, kurzarbeit, wage subsidies, coronavirus, paycheck protection program
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