German model to protect jobs

German model to protect jobs

The government is pondering different schemes to tackle reduced employment that would see it subsidizing part of lost salaries or social security contributions, once the country enters the stage of a gradual return to a new kind of normalcy.

The main tool that will be employed by the Finance Ministry will be the European Union's SURE program, which is aimed at bolstering employment and reducing unemployment risks during emergencies. According to ministry calculations, Greece will be able to claim around 1.4-1.5 billion euros from the 100 billion euros the EU plans to provide to member-states in the form of favorable loans.

EU agencies and the Greek Ministry of Labor are examining schemes employed during the 2008 credit crisis aimed at maintaining jobs in businesses grappling with a temporary reduction in demand. One scheme that is under consideration for the second half of the year is the German "Kurzarbeit," through which the state provides financial support to workers who have either their seen working hours reduced or have no work due to their contracts being temporarily suspended.

Such programs could apply in the context of the coronavirus pandemic to enterprises that have adopted flexible forms of employment for 10 percent of their staff (against 33 percent during the 2008 crisis). Usually the state covers 60 percent of the difference between net salaries due to the reduction in working hours and would now also cover 100 percent of contributions, against 50 percent during the credit crisis.

Experts explain that the idea behind Kurzarbeit is the avoidance of layoffs of skilled staff in cases where the reduction of working hours or the job loss is temporary. Unionists, however, are concerned that such a scheme would allow flexible and temporary forms of employment with exceptionally low salaries to gain greater prevalence in the labor market even after the coronavirus crisis is over.

Until the SURE program is approved, the government is considering extending the current contract suspension scheme by another month after end-April, with compensation being proportionate to the days of suspension up to 533 euros per month.

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