Coronavirus: Could UK adopt German pay top-up scheme?


Different from the UK, the Germans didn’t have to invent a job support programme from eliminate when the pandemic struck: they already had one oven-ready.

While British followers were getting to grips with the novelty of furloughing workers at the authority’s expense, their German counterparts simply fell back on a look overed and tested scheme.

Now, while UK Chancellor Rishi Sunak is insisting that the Coronavirus Job Retention Subterfuge will not continue past October, Germany is extending its Kurzarbeit job subvention measures until the end of 2021.

At the same time, France is following Germany’s eg and expects to be doing so for a couple of years.

In the UK, influential figures including old prime minister Gordon Brown are urging the government to bring in a German or French-style structure after October.

So what are the German and French schemes and how do they deal with?

Germany’s Kurzarbeit

“I’m very glad we have this system,” speaks Dr Volker Verch, director of the Central Westphalian employers’ federation.

“We pass on have lost many more jobs, in my region and across the motherland, if we didn’t have this Kurzarbeit,” he told the BBC.

“Obviously it all has to be paid for, but it’s benefit it in terms of social harmony.”

When the British scheme began, it was based on reward workers to stay at home and do nothing. It was not until July that furloughed staff members were able to go back to work part-time.

However, the German approach was always about short-time working – allowing employers to reduce workers’ hours while keeping them in a job. The government pays workers a portion of the money they would have got for working those lost hours.

According to the Munich-based Ifo Organize for Economic Research, at the height of the pandemic, half of all German firms had at least some of their standard on the scheme.

That includes Rolls-Royce Power Systems, a German engineering enterprise owned by Rolls-Royce Holdings and specialising in power generation and propulsion techniques. It employs 9,000 people worldwide, 5,500 of them in Germany.

Chief leader Andreas Schell told the BBC that the company came relatively past due to the Kurzarbeit scheme.

“When the crisis came, we were sitting on a propitious order book,” he says. “But we anticipated a reduction in orders, and we had less to do in the third part, so we had to adjust our capacity.”

In June, the firm put 1,000 of its German employees on “short-time exertion”. That rose to 1,800 in July, before falling back in August and September as women went on holiday instead.

“It’s a really good programme of support by the German ministry,” says Mr Schell. “Otherwise we would have suffered economically. But it also helps to lessen the economic consequences for our employees. It offers flexibility to us as a company and that’s a considerable thing.”

Kurzarbeit has a long pedigree, going back to the early 20th Century. How, it came to prominence during the global financial crisis of 2008-09, when it is ratiocination to have saved up to half a million jobs.

Even in normal without delays, it can be used by companies undergoing restructuring or suffering from seasonal fluctuations in their profession.

But normally it lasts for only six months. During the pandemic, that has been snowballed to a maximum of 21 months, while the criteria have been swapped to include more firms and workers.

The percentage of lost wages paid by the superintendence will also go up in stages, from the usual 60% to 80% after the original six months.

In comparison with the UK’s furlough scheme, the cost of Kurzarbeit appearance ofs relatively modest, perhaps reflecting its more limited scope.

Berlin furrowed €23.5bn into bolstering the scheme at the start of the pandemic, then increased it again in August, at an estimated cost of €10bn more, to run for all of next year.

By place against, the Office for Budget Responsibility has estimated that the UK’s furlough scheme pass on have cost £60bn, about twice as much as the Germans are splurge, by the time it ends in October.

France’s ‘chômage partiel’

The French blueprint, known as “partial unemployment” or “partial activity”, also pre-dates the coronavirus pandemic.

It too is lay out to subsidise the jobs of people on reduced working hours – and it’s also in view for the long haul.

Under the French scheme, firms are allowed to cut workers’ hours by up to 40% for up to three years. Employees still receive just about all their normal salary, with the government paying a percentage of the bring in.

The scheme is subject to all kinds of French bureaucracy, requiring firms to move to an agreement with unions and offer formal guarantees of job security, but the in theory is the same as in Germany.

Olivier Six is chief executive of two very different decides, both based in the Grenoble area.

The bigger of the two, CIC Orio, is a metallurgy body that employs 150 people making industrial boilers and other specialised gear. The other, G-Tech Guidetti, specialises in making hiking accessories.

“When the calamity began, there was a loss of confidence,” he told the BBC. “Firms were pay attention on their funds, nobody was paying anybody.”

G-Tech Guidetti, as a consumer-facing steady, was immediately hit by the lockdown, because all its stockists had to close, so all its 15 employees stabbed on the partial activity scheme.

“But after confinement ended, there was a pick-up in consumption and the rally was very strong,” he says.

CIC Orio, however, is still making use of the approach. Its employees are currently working four days out of five, with the guidance compensating them for the lost day’s earnings.

“It’s fortunate that we have this manoeuvre, because we’re afraid that the crisis will come back again,” he thinks. “This will last a long time. There will undoubtedly be another year of very weak economic activity.”

The French supervision describes its scheme as a “bouclier anti-licenciements” – that is, an anti-redundancy shield.

For now, it manifests to be working. But with cases of coronavirus on the rise again in France, it’s anyone’s guesswork how long it might be needed.

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