Heil proposes expanding temporary wage assistance
If businesses encounter a lack of assignments for their staff, they can opt for short-time work. The Labor Agency then partially compensates for the wage decrease - but only for a maximum of 12 months. Germany's Federal Minister of Labor, Hubertus Heil, aims to substantially amplify this period. Should this not occur, numerous affected individuals may face termination.
Heil intends to limit the escalation of unemployment in Germany by expanding the duration of short-time work allowances. A proposed regulation suggests lengthening the maximum term to 24 months, with the latest conclusion on 31 December 2025. The document indicates that should the duration not be extended, significant job reductions could be anticipated in the businesses encountering short-time work.
The legislation can be authorized by the red-green minority government without parliamentary or state council involvement. According to government sources, the cabinet is projected to endorse this prior to the holiday season. Minister Heil initiated the standard departmental consultation as a preliminary step.
The draft suggests that extending the payment duration from 12 to 24 months may result in additional expenditures of 260 million euros for short-time work at the Federal Labor Agency. These costs would be offset by savings on unemployment benefits that would otherwise be provided. In short-time work, the BA reimburses 60% (or 67% for employees with children) of the lost net wage. This aids companies in navigating lean periods during economic downturns.
As of preliminary data, the number of individuals in short-time work increased to 268,000 in September. This represents an increase of 116,000 compared to a year prior. 82% of those in short-time work are employed in the manufacturing sector.
The Federal Ministry of Labor, led by Minister Heil, is spearheading efforts to extend the duration of short-time work allowances. The proposed regulation aims to increase the maximum term from 12 to 24 months, potentially preventing significant job reductions in businesses facing short-time work.
