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Kurzarbeit scheme

Topics Covered: Inclusive growth and issues arising from it.

Kurzarbeit scheme

What to study?

For Prelims: Key features of the scheme.

For Mains: Significance of the scheme and can it be replicated in India?

Why in News? Amid the all-round disruption caused to the economy by the novel coronavirus outbreak, a concern across the world is the possibility of loss of jobs.

Germany’s Kurzabeit is being mentioned time and again in this context. Also, the German cabinet is planning to extend the benefit of short-time work allowance by the first half of April through legislation.

About Kurzarbeit:

Kurzarbeit is German for “short-work”.

The policy provides for a short-time work allowance, called kurzarbeitgeld, which partially compensates for lost earnings during uncertain economic situations.

The policy was rolled out during the 2008 economic crisis while its origins date back as far as the early 20th century, before and after World War I.

How it works?

  1. The scheme aims to address workers who are impacted by loss of income due to shortened work hours during such times.
  2. They can apply for short-term work benefits under the scheme, with the government stepping in to pay employees a part of their lost income.
  3. This helps the companies retain their employees instead of laying them off, and allows the latter to sustain themselves for a period of up to 12 months.

Quantum of payment:

Payment under Kurzarbeit is calculated on the basis of net loss of earnings. As per Germany’s Federal Agency for Work, short-time employees generally receive about 60 per cent of the flat-rate net wage, In case there is at least one child in the house of the short-time worker, he/she receives 67 per cent of the flat-rate net wage.

Sources: Indian Express.