Why furlough should be available permanently

Germany has had a partial unemployment or short time working scheme since the 1900s. According to the FT:

The tool is Kurzarbeit, or shorter work-time, a policy that has been copied by so many other countries that one economist called it one of Germany’s “most successful exports”. Under the scheme, companies hit by a downturn can send their workers home, or radically reduce their hours, and the state will replace a large part of their lost income.

Germany used the same system after 2008’s financial crisis and, though I can find little detail, it seems to be a quasi permanent feature of the German employment environment.

Since Britain, (before the Covid pandemic at least) had the longest working week in Europe, could not Britain adapt the current scheme in order to ensure we all work less?

Initially we could give all employers the right to furlough any employee for up to one day a week to see how it goes. It would be useful in not destroying companies that hit a sticky patch in their activities and help to prevent redundancies of highly skilled employees having to be made to because of a temporary problem.

It might be useful to demonstrate the bullshit jobs aspect of much employment and that the same output is indeed, often achievable in four days rather than five. So it might tackle productivity and could at the same time offer proper employment to more people – rather than having a significant minority having to put up with the precariousness of zero hours contracts, indeed that could be an additional reason for outlawing them (which after all, New Zealand did some years ago).

Since Covid-19, this sort of scheme would help to keep unemployment lower than it would otherwise be. Potentially employers could employ 20% more staff for the same cost. And they’d all be working a four day week.

We know it works both for Germany and now for the UK – and what we need is not to destroy what has been created but to take on board that it contains ideas that would work in the amelioration of the major employment crisis that is our future…..

Comments

  1. Andrew -

    Kurzarbeit seems to pay 60% of the difference in wages for up to 12 months (which can be extended to 24 months, and the percentage was increased to 70% or 80% for the coronavirus emergency). The employer still pays for the hours worked, and social security contributions.

    Yes, it appears to be permanent, set out Section 95 onwards in the third book of the German Social Code (Dritte Buch Sozialgesetzbuch) (§§ 95-109 SGB ​​III) which has been law since 1998, with predecessors back to the 1910s. There are some conditions, significant loss of work which is unavoidable and temporary, and at least a third of employees will lose at least 10% of their gross monthly earnings (and where there is one, works council agrees).

    There are some decent materials out there in German: Google Translate is good for this sort of thing: for example:

    * https://translate.google.co.uk/translate?hl=en&sl=de&u=https://de.wikipedia.org/wiki/Kurzarbeit
    * https://translate.google.co.uk/translate?hl=en&sl=de&u=https://www.eversheds-sutherland.com/global/en/what/articles/index.page%3FArticleID%3Den/global/Germany/de/fragen-und-antworten-zur-kurzarbeit

    1. Peter May -

      Thanks for that. Very interesting. It slightly surprised me that the EU hadn’t outlawed it as giving an unfair advantage to German companies – or perhaps if it was feeling less neoliberal, require that every state should have a similar scheme….

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