On Short-Time

In this Covid-19 era, if you were trying to equate the economy in Germany to the virus, and show the trend....it's next to impossible because of 'short-time' work.

The German concept of avoiding layoffs of personnel?  You have a hundred employees in your company.  Once in short-time, some of them still work full-time (maybe even just one-percent....maybe fifty-percent).  The ones not working the full 160-odd hour month....are still paid out of a government program to roughly 65-percent of their normal month's pay.  This is supposed to move up to 80-percent shortly. 

So the unemployment rate around Germany is mostly stable.....with a quarter-percent point here and there on the rise.

Who is paying for short-time?  Well....you the citizen and consumer.

But short-time has a limit (one-year).

This morning, there's a rumored story via several news sites that the Ministry of Labor will go to an extended short-time program (March 2022, basically 19 more months on top of six months used so far). 

They would have to pass it via the Bundestag, and fund it.  Presently, I don't think any party would oppose it.

What's this basically saying?  Three things:

1.  No one with authority in Germany is expecting the economy to return to normal in 2021 (hint, that vaccine business isn't a 'Jesus-vehicle').

2.  2021 is an election year (not just federally, but via several German states), and they don't want mass unemployment to be one of the top campaign issues.

3.   Just because you offer short-time....doesn't mean that layoffs won't occur.  So offering an extension on short-time may not be a big positive.  In the case of Lufthansa, their manpower cuts will probably occur....even if short-time goes to March of 2022. 

The one curious aspect of this extension is that you have a fair percentage of Germans who might only be working forty hours a month, with their normal pay limited to 80-percent of the base pay.  Basically, they are getting a 20-percent pay-cut, and this has been the norm for six months already.  Can they go another 19 months?  I have my doubts.

The big question left?  If you had people working for you in the marginal sense....maybe only forty hours a month, for almost two years.....what happens when normalcy finally arrives?  Could they 'force' themselves to go and work for 160-hour month?  Would drinking problems start to be an issue over the next year, with so much free time? 

Short-time makes sense, but no one has ever tested it to this extent.