Almost a fifth of the companies want to cut jobs

Berlin Daimler– HR Director Wilfried Porth didn’t gloss over anything: “Obviously something is breaking away at the moment that no one knows if it can be caught up,” the manager said last week. The carmaker had to accept a drop in profits of almost 80 percent in the first quarter, sales of the core brand Mercedes decreased by 15 percent. “The fact that we will need to adjust is obvious,” said Porth. He didn’t say the word job cuts. But even before Corona, Daimler had decided to cut up to 15,000 jobs.

The fear of jobs is back in Germany and the virus pandemic will leave deep marks on the job market. Every second company is already doing short-time work. According to a survey by the Ifo Institute, almost a fifth of the companies want to lay off employees or not to extend temporary jobs.

“The fear of jobs seeps in,” says Ifo economist Klaus Wohlrabe. The job cuts plans are apparently based on the concern of many companies that the restrictions on public life in the corona crisis will not end in May.

On average, the companies surveyed expected four months of partial standstill. 84 percent feel a drop in sales due to the corona crisis, only four percent register a growing business. According to the Federal Employment Agency (BA), almost every third of the 2.2 million companies with at least one employee who is subject to social security contributions have registered short-time work.

Previous employment forecasts are becoming more and more waste every day that the corona crisis continues. “For the labor market, we expect unemployment to rise sharply over the next few months. But many companies keep their people, you can see that from short-time work, ”says Enzo Weber from the Institute for Labor Market and Vocational Research (IAB).

BA boss Detlef Scheele expected a rise in unemployment by 150,000 to 200,000 people in April a month ago. The Nuremberg authorities will present the current data next Thursday.

Domestic demand collapses

There is hardly any improvement in sight if you look at the economic development: the purchasing manager index of IHS Markit has plummeted. In the survey, 75 percent of service providers and almost as many industrial managers said that their sales had shrunk significantly. Service providers’ sales fell more than ever in the 20-year history of this survey. “Both domestic and export demand has collapsed,” writes IHS Markit economist Phil Smith.

“Demand levels will not return to pre-crisis levels anytime soon,” says Sascha Haghani, head of the global restructuring practice at management consultancy Roland Berger. That’s about it GfKConsumer barometer, which measures consumer mood, plummeted to a record low.

“Sooner or later the companies will have to adjust their costs accordingly,” Haghani expects. Probably also through job cuts: According to the IHS, more jobs were cut in the service sector than at the height of the financial crisis recession in April 2009, and the reduction in personnel is also accelerating in industry.

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The Ifo survey also shows how wide the shock waves are spreading in the economy: in industry and service providers, almost every fifth company wants to lay off employees or not to extend temporary jobs. It is 15 percent in retail, and two percent on construction that has so far been little affected by downtime. Leading economists such as the head of business practices, Lars Feld, are starting to adjust their forecasts for 2020 downwards.

After Chancellor Angela Merkel and the Prime Ministers decided a slow restart of the economy last week, he expects gross domestic product (GDP) to shrink by at least 5.5 percentage points in 2020. Even in the economic institutes, which predicted a minus of 4.2 percent for 2020 in their joint forecast two weeks ago, it is now expected that a five will be before the decimal point.

The IAB had anticipated a 4.7 percent decline in GDP in March, when the economy largely stands still for two and a half months and only normalizes by the end of the year. In this case, the number of unemployed could temporarily rise from the current 2.3 million to more than three million, the Nuremberg researchers predicted at the time.

A well-known restructuring expert expects Corona to increase unemployment to as many as four million people. Especially badly hit sectors such as tourism and gastronomy are affected, but also important branches of industry such as the automotive suppliers.

The government is obviously also assuming a long period of weakness on the labor market. For example, for all unemployed people who would slide into Hartz IV between May and December, the duration of the unemployment benefit will be extended by three months. “Those who are just becoming unemployed or who have recently become unemployed currently have little chance of finding a job again,” said Labor Minister Hubertus Heil (SPD).

In order to counter the allegations made by the unions, in particular, that politicians are more concerned with companies than with employees, the coalition committee also decided on Thursday night to increase the short-time work allowance – staggered according to the duration of benefits.

It is currently 60 percent of net income and 67 percent for employees with children. From the fourth month in Corona short-time work, employees whose working hours are reduced by at least half are now to receive 70 or 77 percent. From the seventh month, the rates increase to 80 to 87 percent.

In addition, short-time workers who take up another job can earn up to the amount of their previous monthly income. So far, this was only true for “systemically relevant” activities such as care or agriculture.

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The gradual increase in short-time work benefits has met with criticism: “I would have preferred a faster increase, especially for low-wage earners,” said Sebastian Dullien, head of the Institute for Macroeconomics and Business Cycle Research (IMK). In a survey, 40 percent of employees who were on short-time work said that they would get by with the money for a maximum of three months.

Employers see “contribution club”

The decision met with a mixed response among the unions, which had hoped for a general increase to 80 or 87 percent from the start. “This protects many employees from existential hardships,” praised IG Metall boss Jörg Hofmann. On the other hand, the chairman of the Food, Beverage and Catering trade union (NGG), Guido Zeitler, declared that the increase was correct, but was too small and too late.

In the hospitality industry, employees could probably only expect 80 percent of normal net wages in October 2020. According to the NGG calculations, according to the new plans, a cook in Berlin will have around 1,070 euros instead of around 920 euros and short-time work from around 1,220 euros from the seventh month. “For hundreds of thousands of people with low incomes, the only thing left to do is to apply for Hartz IV,” said Zeitler.

IAB labor market expert Weber also criticizes the fact that the planned changes will not benefit employees in the low-wage industries in a very targeted manner. “In the end, industrial sectors that have long been in recession could benefit in particular.”

For Holger Schäfer from the employers’ institute of the German economy (IW), it is not at all clear which problem the government wants to solve with the compromise: “In the end, a lot of money is spent on a purpose that is not clearly defined.” According to Schäfer’s calculations, the BA would need 24 billion euros to send 4.5 million full-time average earners without children on short-time work for three months. The employment agency’s reserve is just under 26 billion euros.

The criticism from business was correspondingly harsh. Employer President Ingo Kramer praised coalition decisions such as help for restaurants and the easier return of losses for companies. But they would be overlaid by “spending money with a watering can”.

The employers’ association Gesamtmetall criticized that the decisions on short-time work were expensive and caused an enormous additional administrative effort at the BA: “There is great concern that when the economy restarts, the tax and contribution club will fall on the employees and companies,” said CEO Oliver Zander the Handelsblatt. BA boss Scheele said that he would have liked a “simpler regulation”.

Monika Schnitzer, a new member of the Council of Experts, told Handelsblatt that she could understand that the government wanted to expand short-time work benefits. “But I think the chosen way of increasing is problematic.” After all, many employers voluntarily increased to keep their employees. I am afraid that it will have a high share of deadweight effects. ”

Ifo President Clemens Fuest believes the decisions will stabilize consumer demand. They are therefore also “a suitable economic policy measure”. The same applies to the extension of the period of unemployment benefit

More: Tax cuts, premiums, aid: Germany’s economists argue about state aid

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“There are conditions like in war”

Madrid Alvaro Mallol had prepared. Since the coronavirus paralyzed China’s economy in January, the entrepreneur has filled his warehouse with intermediate products. “We worked overtime in logistics and production in order to be able to send as many deliveries as possible before the crisis came to Spain,” says the head of Dicomat, a manufacturer of electrical components that are used in Industry 4.0 or intelligent buildings come. The customers are mainly located in Spain, some in Portugal.

Mallol’s orders began to break in in the second week of March. The more the plague spread in his country, the fewer it became. Almost all Spanish companies, including Dicomat, have been closed for a week. “Incoming orders have only fallen by 70 percent and since Monday by 95 percent,” says Mallol.

With 70 employees, a turnover of more than ten million euros and hardly any debts with the bank, his company is one of those that are slipping into the crisis from a comparatively stable position. But its costs also continue to run, while the revenue collapses. He and his employees initially agreed on working time accounts. “But if we are not allowed to open again at the end of April, I have to apply for short-time work and probably also a loan,” he says.

Spain is one of the countries most affected by the pandemic worldwide. On Sunday there were officially 130,759 infected people, more than in any other country in Europe. Worldwide, there are only more cases in the United States.

The government could have limited the extent of the crisis if it had reacted earlier. The story of Covid-19 in Spain, it’s the story of an underestimated danger.

Hospitals before collapse

12,418 people died of the corona virus in Spain, almost a fifth of all deaths worldwide. The real extent of the infection is likely to be many times higher – there are by far not enough tests to examine all people with symptoms. The health system, which actually has a good reputation, is on the verge of collapse due to the outbreak.

That is why the government has decided to shutdown the economy. People should stay at home if possible. This shutdown is scheduled to end after Easter, while Prime Minister Pedro Sánchez extended the curfew on Saturday until April 26. In addition, he has already announced that further extensions will follow.

The country is heading for the worst recession since democracy was introduced in 1977. The first economic data are devastating: The confidence of entrepreneurs in the future, part of the purchasing manager index, fell in March to the lowest value ever measured.

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Almost a million jobs have already been destroyed. The number of registered unemployed rose by 302,265 people in March as never before. Even before the crisis, unemployment in Spain was 14 percent. Only Greece is worse off in the EU.

The Spanish government, like so many others around the world, has launched an aid program consisting primarily of loan guarantees. The goal is to provide companies with liquidity so that they can bridge the gap without revenue. Once the virus has been pushed back, it is hoped that the recovery will be as steep as the downturn. However, many entrepreneurs are skeptical.

The government’s crisis management also creates uncertainty for them. The boss of the employers’ association CEOE, Antonio Garamendi, criticized the fact that Sánchez decided to shutdown without even contacting the social partners.

Resentment has also triggered a decree by left-wing populist labor minister Yolanda Díaz, which provides for a six-month ban on companies that take short-time work due to force majeure.

This goes too far for entrepreneurs. “How am I supposed to pay all employees if I only make 30 or 40 percent of my normal turnover after the crisis?” Asks Oscar Rivera, who has six restaurants in Madrid. He applied for short-time work for his 120 employees and took out a first loan to pay his current bills. He has already given up hope that he can still make a small profit this year. “For me, the only thing now is that we survive,” he says.

Experts expect a particularly significant slump, especially in the hospitality and tourism sectors, which are key sectors for the Spanish economy. Because only when everyone feels safe again will they travel or go to a busy restaurant.

“Many small and medium-sized companies will not be able to afford to keep all employees on when the alarm goes off,” says labor market expert Marcel Jansen from the Autonomous University in Madrid. “If the government sticks to this rule, many will rather file for bankruptcy.”

The entrepreneurs watch with suspicion how members of the left-wing populist party Unidas Podemos exercise their influence in the young coalition with the socialists. Spanish entrepreneurs have no idea of ​​the socialist minister for economy, Nadia Calviño. The long-time EU budget director has long spoken out against a ban and also against a complete shutdown so as not to stall the economy. “But Podemos would love to reintroduce communism in Spain,” says a manager. Several employers are similar.

Government weighs down

The hands of the socialists are largely tied. The treasury is empty, the debts are just as high as the economic output. Spain cannot afford the generous aid packages that Germany has agreed with employers. After all, the EU is now showing a willingness to provide solidary fiscal support, even if not for the euro bonds such as Spain and Italy are demanding.

Spanish employer president Antonio Garamendi also points out that companies are going into this crisis more solidly than the previous one. “The Spanish companies are much stronger and more international today. That is a very important difference, ”he told the Handelsblatt.

The Pedro Sánchez government could at least have dampened the impact of the crisis if it had reacted earlier. While Mallol was filling his camp for fear of the virus in January, she apparently saw no reason to stock up on medical supplies.

When the GSMA mobile phone association canceled the Mobile World mobile phone fair in Barcelona in February out of corporate fear of contagion, Spanish ministers even reacted with a sniff and said there was no cause for concern. On March 8, when there were already 7,000 infected people in Italy and urgent warnings from the World Health Agency, the government allowed mass demonstrations to be held on World Women’s Day. Two ministers and Sánchez’s wife were then tested positive for the virus.

On March 5, emergency coordinator Fernando Simón said it made no sense to test people without symptoms. He is now infected too, and Spain is desperately trying to buy the necessary tests on the market to get a realistic picture of the spread. The Spanish government was not alone in its misjudgment. But for the Spaniards, that is little consolation.

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The capital city of Madrid is the epicenter of the outbreak. It is famous for its noisy and busy streets full of honking taxis, street cafes and tapas bars. Now they look like an empty film set after the shoot. Instead, the camera in the evening news zooms into the crowded hospitals, where some patients are lying on the floor in the hallway and nurses are tying garbage bags because there is not enough protective clothing. It zooms in shopping malls that are turned into mortuaries because the crematoriums are overloaded. And she zooms in on the Madrid exhibition center, which has been converted into a huge hospital.

They are images that will burn into the minds of the nations. For now, they are making sure that the Spaniards endure the toughest curfew in Europe without any major complaints. You can only go out of the house one by one. And only to go shopping. Walks, jogging or out in the fresh air with a child – all of this has been prohibited for three weeks.

Doctors and nurses are now the new heroes. Every evening at 8 p.m., the Spaniards open balconies and windows and give them applause for minutes. The song that has developed into the hymn of the crisis often sounds from some hi-fi system: the hit “Resistiré” (“I hold out”) by the Spanish band Dúo Dinámico. “I hold on to live on,” says the chorus. “I will endure all the beatings and never surrender, even if my dreams shatter. Resistiré. ”

“Conditions like in war”

Carlos Álvarez is one of the heroes, even if he doesn’t like the name. The 32-year-old is a cardiologist in “La Paz”, one of the largest hospitals in the capital. He became a father shortly before the virus broke out and only started working again a few days ago. “Everything has changed completely,” he says. “Conditions in the hospital are now like in war.”

He recognizes colleagues in protective suits and with masks in front of his face by the eyes or not at all. 95 percent of all beds are reserved for corona patients. In the intensive care unit, which has 45 places, there are 133 patients. The clinic has mobilized beds for them with respirators from recovery rooms, surgery or anesthesia.
In contrast, there are hardly any patients in cardiology. This is also a mystery of the crisis: “People with heart attacks hardly report,” says Álvarez. Nobody knows why – possibly for fear of getting infected in the hospital.

His colleague Almudena Castro, also a cardiologist, works in the middle of the Corona madness. “The worst thing for me is the loneliness of the patients,” she says. “They die alone without being able to say goodbye to their families.” Because of the risk of infection, she can only inform relatives on the phone. “Many of them lost father and mother within a few days,” she says. “This disease is incredibly cruel.”

Seven of the 20 colleagues from the cardiology department at La Paz Hospital got infected, some are in critical condition in their hospital. They are no exception: over 18,000 doctors and nurses have contracted the disease. The big problem is the lack of protective equipment.

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The government later tried to buy the necessary material, but there was none left on the market. A large supply of tests from China was faulty, the producer did not have a Chinese license. Now a million quick tests have come. However, they only reliably detect infections that have existed for seven days. They are to be used primarily in hospitals and old people’s homes.

“The wounds remain”

According to the OECD, Spain is one of the countries where the least people die from preventable and treatable diseases. Health care expenditure is 15 percent below the European average, but the system is considered very efficient. The occupancy rate of hospital beds at 75 percent is lower than in Germany at 79 percent. “The Spanish system is well equipped for normal times,” says Jaume Ribera, health expert at the Spanish business school IESE. However, it is not enough for an extreme situation like the corona crisis.

In order to prevent a collapse of the health system, the economy is now also standing still, because the top priority is to contain the infections. Spain will feel the consequences for a long time. For company boss Mallol, the problem is not solved on the day that he is allowed to work again. “It takes six months in industry for us to reach our full capacities again,” he says. “This is the time it takes a project from development to production to sales. During this time we have no further income. ”

After all, the wave of infections is slowly leveling off. “But the wounds she has left will always remain,” says doctor Almudena Castro.

More: Europe is facing a historical test in the corona crisis.

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How the federal government wants to save companies

Berlin It was an unusual Bundestag session on Wednesday morning. Only every third chair was allowed to be occupied by parliamentarians. The spaces in between had to remain free. President of the Bundestag Wolfgang Schäuble (CDU) asked the MPs to keep the necessary distance of 1.50 meters in the corona crisis in order not to infect anyone. “If there is not enough space in the hall, we have also created space in the visitors’ gallery.”

As many MPs as possible had traveled to Berlin for the meeting to ensure that the chancellor majority needed to adopt the crisis measures. However, the Bundestag stipulated for the future to be quorate even if only a quarter of the members are still present. “Parliamentary democracy will not be overridden,” said Schäuble. Parliament remains able to act.

It immediately demonstrated its ability to act. In the afternoon, the Bundestag hastily passed the billion dollar rescue packages for the economy. The Federal Council still has to agree on Friday.

“Hard weeks are ahead of us. We can cope with them if we show solidarity, ”Vice Chancellor Olaf Scholz (SPD) had previously advertised for the aid packages. Scholz spoke on behalf of Chancellor Angela Merkel, who is still in quarantine at home.

The measures would result in a supplementary budget of 156 billion euros – “a gigantic sum,” said Scholz. But this is necessary to mitigate the consequences of the crisis. In total, including sureties and discounted KfW loans, it is even about aid measures with a volume of 1.2 trillion euros.

Despite this huge sum, artisans, retailers and restaurateurs fear falling through the grate. Emergency aid is available for small companies with up to ten employees, and a new rescue fund (WSF) for large companies, which also grants direct grants as a supplement to KfW liquidity aid – provided the companies have at least 249 employees, 43 million euros in total assets and 50 million euros in sales .

Employer President Ingo Kramer praised the decisions: “What has now been launched is a huge and very targeted aid package,” he told the Handelsblatt.

The rescue package must also be accessible to companies, the associations of hotels, restaurants and caterers, Dehoga and IHA, the retail association HDE and the craft association ZDH demanded.

Fear of overwhelming the rescue package

“Many medium-sized companies with more than ten employees are at risk of falling through the network of federal support measures,” feared craft president Hans Peter Wollseifer. These companies also needed emergency aid, for example when pending wages or subsidizing rents.
Finance minister Scholz promised in the Bundestag that the government would do everything to mitigate the corona consequences. “There is no script for this.” If necessary, the government will decide on further measures. In concrete terms, Scholz already promised employers that he would have examinations made to make tax-free wages that they want to pay their employees in the crisis. That was what medium-sized companies had asked for.

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In the Bundestag, however, other criticisms were initially in focus on Wednesday. A number of MPs were upset with the federal government. Around 15,000 companies are said to be able to slip under the rescue fund.

Union economic leaders fear that this large number could overwhelm the bailout fund – and lead to arbitrary decisions. Therefore, they particularly urged changes to the possibility of the rescue fund to nationalize companies in need. They demanded that the hurdles be raised so that the instrument could not be used indiscriminately.

However, the Ministry of Finance rejected all proposed changes. At 0.08 a.m. Tuesday night the house sent a large package with numerous changes to the law. “That is not possible, not even in these times,” said a CDU MP. “How are we supposed to go through the paperwork until the next morning’s resolution when we get it at midnight?”

Lambrecht for nationalization if necessary

The Federal Ministry of Finance is against criticism. “We have taken up many requests for changes, such as the desire of the federal states to put federal and state programs legally on an equal footing, or to include start-ups in the rescue package,” said the Ministry of Finance. However, one cannot take all wishes into account. And time is short.

Federal Minister of Justice Christine Lambrecht (SPD) also defended the rapid pace. “The current situation requires quick and decisive action,” the SPD politician told the Handelsblatt. She also spoke in favor of completely nationalizing companies if necessary.

“In the crisis, it is imperative that we protect our country’s economic structure and prevent major companies from being sold out or broken up,” said Lambrecht. “The state is ready to partially or wholly participate in companies if this should become necessary.”

However, the Bundestag was able to implement changes elsewhere. For example, companies that use state aid should not be allowed to pay dividends, bonuses or share packages to their top managers. The housekeepers are learning lessons from the financial crisis. At that time, board members of the real estate bank HRE had approved millions of bonuses despite the state’s rescue.

In addition, the Bundestag demands that the state sell shares in companies “at the latest after ten years”, “unless there are urgent economic reasons or reasons that are important for the German economy”, as it was stated in a bill.

“Against this background, the bonus lock for board members makes sense,” said one MP. “This is the biggest incentive for companies to get out of state participation as quickly as possible.” The Bundestag also assures itself of a say. Rescue measures of over 500 million euros are to be discussed in the Budget Committee.

Help without collateral deposited

Another new feature is that start-ups can slip under the protective shield. Up until shortly before the Bundestag session, the details were discussed. Result: All young companies are entitled to help, provided they are systemically relevant and can demonstrate goodwill of at least 50 million euros.

After the accelerated legislation, it is now a matter of publicizing many rescue measures. The statutory health insurance company points out a particularly important point in a circular: On request, companies in need can have the contributions for pension, health and unemployment insurance due for the months of March to May, so that they do not run into liquidity problems.

The employer does not have to offer any security for this, nor is deferred interest or late payments charged. However, the deferral option only applies if other government aid does not work. For example, the expansion of short-time working stipulates that companies are fully reimbursed by the state for the social contributions for lost hours.

More: What the Bundestag has decided in detail.

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Corona could increase unemployment

Berlin The Corona epidemic could temporarily cause the number of unemployed in Germany to rise to more than three million. This emerges from a foresight by the Nuremberg Institute for Labor Market and Vocational Research (IAB). “Germany is facing a severe recession,” warns IAB expert Enzo Weber, which will put the job market under extreme pressure.

The think tank of the Federal Employment Agency (BA) has calculated two scenarios. The researchers are more optimistic that part of the economic activity will be down for six weeks and then return to normal over an equally long period. In this case, they expect a two percent drop in gross domestic product (GDP).

The number of people in employment is then forecast to stagnate at an average of 45.25 million in 2020, but will temporarily drop by 300,000. An annual average of 2.36 million people are expected to be registered as unemployed – that would be around 90,000 more than in 2019.

In the more pessimistic scenario, the IAB assumes that there will even be two and a half months of failures with a delayed normalization of economic activity until the end of the year and that GDP will even shrink by 4.7 percent. In this case, according to Weber, “the number of unemployed could temporarily exceed the three million mark”.

In order to mitigate the consequences as far as possible, comprehensive support measures such as the much easier short-time work and the liquidity aid decided for companies are essential, Weber emphasizes. “Given the severity of the crisis, further drastic support measures may need to be considered.”

Labor market changes

The extent to which the corona epidemic is already impacting the labor market can be seen in short-time working. The BA reported that the number of advertisements had risen rapidly, referring to a survey among all employment agencies.

After that, around 76,700 advertisements for short-time work at the employment agencies nationwide were received this week. In comparison: In 2019, around 600 companies reported short-time working within one week. At the end of 2019 – in an economic downturn – there were around 1,000 companies a week.

Demand is high in all federal states, according to the Nuremberg authority – Bavaria, North Rhine-Westphalia and Baden-Württemberg are particularly striking here. Advertisements come from almost all industries, mainly from the areas of transport and logistics, hotel and catering, trade fair construction and tourism.

The Federal Ministry of Labor has lowered a formal hurdle on Friday so that companies can apply for short-time work benefits for their employees quickly and easily. If works councils cannot come together for a meeting because of the corona epidemic because all or some of the members are in the home office, video or telephone conferences should also be possible, in deviation from the works constitution law. This was announced by Labor Minister Hubertus Heil (SPD) in a ministerial declaration to ensure the work ability of the works councils.

An exceptional situation such as the corona epidemic cannot be an excuse to bypass works councils and effectively override their rights, Heil writes. The decisions that would be taken in a telephone or video conference “are, in our opinion, effective”.

Unions have further demands

The short-time allowance itself continues to be the subject of debate. The mechanical engineering association VDMA asked Heil to quickly extend the duration of the short-time allowance from twelve to 24 months.

For many employees in mechanical engineering and the automotive supply sector, short-time working has been in force since spring or summer 2019, partly because of international trade conflicts, according to a letter from VDMA President Carl Martin Welcker to Heil, which is available to the Handelsblatt.

“If the period for receiving short-time work benefits is not extended in a timely manner, companies have no choice but to fire the employees concerned,” warns the VDMA President. The Federal Association of German Employers’ Associations (BDA) also advocates an extension of the reference period to 24 months in its opinion on the regulation, with which the Federal Government wants to implement extended short-time work.

The unions, on the other hand, are primarily concerned with increasing short-time benefits. It covers 60 percent of net income for lost working hours, and 67 percent for employees with children. Low-wage earners in particular are unable to make ends meet with these amounts, according to the Food, Enjoyment and Catering Union (NGG).

The deputy federal chairman of the Christian Democratic Workforce (CDA), Christian Bäumler, is therefore campaigning for an increase in short-time work benefits to at least 80 percent of net income. “Short-time work benefits are an indispensable part of crisis management,” Bäumler told Handelsblatt. “For many employees, 60 percent of their net income means that they can no longer pay their rent.”

However, it makes no sense that employees should apply for state basic security despite short-time work benefits. Therefore, consideration should be given to raising the short-time allowance to 80 percent for a limited period.

Increase by employer?

After a meeting of the social partners with Minister of Labor Heil and Minister of Economic Affairs Peter Altmaier (CDU), employer president Ingo Kramer said on Wednesday that a solution was being sought but had not yet been found.

In some industries, collective agreements provide for an increase in short-time work benefits by employers. The NGG union had also asked the Dehoga Hotel and Restaurant Association to hold talks to reach an agreement.

According to the employer, the NGG had, however, demanded that the companies increase the short-time work allowance to 90 percent of the net income and waive operational layoffs until two months after the end of the short-time work.

Such demands are “economic madness” and would drive many businesses directly into bankruptcy, warns the gastronomy association. “Companies now need liquidity, otherwise their existence and thus the income base of the employees is in acute danger.”

More: The grand coalition now wants to set up a supplementary budget – a gigantic one. The expenditure is to be financed through new debts.

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Employers want to make final changes to their basic pension

Hubertus Heil

The labor minister prevailed with a concept that drew the circle of beneficiaries further than the Union originally wanted.


(Photo: dpa)

Berlin The resistance of the employers to the basic pension plans of Federal Labor Minister Hubertus Heil (SPD) was great. Now they seem to have resigned themselves to the fact that the law passed by the cabinet in February can no longer be stopped.

In contrast, the Federal Association of German Employers’ Associations (BDA) hopes for further changes to the draft in the parliamentary procedure, which begins on Thursday with a consultation in the Federal Council. The catalog with suggested corrections is available to the Handelsblatt.

The employers adhere to their fundamental concerns: “The planned basic pension is not a suitable contribution against poverty in old age, because the target group of long-term employees is particularly rarely affected by possible poverty in old age anyway.”

However: “If, despite all objections, the legislator still wants to stick to the introduction of the planned basic pension, then he should at least make some substantial corrections to the legal plans,” says the statement.

For example, the basic pension should only apply to future pensioners and not to the pension portfolio. This would “take into account the fact that many pensioners today benefit from other pension regulations that no longer exist with current pension access”. This included the deduction-free pensions from the age of 60 and pension-increasing recognition of training periods.

There is intense argument about details

In their coalition agreement, the Union and the SPD had agreed to improve long-term low-wage earners with low pension entitlements and thus protect them from going to the social welfare office in old age.

The details were the subject of heated argument. In the end, Heil prevailed with a concept that drew the circle of beneficiaries further than the Union originally wanted. Instead of a comprehensive examination of the financial situation of retirees, the aim is to use income to check whether there is a right to a pension increase.

The employers justify the required limitation to new retirees by saying that currently only one percent of all over-65s with at least 35 years of employment are dependent on social assistance in old age. In today’s pension portfolio there is therefore “no special need for social policy action”.

The BDA also requires clarification that the pension insurance must be reimbursed by the federal government for all costs incurred for the basic pension. The previously planned increase in the tax subsidy is not enough because otherwise the pension fund would bear all cost risks. In addition, the federal reimbursement to the pension insurance must also include the high administrative costs resulting from the introduction of the benefit and the income test.

The BDA is particularly critical of the planned procedure to check investment income. Pensioners should report such income to the pension insurance company in a self-assessment. “The administrative costs required would be higher than the services saved by crediting,” says the statement. If no other solution could be found, “it would be better not to count this income altogether”.

More: Hubertus Heil has landed a coup with the basic pension, says Handelsblatt editor Gregor Waschinski.

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Sharp criticism of Heils EU posting directive

Berlin “The same wages for the same work – for everyone in Europe: preventing wage dumping” – that was how Minister of Labor Hubertus Heil (SPD) overwritten his key points on the EU posting of workers directive in May 2019. With his bill, which was passed by the federal cabinet in mid-February, Heil would not live up to this claim, criticizes the union political spokesman for the left-wing faction, Pascal Meiser: “The federal government obviously does not want to take any action against the full-bodied announcements to cross-border wage dumping” Meiser said to the Handelsblatt.

The number of EU citizens who are sometimes sent to work by their companies to work in Germany had increased significantly, especially after the eastward expansion of the EU. In 2010 only 250,000 so-called A1 certificates were issued for entry into Germany, in 2018 the figure was just under 429,000. This emerges from the Federal Government’s answer to a written question from Meiser. With the A1 certificate, a posted worker can prove that he is covered by social security in his home country.

In view of the sharp rise in numbers, the EU adopted the revision of the 1996 Posting of Workers Directive in 2018 and gave the member states until mid-2020 to adapt national law accordingly. So far, posted workers have only been entitled to the statutory minimum wage in their target country. The aim of the reform is to largely equate domestic workers with regard to wages and other working conditions – for example, to pay them minimum industry wages or to equate them with travel expenses if, for example, they have to travel from one construction site to another in Germany.

From Meiser’s point of view, Heil’s design falls far short of the possible. For example, only nationwide collective agreements that have been declared generally binding by the state should also apply to posted workers, but not regional ones. Only if an employee is posted for more than twelve months – or with an extension option longer than 18 months – should all the regulations applicable at the place of employment take effect.

Federal government needs to make improvements

Such long stays are the exception. According to the so far incomplete numbers of A1 certificates issued for 2019, the Ministry of Labor assumes that only 9.8 percent of the employees sent to Germany by their company for more than twelve months and even only 8.8 percent for more than Be sent for 18 months.

The federal government must therefore urgently improve, Meiser demands. “For posted workers in Germany, the same working conditions and generally applicable collective agreements must apply from the start as for domestic workers. Everything else is eyewash. “

In contrast, the Federal Association of German Employers’ Associations (BDA) criticizes that the revision of the posting of workers directive will make cross-border employee deployment within the European Union even more complex and bureaucratic. “The posting of workers directive contradicts EU fundamental freedoms,” wrote the BDA in December last year in its statement on the proposed law. The use of employees abroad would become more expensive and less legally certain, as there could be considerable sanctions for violations.

Germany is not only the main target country for posted workers from the EU, but also the second largest sending agency. According to the EU Commission, German authorities issued just under 476,000 A1 certificates in 2018 that are required for cross-border posting. Only Poland has more than 600,000.

Employers have therefore long been relieving bureaucratic obligations. An A1 certificate must be requested electronically from the health or pension insurance company not only for longer stays abroad, but also for sales talks, visits to trade fairs or participation in meetings, training sessions or seminars, which often last only a few days or sometimes even hours.

Companies and employees unsettled

In addition, different regulations apply from EU country to EU country with regard to the obligation to carry along and controls. France and Austria are particularly strict, as they control more and face severe penalties. “This A1 certificate madness unsettles our companies as well as the employees,” criticizes BDA general manager Steffen Kampeter. “It cannot be the case that these practice-unrelated regulations restrict one of the greatest achievements of the European Union – namely the internal market – in such a way.”

Employers therefore appeal to decision-makers at European level to exempt “normal business trips” and most short-term jobs in general from applying for any certificates. An attempt by the EU Commission to abolish the obligation to issue A1 certification as part of the revision of the rules on the coordination of social security systems had failed last year.

In February, Minister of Labor Heil and Minister of Economics Peter Altmaier (CDU) sent a letter to the EU Parliament demanding that, in the future, if you were to work for a maximum of seven to 30 days, you should “generally refrain from applying for an A1 certificate beforehand” .

More: The Federal Government wants to make it easier for workers to be posted abroad at short notice – against the resistance of the unions.

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What the GroKo decided on short-time work

Berlin When Labor Minister Hubertus Heil (SPD) was planning his “work of tomorrow” law, there was no talk of the corona virus. The grand coalition feared that structural change in the automotive industry or digitization could cost hundreds of thousands of jobs – at least if employees did not undergo extensive further training.

However, there is now a new concern: the viral disease Covid-19. The fear of the economic consequences has long been greater than the uncertainty caused by megatrends such as digitization. Exhibition builders no longer have any work, airlines cut their flight plans, machine and car manufacturers run out of orders and parts. Should there be a real corona epidemic, jobs are at stake across Germany.

That is why the coalition committee has decided to speed up the “Work of tomorrow” law. The working title has now been replaced by the “Law on the Promotion of Continuing Vocational Training in Structural Change and the Further Development of Training Promotion”.

The Federal Cabinet is to adopt the draft on Wednesday of this week. The aim is to put the law into force in the first half of April using an accelerated parliamentary procedure – with short-time working arrangements tailored specifically to the corona crisis.

“It is important to me personally that we take all necessary measures so that companies and their employees are not left alone,” commented Heil. Union and SPD leaders have cleared the way for the government to help businesses and employees quickly and without red tape.

For example, the Bundestag is to authorize the ordinance so that the federal government can quickly reintroduce extended regulations on short-time work, as it had proven itself in the financial crisis.

Employment agency pays social contributions for lost hours

So far, short-time working allowances, which replace 60 to 67 percent of the lost net wages, have been paid. But only if a third of the employees of a company are affected by a significant loss of work. The government wants to lower this threshold to “up to” ten percent, according to the coalition committee’s results paper. Exactly how deep is still being discussed.

In addition, the Federal Employment Agency (BA) should take over the social contributions due for lost hours. So far, employers had to wear them alone. In times of the financial crisis, companies were only reimbursed 50 percent – unless they trained the relevant employees during short-time work.

Negotiations are still ongoing as to whether and to what extent employees have to accumulate minus hours on a working time account before short-time allowance flows. On the other hand, it is already clear that temporary workers should also be able to receive benefits.

Business and trade unions welcomed the planned steps: “The assumption of social security costs is a suitable means and at the moment it is also the most effective liquidity package for the companies concerned,” said President Ingo Kramer.

Corona briefing

“The Federal Government acted resolutely, and that’s a good thing,” said Annelie Buntenbach, board member of the German Trade Union Confederation (DGB). It is important that the improvements in short-time work in combination with further training that have already been decided upon continue to exist. “After all, apart from the current Covid 19 epidemic, we are in an accelerated economic structural change.”

For example, the law, which is now to be adopted more quickly, also provides for higher financial training grants. In addition, employees in transfer companies can receive more support – regardless of age and qualifications. The government also plans to extend the short-term allowance period for companies that qualify employees for longer periods of absence.

More short-time work than in the sovereign debt crisis 2012/13

The Federal Employment Agency estimates that there will be around 124,000 short-time workers in March – especially in the metal industry, which is affected not only by the corona virus but also by structural change in the automotive industry. This means that the drawdown is slightly above the level of the sovereign debt crisis in 2012/13, when economic growth was similarly weak, the Nuremberg authorities said in their monthly report for February.

BA boss Detlef Scheele welcomed the decisions of the coalition committee to make it easier to receive short-time work benefits. “We can use this to help many companies and employees,” he told the Handelsblatt.

However, his authority could not say at the moment how many companies with how many employees will actually take short-time work or what costs this could cause. “We currently have 255 million euros in our household for short-time work benefits. If more funds are needed, the additional expenditure must be requested from the Federal Ministry of Labor, ”said Scheele. But that is a routine procedure.

The Federal Agency has enough funds to finance a higher use of short-time allowance. “And since it is a statutory obligation, short-time work benefits are paid out without any ifs and buts,” emphasized the BA boss. The reserve of the employment agency was almost 26 billion euros at the end of 2019.

More: The leaders of the coalition agreed on a package of measures for the economy in the corona crisis on Monday.

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Federal government wants to quickly introduce extended short-time work

Berlin Because of the economic consequences of the spread of the corona epidemic, the federal government wants to quickly expand the possibility of short-time work. The coalition committee will discuss on Sunday how to lower the hurdles to receive the contribution-financed benefit and to relieve the financial burden on employers. The Handelsblatt learned from coalition circles. On Thursday evening there was a conversation between Federal Labor Minister Hubertus Heil (SPD), Minister of Economics Peter Altmaier and Chancellor’s Office Helge Braun (both CDU).

The group agreed that the Bundestag should quickly authorize the ordinance so that the federal government can put established rules for extended short-time work from the time of the financial crisis back into force – for a limited period until the end of the year.

If the coalition leaders agree, it is planned to lower the hurdles for receiving short-time benefits. According to applicable law, benefits are only granted if at least one third of the workforce in a company is affected by a significant loss of work. In the future, ten percent should be enough.

The short-time working allowance financed by unemployment insurance covers around 60 percent of the net wages lost – and 67 percent for employees with children. Employers are currently required to pay the social contributions due for the lost hours alone. However, 50 percent will be refunded to them in the future.

In the run-up to the coalition committee, the Federal Association of German Employers’ Associations (BDA) put pressure back on. “As a consequence of the health protection measures against the spread of the corona virus, there are already significant disruptions in the global value chains with delivery bottlenecks and partial slumps in the tourism sector,” says a letter to BDA chief executive Steffen Kampeter at the end of February to Heil, Altmaier and Braun had written. In the letter, which is in the Handelsblatt, employers also call for the regulations on short-time work to be attached to a legislative procedure “which can be completed by the end of March”.

Corona briefing

Heil’s “Work of Tomorrow Law”, which has now become the “Law for the Promotion of Continuing Vocational Training in Structural Change”, also provides for an expansion of short-time work and a stronger link with qualification. But the legislative process here will hardly be completed before the summer break. The coalition leaders still have to decide whether Heils law should now be implemented in an accelerated process or whether short-time work should be decoupled.

The Federal Employment Agency (BA) estimates that there will be around 124,000 short-time workers in March – especially in the metal industry, which is affected not only by the corona virus but also by structural change in the automotive industry.

This means that the drawdown is slightly above the level of the sovereign debt crisis in 2012/13, when economic growth was similarly weak, the Nuremberg authorities said in their monthly report for February. The BA can also finance an increased number of short-time workers without any problems. Their reserve was almost 26 billion euros at the end of 2019.

The coalition committee still has to discuss whether short-time work benefits – as in the years of the financial crisis – should be made accessible to temporary workers again. As a rule, they are the first to have to leave the company if there is a drop in production.

The leaders of the Union and SPD also have to negotiate whether working time accounts have to be completely reduced or even minus hours built up before short-time allowance flows. This regulation was suspended during the financial crisis.

More: Profit warnings at German companies – Corona virus is becoming an economic problem.

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