Great Britain: Unemployment skyrockets

I.n the Corona crisis, Britain, like many other countries, is experiencing a surge in unemployment and new claims for social benefits. 1.4 million people have already applied for universal credit within four weeks, as Labor Minister Therese Coffey announced in a television interview on Tuesday. In normal times, a little over 50,000 people typically apply for social security per week.

Philip Plickert

Since the Corona crisis and the start of the lockdown measures, applications have increased to around seven times the pre-crisis level. “We are able to process and process these requests,” said Coffey. The government has increased social benefits for the unemployed. Official job market data for March will be released next week. Before the crisis, the unemployment rate was only 3.9 percent.

Since mid-March, the government has ordered stores to be closed, except for supermarkets and a few others. Offices also have to close, employees can only work in the home office. In Britain, these closings and economic and public shutdowns are referred to as “lockdowns”.

“This is not a choice between health and economy”

The research institute Office for Budget Responsibility (OBR) meanwhile warns of a 35 percent drop in economic output in the second quarter if the lockdown regulations remain in effect in the three months. According to a new calculation of the OBR, which works for the government but works independently, the crisis could tear a hole in the state budget of more than £ 200 billion. This is due to lower tax revenues and higher expenses during the crisis. According to the OBR, this is not a forecast, but a “reference scenario” about a possible outcome. The actual development depends crucially on the length of the lockdown and the subsequent recovery of the economy after the forced standstill has ended.

If the lockdown is released after three months and restrictions still apply in part for a further three months, economic performance could shrink by 13 percent for the full year, the OBR experts estimate. That would be a recession more than twice as deep as that resulting from the financial crisis in 2008 and 2009. The government deficit would rise to 14 percent of gross domestic product (GDP) and the debt ratio could temporarily climb from just over 80 percent to over 100 percent.

“It is clear that we must defeat this virus as soon as possible,” British Chancellor of the Exchequer Rishi Sunak told the BBC on Tuesday. Some media previously reported tensions between Treasury Secretary and Health Minister Matt Hancock over the length of the coronavirus lockdown. Sunak denied a conflict: “This is not a choice between health and economy,” he said. It contradicts common sense to play one against the other.


Coalition argues again over basic pension schedule

Hubertus Heil

The SPD rejects the demands of its coalition partner to stop the basic pension plans.

(Photo: dpa)

Berlin In the middle of the corona crisis, a new dispute over the basic pension broke out in the coalition. Leading SPD politicians rejected calls from the Union on Friday to rethink funding and the timing of the basic pension in the face of the pandemic.

“Questioning the basic pension at Easter and in times of Corona is evidence of a lack of political responsibility,” said SPD parliamentary group leader Katja Mast of the German Press Agency in Berlin. “Whoever applauds everyday heroes shouldn’t forget them even after the crisis.”

The head of the labor and social work group of the Union faction, Peter Weiß (CDU), told the magazine “Focus” that the financing of the basic pension in the form previously planned could not be realized. “We have amassed a huge mountain of debt to deal with the corona crisis. Therefore, we have to sit down in the coalition after the pandemic and take a closer look at the financing, ”he said.

The schedule for the entry into force of the basic pension must also be reconsidered. Union faction vice Carsten Linnemann (CDU) had already asked in March to put the project on hold.

Labor Minister Hubertus Heil (SPD), on the other hand, insisted on the implementation of the plans for the basic pension and partial abolition of the solidarity surcharge for 90 percent of taxpayers, despite the corona crisis. He told “Focus” about the abolition of solos: “We are relieving the citizens of what is important for stimulating the economy after the crisis. In the end, this also applies to the basic pension. ”The state should be reliable and the improvements decided now should not be reversed.

Mast demanded that elderly care assistants and many cashiers who often earned little would need better wages and a basic pension. “So misusing the corona crisis now to question the basic pension again is shabby.”

The Federal Government has decided to introduce the basic pension on January 1, 2021 and to cancel the solidarity surcharge for 90 percent of taxpayers. The pensions of around 1.3 million people with small earnings are to be improved. Long-term low earners who have at least 33 years of contribution periods for employment, education or care should be able to receive the basic pension. In the starting year, it should cost 1.4 billion euros.

The government passed the basic pension bill in February. For the plans to become law, the Bundestag and Bundesrat still have to agree. In February, doubts arose due to the administrative burden as to whether implementation by the pension insurance scheme could be achieved at the beginning of 2021.

More: Employers are exerting pressure to change the basic pension in parliamentary proceedings. The benefit should only apply to new retirees.


Job centers fear wave of Hartz IV applications

Job centre

Applications for state basic security should be simplified for a limited period.

(Photo: imago images / Schöning)

Berlin The social protection package for cushioning economic corona consequences, which was also adopted by the Federal Council on Friday, raises concerns in the job centers responsible for processing. There are doubts as to whether the human resources are sufficient to process applications for supplementary Hartz IV services quickly.

“We are unable to understand the calculations and forecasts regarding access to initial applications and the duration of their processing,” says a written statement by the Federal Chairman of the Job Center Personnel Council, Uwe Lehmeniek.

The letter, which is in the Handelsblatt, is addressed to the Federal Ministry of Labor, the parliamentary factions, the state chancelleries, the local umbrella organizations and the headquarters of the Federal Employment Agency (BA).

The social protection package provides, among other things, help for the self-employed who have no more jobs due to the corona epidemic. They should be able to apply for Hartz IV benefits – initially for a limited period until the end of June – without having to disclose their assets beforehand. It is also not checked whether your apartment is too expensive.

The simplified procedure should not only make the aid quickly and unbureaucratically accessible, but “above all also support the ability of the job centers to work,” writes the Ministry of Labor in its formulation aid for the draft law of the coalition groups.

It is unclear how many applications are coming

In the justification for the law, the department expects that there may be up to 1.2 million additional Hartz IV recipients from the circle of self-employed, but also from other groups of employees who lose their income.

At the moment, no one can say with certainty how many crisis-related new applications can be expected, according to the letter from the job center staff councils. However, these assume that in addition to the additions of small entrepreneurs and solo self-employed persons, there will also be “substantial” additions from other workers.

It is all the more regrettable that, despite repeated reminders, the job centers do not have the personnel resources they actually need in normal times, Lehmeniek writes. “The access to beneficiaries will be considerable and the rework after the temporary access simplifications have ended will be enormous,” it continues. “We ask you to take this into account appropriately in the 2021 staff budget preparation procedure.”

However, the job center staff councils also point out that “if every actual expenditure on accommodation and heating is temporarily considered appropriate, it could lead to” considerable social discrepancies and consultation efforts “.

In other words, while beneficiaries who were dependent on basic security even before Corona may have to move out of their apartment because the costs are too high, the Corona-injured self-employed can in extreme cases, at least temporarily, have a luxury old building financed by the state.

Clear rules needed

It was therefore necessary to clarify whether existing instructional procedures relating to inadequate accommodation and heating costs would be discontinued. “It would be difficult to convey to those entitled to benefits if some costs were reduced and others were not,” the letter said.

According to the law, assets should only be disregarded if they are not “significant”. The fuzzy legal concept needs to be interpreted. However, the employees in the job centers now need clear regulations.

Overall, however, the staff councils reaffirm the commitment of all job center employees to master the exceptional situation as best as possible. “Given the impact of the Covid-19 pandemic, there is a great deal of concern and sympathy among the employees of the joint facilities, but also the willingness and willingness to face this crisis and to provide basic security for job seekers in a committed manner.”

More: Detlef Scheele’s authority is in a state of emergency. The head of the employment agency speaks in an interview about the challenges of short-time work and unemployment in Corona times.


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.