In Germany short-time working has been a key element in the Federal Government’s response to the current recession. It enables employers to avoid redundancies by placing employees on reduced hours for a set period of time. In such circumstances employees are entitled to receive short-time working benefits from the Government to help compensate them for their reduced earnings. The benefits are paid to employees via their employers.
Use of the scheme has risen massively over the last year. According to the Federal Employment Office there are currently between 1.3 and 1.5 million employees working reduced hours. In January 2009 over 10,000 employers applied for public short-time working benefits in respect of 290,600 employees, citing economic reasons. This represented an increase of 274,000 claimants on the same time last year.
In response to these statistics the German Government has decided to increase the period of entitlement to short-time working benefits from 18 to 24 months. It will also relieve employers of their obligation to pay social security contributions if they have been operating short-time working for at least 6 months.
In a similar development the French Government has set up a new fund to support short-time working and to help redundant workers gain new skills in an attempt to stem rising unemployment levels. Short-time benefit levels are set to increase from 60% to 75% of normal gross pay and will be paid for longer periods. Special schemes have been set up for industries hit by the current crisis, including the automotive sector.
The German Government is also introducing measures in an attempt to regulate senior executives’ pay and link it more closely to the long-term performance of their organisation. Under the proposals full company supervisory boards (which include shareholders as well as employee representatives) will be responsible for setting pay. They will no longer be able to delegate this responsibility to remuneration panels and could be held personally liable for any damages arising from inappropriate remuneration. They will also have the power to reduce executives’ pay where a company performs badly. The draft legislation is now being finalised before going to Parliament for approval.